New compensation calculation limits announced by government

The government has announced the new limits that will apply for calculating compensation awards granted by employment tribunals.

The annual increases in maximum limits of compensation have been laid before Parliament under the Employment Rights (Increase of Limits) Order 2007.

The increased rates will apply to dismissals taking place on or after 1 February 2008. This means that if an employee is dismissed before 1 February, then the old rates will apply - even if the tribunal hearing takes place after that date.

The headline increases are:

• Maximum compensation for unfair dismissal is to be increased from £60,600 to £63,000
• Maximum amount of "a week's pay" (for calculating statutory redundancy pay, or the basic award for unfair dismissal) is to be increased from £310 to £330.