It's the law: Changes to compensation

Make sure any compensation your organisation has to pay to staff is in line with the new limits.

Readers will no doubt wish to avoid paying compensation for breach of their statutory employment law obligations. However, with claims to the employment tribunal rising to more than 115,000 last year, and the ever-increasing complexity of employment law obligations, it is becoming more common for employers to find themselves facing employment tribunal claims from prospective, current and former employees.

The law applies limits to compensation payable for breaches of many employment law obligations, but there is no limit on the compensation payable for discrimination claims. These limits were increased on 1 February. Employers should therefore ensure that any compensation they pay to any employees (or former employees) after that date is in line with the new limits.

The statutory cap on a week's pay for the purposes of statutory redundancy payments has increased from £280 to £290. The limit on awards for unfair dismissal has increased from £56,800 to £58,400. The basic award (the second component of the damages payable in compensation for unfair dismissal) has also increased from £8,400 to £8,700, with the minimum basic award for certain types of dismissal rising to £4,000.

Specific entitlements relating to trade union rights and responsibilities were also increased from 1 February. Employers should seek specific advice if they find themselves in such circumstances.

Claims for breach of contract brought in the employment tribunal remain capped at £25,000. Employers should also be aware of the annual increases to maternity, paternity, adoption and sick pay, which are due to be increased from 1 April. From that date, the weekly payment will be £108.85. At this time, maternity allowance will also increase to £108.85 per week.

The Department for Work and Pensions has also announced that statutory sick pay is due to increase in April from the current rate of £70.05 a week to £72.25.

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