Economy Minister Dr Caoimhe Archibald has announced that compensation limits for unfair dismissal and statutory redundancy payments will rise next month, with the maximum compensatory award increasing to nearly £124,000.
The adjustments take effect on 6 April 2026, raising the cap on unfair dismissal compensatory awards by more than £5,000 while the weekly pay limit used to calculate redundancy entitlements climbs to £783. The changes are automatic annual adjustments tied to inflation rather than policy reforms, coming as the Executive prepares for more substantial employment rights legislation later this year.
New statutory limits from April
The Employment Rights (Increase of Limits) Order (Northern Ireland) 2026 raises several statutory limits by 4.5 per cent, reflecting the change in the Retail Prices Index (RPI) between September 2024 and September 2025. Details are also available via nibusinessinfo.
- Unfair dismissal compensatory award: Rising from £118,455 to £123,785 (or 52 weeks’ pay, whichever is lower)
- Maximum week’s pay: Increasing from £749 to £783, affecting both statutory redundancy calculations and the basic award for unfair dismissal
- Guarantee payments: Daily limits for when employees are not provided with work also increase proportionally
- Minimum basic award: The floor for unfair dismissal awards in health and safety and certain other cases rises accordingly
These increases apply where the event giving rise to entitlement occurs on or after 6 April 2026. Cases arising before that date remain subject to the previous limits.
Minister affirms worker protection
Dr Archibald said:
“A key focus for me is to safeguard the employment rights of workers and employees. This Order will make sure that they get fair compensation and that their rights are legally protected if they find themselves in the unfortunate circumstance of needing to receive these kinds of payments or awards.”
Technical adjustment amid wider reform
The Department for the Economy is legally required to make these adjustments annually under Article 33(2) of the Employment Relations (Northern Ireland) Order 1999. The legislation mandates that limits move in line with RPI inflation measured each September.
While the 4.5 per cent increase maintains the real-terms value of awards, it comes against a backdrop of more significant employment law reforms. The Minister is currently preparing the “Good Jobs” Employment Rights Bill, unveiled in April 2025, which proposes fundamental changes to zero-hours contracts, “fire and rehire” practices, and trade union rights. Unlike those controversial reforms, today’s announcement involves no structural changes to employment rights or employer obligations.
Notably, the press release did not specify the exact new figures for guarantee payment limits or the minimum basic award for certain unfair dismissals, nor did it estimate the aggregate cost to employers or the number of workers likely to benefit from the higher caps.
Policy implications
- Does indexing awards to RPI rather than CPI (which typically runs lower) strike the right balance between worker protection and business liability, particularly when the gap between the two measures widens?
- How will small and medium-sized enterprises factor these higher potential liabilities into their redundancy planning and insurance provisions, especially alongside other rising employment costs?
- With the six-month unfair dismissal qualifying period coming into force across the UK in January 2027, should Northern Ireland consider whether its procedural protections adequately prevent misuse of these higher compensation caps?
- Will the annual uprating mechanism adequately keep pace with the “Good Jobs” agenda’s broader aims, or does it risk masking stagnant real-wage growth through higher termination payments rather than improved job security?
- How will the Department ensure that workers made redundant in the weeks immediately before 6 April 2026—who may miss the higher limits by days—understand the transitional provisions?
Implementation from April
Employers and HR professionals should update payroll systems and redundancy calculation tools before the 6 April deadline. The new limits will apply to dismissals and redundancies occurring from that date onwards.
Meanwhile, scrutiny will turn to the Assembly’s consideration of the broader Good Jobs Bill, which the Minister has pledged to introduce within the current mandate. While this year’s inflation-linked increase is routine, the more substantial reforms remain subject to Executive agreement and legislative timetabling constraints.