UK Employment Compensation Payments Increase

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Annual increase on certain statutory payments takes effect from 1 February.

On 1 February, the annual increase on certain statutory payments comes into effect. The key changes are the following:

  • Maximum unfair dismissal compensatory award: £74,200 (increase from £72,300)
  • Maximum unfair dismissal basic award: £13,500 (increase from £12,900)
  • Cap on a week's pay for certain statutory calculations: £450 (increase from £430)
  • Maximum statutory redundancy pay: £13,500 (increase from £12,900)

Other increases will take effect in April 2013, including increases in statutory maternity pay and statutory sick pay, and the level of national minimum wage will increase in October 2013.

Additionally, on 17 January, the government announced that the cap on the unfair dismissal compensatory award will change. Beginning around summer 2013, unfair dismissal compensation will be capped at the lower of the statutory cap (currently £74,200) and 12 months' pay. This is a major change in UK employment law and one that employers will welcome because the financial risk of dismissing an employee who earns less than the statutory cap will be reduced. However, it is likely to mean that more employees will make discrimination or whistleblowing claims, for which no statutory cap applies.