Employment claims - compensation limits to change

A number of the compensation limits which may be awarded by Employment Tribunals are reviewed annually.

The following limits have effect in any case where the appropriate date falls on or after 06 April 2025:

• limit on amount of compensatory award for unfair dismissal: rose from £115,115 to £118,223 (note subject generally to the further cap so that the limit is the lower of £118,223) or 52 weeks’ pay)

• minimum amount of basic award where reason for dismissal is one listed below: rose from £8,533 to £8,763:

  • carrying out duties as health and safety representative
  • carrying out duties as a representative (or candidate) in relation to working time matters
  • carrying out duties as a trustee of an occupational pensions scheme
  • performing functions or activities as an employee representative (or candidate)
  • trade union membership or activities, or
  • selection for redundancy on grounds related to trade union membership or activities

• a week's pay for the purposes of calculating the awards below rose from £700 to £719:

  • redundancy payments
  • basic awards for unfair dismissal
  • additional awards of compensation for unfair dismissal
  • payments payable on the insolvency of an employer (including arrears of pay and holiday pay)
  • awards of compensation for a failure to deal correctly with a right to request a contract variation made under the statutory procedure
  • where an employee is unfairly dismissed because the statutory retirement procedure has not been followed and an order is made for reinstatement or re-engagement.

The increase in the amount of a week’s pay means that the maximum basic award for unfair dismissal and the maximum statutory redundancy payment increased from £21,000 to £21,570.

Transitional provisions apply in relation to the increase. The increased rate does not have effect in relation to a case where the “appropriate date” falls before 06 April 2025 with the “appropriate date” being defined in relation to each of the specific awards.

In respect of claims presented on or after 6 April 2025, the “Vento bands” shall be as follows: a lower band of £1,200 to £12,100 (less serious cases); a middle band of £12,100 to £36,400 (cases that do not merit an award in the upper band); and an upper band of £36,400 to £60,700 (the most serious cases), with the most exceptional cases capable of exceeding £60,700.

Full details of all recent and anticipated employment law changes are available here.