The Employment Rights (Increase of Limits) Order 2022 has been laid before parliament and will bring increases to Employment Tribunal awards from 6 April 2022.
What is the Order?
The Employment Rights (Increase of Limits) Order 2022 has been laid before parliament. The Order will increase the limits that are applied to certain awards of the Employment Tribunal and other amounts that are payable under employment legislation.
The increases are made on an annual basis in line with the retail price index (‘RPI’). This increase relates to the RPI increase between September 2020 – September 2021. The Order will be increasing Employment Tribunal awards by 4.9%.
The increases as outlined in the Order will apply to dismissals occurring on or after 6 April 2022. This year’s increases are:
- One week’s pay, for the purpose of calculating a basic award or statutory redundancy payments, will be increasing from £544 to £571.
- The compensatory award for unfair dismissal is capped at the lower of 12 months’ gross pay or the maximum compensatory award. The maximum compensatory award will be increasing from £89,493 to £93,878.
In cases of unfair dismissal, an Employment Tribunal may award compensation in the form of a basic award and a compensatory award. The formula when calculating the basic award is based on the employee’s age, length of service and weekly pay. The maximum that can be awarded is 30 weeks’ pay and is subject to the statutory limit (as above) on a week’s pay. Therefore, the maximum basic award will be increasing from £16,320 to £17,130 as of 6 April 2022.
When looking at the above figures, it is important to remember that these are the upper limits, and not necessarily the norm for Employment Tribunal awards. In 2019-2020, the highest award made was £265,719 in a disability discrimination claim. However, the average award for unfair dismissal claims was £6,646 and the average award for discrimination claims was £11,229 so high awards are the exception rather than norm.
For further information or to discuss the issues raised by this update, please contact our Employment Group on 0118 977 4045 or employment@herrington-carmichael.com.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
