Tribunal compensation limits to increase in April 2024

Along with the many legal changes that are coming into place in April and the statutory rate increases, the compensation limits in employment tribunals are also increasing.

Tribunal awards are calculated based on strict formula and the limits are reviewed (and often increased) annually. The new limits will come into force on 6 April 2024. These reflect the increase in the retail prices index (RPI) of 8.9% from September 2022 to September 2023.

What is changing?

When an employee has been successful in an unfair dismissal claim, the tribunal will then have to consider what the appropriate remedy is in the circumstances of that case. Most claimants will seek a monetary award comprising of a basic award and a compensatory award.

The basic award is based on an employee’s age, length of service and weekly pay. The weekly pay is subject to a cap that is currently £643. However, this will increase to £700 from 6 April 2024. If an employee’s gross weekly pay is less than the cap, then their usual weekly pay amount is used. As the basic award is calculated in the same way as a statutory redundancy payment, it also means that this weekly pay limit applies when calculating a statutory redundancy payment. 

The compensatory award is designed to put the claimant in the position they would have been in financially, had they not been unfairly dismissed. It is subject to a maximum of 52 weeks’ pay or £105,707, whichever is lower.  This figure will increase from 6 April 2024, to £115,115. However, there are certain claims for automatic unfair dismissal, including whistleblowing, where there is no limit to the compensation that can awarded.   

The increases apply where the event giving rise to the entitlement to compensation (usually the date of termination) or other payment occurs on or after 6 April 2024. The sums previously in force between 2023 – 2024 will remain in place for cases where the relevant event took place before that date.

How much can employees win for unfair dismissal claims?

Who can claim unfair dismissal?

How long does an employee need to have been with me before they can claim unfair dismissal?

The statutory guarantee pay amount is also increasing. Statutory Guarantee Pay (SGP) is the payment made while an employee is laid off (asked not to work), and is a daily rate paid on any days where an employee is laid off, to a maximum of a normal working week, every 13 weeks. The daily rate is increasing from £35 to £38, effective from 6 April 2024.

Here are the most important changes:

• Limit on guarantee payments will increase to £38 (currently £35)
• Limit on a week’s pay for calculating redundancy and unfair dismissal basic award will increase to £700 (currently £643)
• Maximum basic award for unfair dismissal and statutory redundancy payment (30 weeks' pay subject to the limit on week's pay) will increase to £21,000 (currently £19,290)
• Maximum compensatory award for unfair dismissal - subject to a maximum cap of a year's pay will increase to £115,115 (currently £105,707)