Section 34 of the Employment Relations Act 1999 provides that the limits on various awards and payments under employment legislation will be index-linked, i.e. will be varied by Order if the Retail Prices Index (RPI) for September of a year is higher or lower than the index of the previous September. The variation between September 2009 and September 2010 was +4.6% (source: ONS, all items RPI).
Section 36(1) and 36(2) of the Act abolished the previous requirement to conduct annual reviews. A Regulatory Impact Assessment is not required in this instance because the Act provides for indexation according to a pre-determined formula (i.e. linked to the RPI).
The new increases will apply where the event giving rise to the entitlement to compensation occurs on or after 1 February 2011. Limits previously in force (under the Employment Rights (Increase of Limits) Order 2008 - S.I. 2008/3055, The Employment Rights (Revision of Limits ) Order 2009 - SI 2009/ No.3274) and The Work and Families (Increase of Maximum Amount) Order 2009 - S.I. 1903) are preserved by article 4 of the Order in relation to cases where the event was before that date.
The Secretary of State is under a duty both to make the uprating Order and to bring the new limits into force as soon as practicable. The changes being made involve no changes to the structure of the awards and other payments, or to employers’
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