Department for Business, Innovation and Skills
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Revised Limits on Payments Under Employment Rights Legislation

Revised Limits on Payments Under Employment Rights Legislation

News Release issued by the COI News Distribution Service on 01 February 2010

Limits on awards and payment made to workers in certain employment rights cases will be revised from 1st February under the annual index-linked formula.

The revised limits affect:

· The maximum amount of compensatory awards for unfair dismissal;

· the limit on guarantee payments made when employees are not provided with work; and

· the minimum amount of compensation for exclusion or expulsion from a trade union.

Table of revised limits, effective from 1 February 2010:

Access this information online at:

or copies are available from the Stationery Office.

Notes to Editors

1. Section 34 of the Employment Relations Act 1999 provides that the limits on various awards and payments under employment legislation will be index-linked, i.e. will be varied by Order if the Retail Prices Index (RPI) for September of a year is higher or lower than the index for the previous September. The variation between September 2008 and September 2009 was minus 1.4% (source: ONS, all items RPI).

2. In applying the relevant percentage increase or, as in this case, decrease, the Secretary of State is required to round up the new sums, variously to the nearest 10 pence, £10 or £100 with the result that variations in the percentage revisions occur. This year the retail prices figure used in the calculation is minus 1.4%. The requirement to round up has meant that three of the sums are reduced. It has also meant that others remain the same and are therefore not revised by the Order, although they are noted in the Explanatory Note for information.

3. The Work and Families (Increase of Maximum Amount) Order 2009 (S.I. 2009/1903) excluded certain limits from the 2010 annual uprating formula. These are the limit on a week's pay for calculating statutory redundancy payments, and tribunal awards that use a week's pay as the basis for calculation. These limits were previously increased - from £350 to £380 - on 1 October 2009.

4. The amounts revised by the present Order will apply where the event giving rise to the entitlement to compensation occurs on or after 1 February 2010. The previous Order (the Employment Rights (Increase of Limits) Order 2008 (SI 2008/3055)) continues to apply to the limits which are revised by the present Order in relation to cases where the relevant event was before 1 February 2010. The 2008 Order also continues to apply to the limits that were not included in this Order because they remained the same after rounding.

5. Legally, the Secretary of State is under a duty both to make the Order and to bring the revised limits into force as soon as practicable. An Impact Assessment is not required in this instance because the Act provides for indexation according to a pre-determined formula (i.e. the RPI) and the changes being made do not impact on business. They involve no changes to the structure of the awards and other payments, or to employers’ management systems.

6. Key stakeholders have been informed of the revised amounts.

Department for Business, Innovation & Skills

The Department for Business, Innovation and Skills (BIS) is building a dynamic and competitive UK economy by: creating the conditions for business success; promoting innovation, enterprise and science; and giving everyone the skills and opportunities to succeed. To achieve this it will foster world-class universities and promote an open global economy. BIS - Investing in our future.


BIS Press Office

Matthew Barker
Phone: 020 7215 5946

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