Government reforms (2): Increase in tribunal awards

What do we already know?

1. We updated you in our September 2017 Newsletter Government reforms (2): Increase in discrimination awards on the Guidance published by the Presidents of the Employment Tribunals on the amount of compensation which can be awarded in discrimination claims.

This Guidance confirmed there are three levels of bands for compensation for injury to feeling as a result of discrimination (known as ‘Vento’ bands, after the 2002 case by that name); and that these bands would be reviewed annually.

Awards for injury to feelings are made to employees for the hurt caused when they have been treated in a discriminatory way which is unlawful under the Equality Act 2010.

2. The compensatory award in the vast majority of unfair dismissal cases is subject to a statutory upper limit or “cap”. This cap is adjusted annually by the Government. The relevant date for determining the applicable limit is the effective date of termination (EDT), not the date the Tribunal makes its award.

What’s new?

1. The ‘Vento’ award bands (referred to above) for compensation for injury to feeling as a result of discrimination have been reviewed by the Presidents of the Employment Tribunals.

For claims presented on or after 6 April 2018, the revised Vento bands will be:

• £900 to £8,600 for the lower band, which applies to less serious discrimination cases;
• £8,600 to £25,700 for the middle band;
• £25,700 to £42,900 for the upper band, which applies to the most serious discrimination cases; and
• £42,900 and above for the most exceptional cases.

2. The limits on compensation awards have increased. The changes are as follows:

• The maximum limit for a statutory week’s pay (used to calculate statutory redundancy payments and the basic award for unfair dismissal) will increase from £489 to £508.
• The maximum compensatory award for unfair dismissal will increase from £80,541 to £83,682.
• The minimum basic award for certain automatically unfair dismissals will increase from £5,970 to £6,203 (i.e. those due to due to health and safety, employee representative, trade union, or occupational pension trustee reasons).

The increases are based on a 3.9% increase to the retail prices index (RPI) as at September 2017.

The new rates take effect where the ‘appropriate date’ for the course of action, such as the date of termination in an unfair dismissal claim, falls on or after 6 April 2018. In cases where the date of termination falls before 6 April 2018, the old limits will continue to apply.