Employment Tribunal Claim Limits: What Employers Need to Know

From 6 April 2024, revisions have been made to the rules that determine the maximum amounts that individuals can claim in compensation for various employment-related disputes.

Key changes

1. Unfair Dismissal Claims – up to £115,115

The maximum compensatory award for unfair dismissal claims has been revised upwards, from £105,707 to £115,115 (or a year’s gross pay, whichever is lower). This means that employees who succeed in unfair dismissal claims may be entitled to higher compensation amounts, reflecting economic changes and the need for adequate redress.

2. Redundancy Payments – up to £21,000

The maximum amount of statutory redundancy pay that can be awarded in employment tribunal cases has also been adjusted, from £19,290 to £21,000. Employers facing redundancy-related claims should take note of these changes and ensure compliance with statutory redundancy payment obligations.

The increase in redundancy payments is based on the fact that a week’s pay, for the purposes of compensation calculations, has risen from £643 to £700. This also impacts on compensation awards payable on the insolvency of an employer (including arrears of pay and holiday pay), awards of compensation for a failure to deal correctly with a right to request a contract variation or where an employee is unfairly dismissed because the statutory retirement procedure has not been followed.

3. Vento bands – up to £58,700 (Band 3)

Another change from 6 April 2024 sees an increase in the values of ‘Vento bands’. The three value ranges are named after a 2002 case involving West Yorkshire Police and relate to calculation of compensation awards used by employment tribunals when assessing injury to feelings in discrimination and whistleblowing cases.

The lowest band, for less serious cases, now stands at £1,200 to £11,700, while the middle band ranges from £11,700 to £35,200, for cases brought after 6 April. The upper band has risen to between £35,200 to £58,700 , with the most exceptional cases capable of exceeding this upper limit.

4. Basic awards – up to £8,533

The minimum amount of a basic award will rise from £7,836 to £8, 533, where the reason for dismissal is linked to a range of set scenarios. These include carrying out duties as a health and safety or employee representative, acting as a trustee of an occupational pension scheme or engaging in trade union activities.

Implications for employers

The revised compensation limits have several implications for employers, not lease the fact they now face increased financial exposure in the event of employment tribunal claims. With the increased compensation limits, comes a heightened need for employers to revisit internal risk management processes and consider refresher training for managers to reduce the likelihood of tribunal claims. This could include reviewing certain policies and procedures, conducting thorough investigations into employee grievances and potentially seeking legal advice where necessary.

If you require further guidance on changes relating to the employment tribunal process, or need an experienced employment lawyer to review your workplace policies and procedures, please do not hesitate to contact the team at MDJ Law.