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Update – Employment Tribunal compensation and the National Minimum Wage

We have provided a brief overview of increases to compensation limits in the employment tribunal and the rise in the National Minimum Wage which will be coming into force in April 2017.

National Minimum Wage

The following hourly rates of national minimum wage will apply from 1 April 2017:

  • The national living wage (workers aged 25 and over) will increase from £7.20 to £7.50
  • The standard adult rate (workers aged between 21 and 24) will increase from £6.95 to £7.05
  • The development rate (workers aged between 18 and 20) will increase from £5.55 to £5.60
  • The young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices) will increase from £4.00 to £4.05
  • The rate for apprentices will increase from £3.40 to £3.50

Employment Tribunal compensation limits

The annual increase to employment tribunal compensation payments has been published. The new limits are set out in the Employment Rights (Increase of Limits) Order 2017 and will apply to dismissals and certain other claims occurring on or after 6 April 2017.

The changes are minor however, employers should be aware of some of the key figures:

  • A week’s pay for the purpose of calculating a statutory redundancy payment or various awards including the basic award for unfair dismissal will increase to £489 (currently £479)
  • The maximum compensatory award for unfair dismissal will increase to £80,541 (currently £78,962). Such awards will be subject to the additional limit of 52 weeks’ gross pay, meaning the maximum compensation award for unfair dismissal will be the lower of the two figures in cases or ordinary (rather than automatically) unfair dismissal

In redundancy situations, these new figures will apply in circumstances where notice is served before the 6 April 2017 but the effective date of termination is after this date.

If you would like to speak to us about any employment issues, please feel free to email us  or contact us on 0191 282 2880 for a no obligation chat.

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