Business Owners Take Note
Unfair Dismissal Awards Are Going Up
We like to write entertaining content for our business owners, with a smile on our face and a spring in our step …. well, we are moving into the joyful months of springtime and the sun is dazzling the river outside our office windows.
But sometimes our readers pushback … “we love your content but sometimes, we just need some hard facts that help us manage our business”
So here we go ….
From 6 April 2015, the cap for an unfair dismissal compensatory award will increase from £76,574 to £78,335. The cap on weekly pay (used to calculate the unfair dismissal basic award and statutory redundancy pay) will increase from £464 to £475. The maximum basic award therefore rises to £14,250.
In addition, since 29 July 2013, the cap on the compensatory award for unfair dismissal is 12 months’ salary as long as this figure is not in excess of £78,335. So where a year’s salary exceeds £78,335, then the amount of compensation awarded will be capped at £78,335.
This gives a maximum unfair dismissal award of £92,585 (comprising of the maximum basic award of £14,250 and the maximum compensatory award of £78,335).
The increases are set out in the Employment Rights (Increase of Limits) Order 2015 SI 2015/226.
Compensation for unfair dismissal also includes an element to compensate for loss of earnings for the time between the dismissal and the tribunal decision. So if the ex-employee has got a new job, then this element will be reduced to take account of that act. The compensation will also reflect other losses including loss of pension rights.
Statutory redundancy pay can also be calculated using the maximum rate of week’s pay along with various factors including age, length of employment and gross weekly pay. The maximum length of service that may be taken into account in calculating redundancy pay is 20 years.
The weekly rate of statutory sick pay will increase to £88.45 (from £87.55). The weekly flat rate of statutory maternity, paternity, adoption and (for those expecting a baby or to adopt on or after 5 April 2015) shared parental pay will increase to £139.58 (from £138.18) from 5 April 2015. These increases are set out in the Welfare Benefits Up-rating Order 2015 SI 2015/30.
Be aware that you can be made to pay more compensation if you fail to follow the Acas Code on Disciplinary and Grievance procedures. Furthermore your compensation can be reduced if you unreasonably failed to co-operate and raise concerns internally in the way suggested by the Acas Code.
The scale and complexity of employment legislation is overwhelming and a huge knowledge responsibility for many of the UK’s entrepreneurs who are not familiar with the requirement to introduce in-house management systems to support employees, define rules and resolve disputes.
If you have employment contracts in place and can show that you have followed the correct procedures fairly and competently, then you are more likely to successfully defend a tribunal case following a dismissal. Equally, although there is no actual requirement to keep records of warnings and disciplinary meetings, it is best practice to keep detailed records as they will prove invaluable when defending an unfair dismissal claim.
Review your staff handbooks and ensure that they are distributed to all employees. Proactively invite input from your staff before making changes to personnel policies and keep an eye on potential problems regarding morale/dissatisfaction within your staff. Encourage a healthy exchange of views within your organisation so that employees can openly voice grievances without fear of retaliation.
Final Words: The Rise In Unfair Dismissal Awards Rates
If you haven’t got your policies, procedures and management systems in order then now is a perfect time to do so. It is extremely useful for business owners to be aware of the changes in good time so you can update your policy documents and payroll systems ahead of the new rates being implemented.
If it’s all a little too daunting and frankly, boring, then you’re just as well to speak to a specialist who can help you cut through the noise and focus on what matters to you, your business and your employees.