From 6 April, the limit on the compensatory award for unfair dismissal will rise from £88,693 to £89,669, while the maximum amount of “a week’s pay” for the purpose of calculating redundancy payments will rise from £560 to £566.

The increased limits relate to a range of employment rights including statutory redundancy payments; the basic and compensatory awards for unfair dismissal; the limit on guarantee payments made when employees are not provided with work; and the minimum basic award for unfair dismissal in health and safety and certain other cases.

Economy Minister Diane Dodds said: “In the unfortunate event that workers find themselves in the position of receiving these types of payments or awards, I want to assure them that they will be calculated appropriately and that this is protected by law.”

Legislation adjusting limits relating to a range of employment rights is made annually to reflect changes in the rate of inflation as measured by the Retail Prices Index (RPI).