Every year, the Government changes the Employment Tribunal compensation limits for successful unfair dismissal claims and the rate of a “Week’s Pay”.
A Week’s Pay is used to calculate the basic award for unfair dismissal and the value of statutory redundancy payments.
The Government has announced the new rates as stated in the Employment Rights Order 2025 (SI 2025/348) which has been effective as of 6 April 2025.
i. Increase to Employment Tribunal compensation limits, including for Unfair Dismissal cases and statutory redundancy payments
The new rates, which apply to unfair dismissal cases where the effective termination date falls after 6 April 2025, are as follows:-
- The maximum compensatory award for unfair dismissal cases (including Health & Safety dismissals) increased from £115,115 to £118,223;
- The limit on a “Week’s Pay” increased from £700.00 to £719. This increase means that the maximum basic award and statutory redundancy payment is now £21,570;
- The minimum basic award (for certain cases, e.g. health & Safety dismissals) increased from £8,533 to £8,673;
- The limit on the compensatory award for failure to have a written tips policy or failure to allocate tips fairly increased from £5,000 to £5,135.
As a reminder, a statutory redundancy payment is a statutory entitlement for employees who are eligible and made redundant by their employer. The following formula calculates the statutory redundancy payment: [length of service at the workplace] x [week’s pay] x [age]
The multipliers for calculating the week’s pay are also based on age:
- For an employee who completes a year’s service aged less than 41 years old, the multiplier is 1
- For each completed year of service where the employee is aged 41 years old or above, the multiplier is 1.5
It should be remembered that an employee who claims a statutory redundancy payment will not also be able to claim a basic award.
In addition to the annual increases to the Employment Tribunal compensation limits, The Social Security Benefits Up-rating Order 2025 SI 2025/295 has also increased the rate of payment for several statutory leave entitlements which has been in effect as of 6 April 2025.
- Statutory maternity pay (after the first six-weeks), statutory adoption pay (after the first six-weeks), statutory paternity pay, statutory shared parental pay and statutory parental bereavement pay increased from £184.03 to £187.18 per week or 90% of the employee’s average weekly earnings (the lower amount will be considered).
- Statutory sick pay increased from £116.75 to £118.75 per week
ii. Increases to Vento Bands for Injury to Feelings Awards
According to the Equality Act 2010, compensation for injury to feelings can be claimed in discrimination cases. A claimant can get compensation for injury to feelings even if they have not suffered financial loss.
Employment Tribunals use set guidelines when assessing compensation for injury to feelings, known as “Vento Bands”.
Since 2017, the Courts decided that the Vento Bands need to be evaluated each year to reflect inflation and the Retail Prices Index.
The President of the Employment Tribunal has recently updated the Presidential Guidance which provides the details of the current increases to Vento Bands. The new bands are effective for Employment Tribunal claims presented on or after 6 April 2025.
The new bands are as follows:
- The lower band for less serious cases is £1,200 – £12,100;
- The middle band for cases which do not merit an award in the upper band is £12,100 – £36,400;
- The upper band for the most serious cases is £36,400 – £60,700;
- The most exceptional cases will be capable of awards exceeding £60,700, depending on the circumstances of the case;
Further details on Vento Bands and the compensatory elements of each band can be explored further here.
We hope that you find this update useful.
Jones Chase is a specialist employment law firm based in London with an excellent track record of looking after our clients. Learn about our client reviews here.
If you have any questions about the Employment Tribunal limits or would like to understand how these increases might impact you or your business, please contact a member of the team.
Email: info@joneschase.com
Phone: 02038379914