Settlement Agreements and Compensation Limits
Details of the annual review of compensation limits have been published this week. The new limits shall take effect from 6 April 2014 and will only apply where the event giving rise to compensation occurs on or after that date. This means that, for example, where a dismissal took place before 6 April 2014 then the old rates will apply even if the Tribunal hearing, and therefore the award for compensation, falls after that date.
Notable increases include:
Award type |
Old rate |
New rate |
Statutory Limit on a ‘week’s pay’ |
£450 |
£464 |
Maximum compensatory award for Unfair Dismissal |
£74,200 |
£76,574 |
Statutory Guarantee Payment |
£24.20 |
£25 |
Unfair Dismissal Basic Award |
£5,500 |
£5,676 |
These changes will give new considerations for anybody considering a settlement agreement. In particular, the limit of one years salary will be a major consideration for anybody thinking of bringing unfair dismissal claims as opposed to entering into a settlement agreement.