New limits for unfair dismissal and redundancy payments announced

Payments and awards made to workers in employment rights cases are to rise in line with inflation.

Orders made by the Department for the Economy bring these new limits into operation from 6 April 2018.

The increased limits relate to a range of employment rights including statutory redundancy payments; the basic and compensatory awards for unfair dismissal; the limit on guarantee payments made when employees are not provided with work; and the minimum basic award for unfair dismissal in health and safety and certain other cases. For example, the limit on the compensatory award for unfair dismissal will rise from £79,100 to £83,847 while the maximum amount of ‘a week’s pay’ for the purpose of calculating redundancy payment rises from £500 to £530.

The Order, which contains a table showing the increase in limits from 6 April 2018 is available to view online. Details of limits are available on nibusinessinfo.co.uk.

Legislation adjusting limits relating to a range of employment rights is normally made annually to reflect changes in the rate of inflation as measured by the Retail Prices Index (RPI).  Section 22 of the Employment Act (NI) 2016 provided for legislation to be amended so that annual increases take place on a fixed date (6 April) and so that the rounding formula provides for figures to be rounded, up or down, to the nearest whole pound. This section of the Act has now been commenced and these changes are incorporated into these new limits.

Notes to editors: 

1. Article 33 of the Employment Relations (Northern Ireland) Order 1999 provided that the limits on various awards and payments under employment legislation would be index-linked, i.e. varied by Order if the Retail Prices Index (RPI) for September of a year is higher or lower than the index of the previous September.
2. Due to amendments contained within the Enterprise and Regulatory Reform Act 2013, limits applicable in Great Britain are now subject to increase on a fixed date (6 April annually) and a different method of rounding is used.  Consequently limits in Northern Ireland have diverged slightly from those applicable in GB. 
3. Now that Section 22 of the Employment Act (Northern Ireland) 2016, has been commenced this will allow this divergence to be addressed, if there is agreement to do so, in the future.
4. The new limits set out in Order 2 reflect changes in the RPI between September 2015 and September 2016 (2.0% - source: ONS, all items RPI) as set out in Order 1, and subsequently September 2016 and September 2017 (3.9% - source: ONS, all items RPI).
5. Printed copies of the Rule may be purchased from The Stationery Office (TSO) or by contacting TSO Customer Services on 0870 600 5522.
6. All media queries should be directed to the Department for the Economy Press Office on 028 9052 9604. Out of office hours contact the duty press officer via pager number 07623 974 383 and your call will be returned.

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