Increase of limits on tribunal awards from 6 April 2025

James Cairns, Trainee Solicitor

The Government has now announced the proposed annual increases in statutory compensation payments that can be awarded by an employment tribunal. Following approval, the increased rates will apply from 6 April 2025 to 5 April 2026.

The Key Takeaways are as follows:

1. Maximum compensatory award in an Unfair Dismissal claim

• Increases from £115,115 to £118,223.
• This amount is the lower of the statutory limit or 52 weeks’ actual gross pay at the time of the dismissal.
• The limit does not apply where the reason for dismissal or redundancy selection is carrying out health and safety activities or making a protected disclosure.

2. A week’s pay for the purposes of calculating certain awards

• Increases from £700 to £719.
• This applies to various awards, including:
  • redundancy payments
  • basic awards for unfair dismissal
  • payments payable on the insolvency of an employer (including arrears of pay and holiday pay)
  • compensation for failure to comply with the right to be accompanied to a disciplinary or grievance hearing

3. Maximum statutory redundancy payment/basic award in an unfair dismissal claim

• Increases from £21,000 to £21,570.

4. Minimum basic award

• Increases from £8,533 to £8,763.
• This applies where the reason for dismissal relates to:
  • trade union membership or activities
  • selection for redundancy on grounds related to trade union membership or activities
  • carrying out duties as health and safety representative
  • carrying out duties as a workforce representative
  • carrying out duties as a trustee of an occupational pensions scheme or
  • performing functions or activities as an employee representative (or candidate)

5. Limit on the compensatory award for failure to have a written tips policy, or for failure to allocate and pay tips fairly

• This will increase from £5,000 to £5,135.

6. Award for unlawful inducement relating to trade union membership, activities and collective bargaining

• Increases from £5,584 to £5,735 per week.

7. Statutory guarantee pay

• This will increase from £38 to £39 per day

When do the new rates take effect?

The new rates will take effect where the ‘appropriate date’ for the cause of action (such as the effective date of termination in an unfair dismissal claim) is on or after 6 April 2025.

For claims with an appropriate date before 6 April 2025, the old limits will still apply, regardless of when compensation is awarded.