URN No: 07/512
Introduction
Legislation provides for payments to be made to employees in certain circumstances. Employees may be entitled to guarantee payments, redundancy payments, payment by the Department of Trade and Industry of certain debts owed by insolvent employers, damages for unfair dismissal. All these payments and awards are subject to financial limits, and this document gives general information about the sums payable. It is not intended to be a complete or authoritative statement of the law.
Under the legislation, the Secretary of State is required to vary the limits on the various awards and payments mentioned above in line with the movement of the Retail Prices Index using the September Index in each year as the reference point. The changes are made by order as soon as is practicable.
Further information is available from the Advisory, Conciliation and Arbitration Service (Acas).
The limits
| Previously | From 1/2/2007 | |
| Limit on guarantee payments | £18.90 per day | £19.60 per day |
| Limit on a week’s pay | £290 | £310 |
| Maximum basic award for unfair dismissal (30 weeks' pay) | £8,700 | £9,300 |
Minimum basic award for dismissal on trade union, health and safety, occupational pension scheme trustee, employee representative and on working time grounds only | £4,000 | £4,200 |
| Maximum compensatory award for unfair dismissal | £58,400* | £60,600* |
| Amount of award for unlawful inducement relating to trade union membership, activities or services, or for unlawful inducement relating to collective bargaining. | £2,600** | £2,700** |
| Minimum amount of compensation where individual excluded or expelled from union in contravention of section 174 of the Trade Union and Labour Relations (Consolidation) Act 1992 and not admitted or re-admitted by date of tribunal application. | £6,300*** | £6,600*** |
| Maximum award in breach of contract cases | £25,000 | |
* There is no limit where the employee is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or public interest disclosure ('whistleblowing').
** For details of trade union membership protection rights, please see:
Union membership: rights of members and non-membersPart of the compensatory award in unfair dismissal cases compensates an employee for the loss of earnings up to the date of the tribunal hearing. However, some employees may have already received unemployment benefit or income support for the same period. To avoid ‘double payment’ the tribunal will order the employer to pay a specified amount of the employee’s award to Jobcentre Plus (formerly known as the Benefits Agency).
See also:
Details of the qualifying conditions employees have to meet in order to qualify for an award or payment, are described in other regulatory guidance.
Guarantee payments
Employees may be entitled to receive guarantee payments for up to five days of lay-off in any three-month period. The maximum amount of a guarantee payment for any one day is £19.60 (£18.90 before 1 February 2007).
See also:
Redundancy payments
The amount of a statutory redundancy payment depends on the employee’s age, length of service, and the amount of a week’s pay. The maximum payment is up to 30 weeks’ pay, and the maximum amount of a week’s pay which may be used to calculate a payment is £310 (£290 before 1 February 2007).
See also:
Redundancy entitlement statutory rights: a guide for employeesEmployees may be entitled to payments by the Department of Trade and Industry of certain debts owed by insolvent employers - up to eight weeks’ arrears of pay, up to six weeks’ holiday pay, and up to twelve weeks’ pay as compensation if the employer fails to give the proper period of notice of dismissal. In each case, the maximum payment for a week is £310 (£290 before 1 February 2007).
See also Redundancy and insolvency: a guide for employees on the Insolvency Service website.
Unfair dismissal
Employment tribunals may order an employer to re-employ an employee who has been unfairly dismissed. If the tribunal does not order re-employment or if the re-employment order is not complied with, it will award compensation as described below.
The compensation awarded may be reduced by the tribunal if, for example, it is found that the employee was partly to blame for the dismissal, or that she/he has not tried to find another job in the meantime.
See also:
Basic award
The basic award compensates the employee for loss of job security. The amount of the basic award depends on the employee’s age and length of service with the employer, and the amount of a week’s pay. The maximum basic award is 30 weeks’ pay (subject to the limit on a week’s pay). In ordinary unfair dismissal cases, there is no minimum basic award. However, in the case of employees who are unfairly dismissed because of their membership or non-membership of a trade union, or because of their trade union activities, or because of activities as an employee representative or occupational pension scheme trustee, or because they have taken certain types of action on health and safety grounds or for the purposes of working time regulations, there is a minimum figure for the basic award.
| Before 1/2/2007 | From 1/2/2007 | |
| Maximum week’s pay | £290 | £310 |
| Maximum (30 weeks’ pay) | £8,700 | £9,300 |
| Minimum (trade union, health and safety, occupational pension scheme trustee, employee representative and working time cases only) | £4,000 | £4,200 |
Compensatory award
The compensatory award is based on the tribunal’s assessment of the employee’s loss of earnings between the dismissal and the tribunal hearing, and the likely future loss of earnings, loss of pension rights etc., up to a maximum figure of £60,600 (£58,400 before 1 February 2007). There is no limit where the employee is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or public interest disclosure ('whistleblowing').
See also:
Additional award
If a tribunal orders the employer to re-employ the employee, and if the employer does not comply, the tribunal may make an additional award, on top of the basic and compensatory awards.
The additional award will be between 26 and 52 weeks' pay - subject to the £310 (£290 before 1 February 2007) limit on a week's pay.
Minimum 26 weeks' pay or £8,060 (£7,540 before 1 February 2007), whichever is the lower.
Maximum 52 week's pay £16,160 (£15,080 before 1 February 2007).
Breach of contract
Where an employee makes a breach of employment contract claim to an employment tribunal (or an employer makes a counter claim) the maximum amount that may be awarded in respect of that claim (for a number of claims arising from the same breach of contract) is £25,000.
See also:
