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Enterprise and Regulatory Reform Act 2013

Section 15: Power by order to increase or decrease limit of compensatory award

89.This section confers a power on the Secretary of State to amend section 124 of the ERA 1996 to increase or decrease the limit of the compensatory award for unfair dismissal. Any new limit must be a set amount (subsection (2)(a)), or the lower of a set amount and a certain number of weeks’ pay (subsection (2)(b)). Different amounts can be specified under subsection (2)(a) or (b)(i) for different kinds of employer; for example there could be a lower amount for small businesses. The power is subject to certain constraints and the affirmative resolution of Parliament.

90.The effect of subsections (2), (4) and (5) is that the limit cannot be decreased  to less than the lower of median annual earnings (defined in subsection (9)) and the individual’s annual earnings; and it cannot be increased to more than three times median annual earnings.  The figure for median annual earnings will be taken from the Office of National Statistics’ Annual Survey of Hours and Earnings publication; the Office of National Statistics is the executive office of the Statistics Board.

91.Subsection (10) amends section 34 of the Employment Relations Act 1999 (“ERe1A 1999”) (the automatic indexation provision) to prevent section 124(1) of the ERA 1996 having to be amended twice in the same year.

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