The maximum compensation that employment tribunals can award and various statutory payments is set to increase next month.
Thrings’ Employment Partner Kerrie Hunt takes a look at the changes coming into effect on 6 April, which employers and employees need to be aware of to ensure they understand their rights and obligations moving forward.
Increased Compensation Limits for Unfair Dismissal and Other Claims
One of the most notable changes is the increase in the compensatory award for unfair dismissal, which will rise from £115,115 to £118,223. This change reflects the government’s pledge to ensuring that employees receive adequate compensation for loss of earnings following an unfair dismissal.
In addition to the compensatory award, the cap on a week’s pay, which is crucial for calculating statutory redundancy pay and the basic award for unfair dismissal, will increase from £700 to £719. This increase is designed to ensure that employees facing redundancy or unfair dismissal are compensated fairly in relation to their weekly earnings.
Other changes to compensation limits include the limit on the compensatory award for claims of failure to fairly allocate and pay tips, which will rise from £5,000 to £5,135, and an increase in the daily rate for guarantee pay, which will rise from £38 to £39.
A rise is also included in the minimum basic award for unfair dismissal cases related to health and safety, working time, trade union, or employee representative matters, which will increase from £8,533 to £8,763.
These adjustments will apply where the ‘appropriate date’ for the cause of action — such as the effective date of termination in an unfair dismissal case — falls on or after 6 April 2025. It is important to note that claims with an ‘appropriate date’ before 6 April will be subject to the old limits, regardless of when the compensation is awarded.
Higher Statutory Payments for Leave Entitlements
From 6 April 2025, statutory maternity, adoption, paternity, shared parental, and bereavement pay will rise by £3.15 a week to £187.18. Employees will receive either this fixed rate or 90% of their average weekly earnings, whichever is lower. The same increase applies to maternity allowance from 7 April 2025 for employees who don’t qualify for statutory maternity pay. Additionally, statutory sick pay will increase by £2 to £118.75 per week.
Kerrie Hunt, Partner in Thrings’ Employment team, said: “With these adjustments set to come into place, employers must ensure they update their payroll systems to reflect these new limits and statutory payments. Employees, on the other hand, should be aware of the increased rates to ensure they receive the correct compensation and leave entitlements.
“As with any change in legislation, it’s essential for businesses to stay informed and seek legal advice where necessary to avoid any potential disputes or errors in the payment of statutory entitlements, and to start preparing accordingly for the changes to come into force next month.”
Thrings’ Employment lawyers are experienced in dealing with business matters that affect the workforce and has acted for both employers and employees from start-ups and SMEs all the way to multinational corporations across a wide range of employment matters. To find out how they can help strengthen your polices, and solve your disputes, please get in contact.
