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Unprecedented reduction in compensation for unfair dismissal from February 2010

22 December 2009

For the first time ever the compensation limit in unfair dismissal cases will fall in February 2010.

The limit on certain employment tribunals claims is adjusted each year in line with the retail prices index (RPI) in the 12 months to the previous September.  The changes come into effect in relation to events such as dismissals which take place after February 1st in each year.

Given the unusual economic conditions last year, the RPI decreased from September 2008 to September 2009. Therefore, most unusually, the limit on the amount of compensatory award for unfair dismissal will drop in February 2010 to £65,300, (from the current £66,200).

However, it should be noted that the limit on a week’s pay (used to calculate basic awards, statutory redundancy payments and some other payments) which was subject to a one-off rise in October 2009 to £380 will not change.

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