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Compensation levels to rise next year

Compensation limits are set to increase from early next year.

From February 2011 the maximum amount of compensation available for unfair dismissal cases will increase from £65,300 to £68,400.

Maximum statutory redundancy payment will be £12,000 and the upper limit of 'a week's pay' for calculating statutory redundancy pay, (or the basic award for unfair dismissal) will increase from £380 to £400.

Increases in the Retail Prices Index, which went up by 4.6% between September 2009 and September 2010 have been a deciding factor in the rises.

However, Employment Tribunals will still apply the old limits of compensation for anyone dismissed prior to 1st February 2011.

Employment solicitors believe that the overall maximum unfair dismissal award available in some cases could reach £80,400, which could seriously damage some small businesses.

Because of this fact it is vital that all companies act reasonably when dismissing an employee to avoid legitimate claims. Legal advice from a qualified expert should always be sought if an employer is unsure of the appropriate method of practice.