Solicitor Aoife McGrath, in law firm Blandy & Blandy’s Employment Law team, summarises the changes set to take effect from 6 April 2026.
The annual increases to the statutory sums allowed for a weeks’ pay and the maximum compensatory award for unfair dismissal have been announced.
Unfair dismissal awards consist of a basic award and a compensatory award. The basic award is calculated in the same way as a statutory redundancy payment. The compensatory award is designed to compensate for financial loss resulting from the dismissal and could include, for example, a sum for loss of earnings for the period during which a claimant was unable to find another job.
Both unfair dismissal basic awards and statutory redundancy payments are calculated with reference to a claimant’s age, their length of service, and a week’s pay. A week’s pay is deemed to be the lower of the claimant’s actual weekly pay and a maximum figure set by government annually.
The compensatory award for ordinary unfair dismissal claims is capped at the lower of 52 weeks of the Claimant’s salary, or a maximum figure set by government annually.
The government has announced the annual increase in compensation limits for a week’s pay and the compensatory award as follows:
– Limit on a week’s pay: 719 to 751.
– Maximum compensatory award for ordinary unfair dismissal: 118,223 to 123,543.
The changes will apply to dismissals on or after 6 April 2026.
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