Compensation Limits to rise from 1st February 2009

4th December 2008 The compensation rates applicable from the 1st February 2009 have just been published.

The maximum figures for the statutory redundancy payment, "guarantee" payments for staff that have been laid off work temporarily, the maximum figure for the "compensatory" and "basic" awards for unfair dismissal will all rise. The new figures will apply to any dismissal, statutory redundancy, and guarantee payment that arises on or after the 1st February 2009. So, where the dismissal takes place before the 1st February 2009, the old rates will continue to apply, irrespective of the date on which the compensation is awarded. 

The main changes are as follows:-

1. The limit on the amount used as "a week's pay", for calculating statutory redundancy payments and the basic award for unfair dismissal, will rise from £330 to £350.
2. The maximum "compensatory" award for unfair dismissal (which is added to the basic award to cover any losses that result from the unfair dismissal) will rise from £63,000 to £66,200.  
3. The rate of the "guarantee" payment (for staff that have been temporarily laid-off work) will rise from £20.40 to £21.50 per day.

These changes indicate that redundancy costs for employers will shortly rise. Therefore, if an employer is facing grave financial pressures now, they should consider commencing the necessary redundancy procedure sooner rather than later. 

If you need any specific advice on the issues raised in this article then please contact us.