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.
It is worth noting that the government plans to abolish the limit on the compensatory award for ordinary unfair dismissals. Subject to further legislation being passed, this is likely to impact dismissals from 1 January 2027. The statutory limit on a week’s pay for the purposes of calculating an unfair dismissal basic award and a statutory redundancy payment will remain.
Blandy & Blandy is a leading Thames Valley law firm with offices in Wokingham, Henley-on-Thames and Reading.
For further information or legal advice, please visit www.blandy.co.uk or call 0118 951 6800.
