Sejal Raja provides details of the new statutory rates and compensation limits set to take effect from April 2025.
The compensation limits applying to certain employment claims will increase with effect from 6 April 2025. The rates of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay will also rise from April 2025. This will now include Neonatal Leave Pay.
Compensation limits
The changes come into effect from 6 April 2025 and the new limits apply when the appropriate act — for example, termination of employment — occurs on or after 6 April 2025.
The new limits are:
- A “week’s pay” for the purposes of calculating both the basic award in unfair dismissal cases and statutory redundancy payments will be capped at £719 — the current limit is £700.
- Consequently, statutory redundancy pay will increase, with the maximum payment increasing to £21,570 (i.e. 20 x £719 x 1.5).
Compensation for unfair dismissal
Compensation for unfair dismissal claims is split into a “basic” award and a “compensatory” award. The basic award is calculated in the same way as statutory redundancy pay and will, therefore, increase as described above.
The maximum compensatory award for unfair dismissal will now be £118,223 the current limit is £115,115. The separate cap of one year’s gross pay on “ordinary” unfair dismissal compensatory awards still applies so the maximum award will therefore now be the lowest of one year’s pay and £118,223.
Statutory pay rates
From 6 April 2024, the statutory sick pay rate will increase from £116.75 per week to £118.75.
From 7 April 2024, the rate of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Parental Bereavement Pay and Neonatal Leave Pay will increase from £184.03 per week to £187.18.
National Minimum Wage
From 1 April 2025, the national living wage for workers aged 21 and over will increase from £11.44 per hour to £12.21 per hour.
The standard minimum wage rate for younger workers (aged 18 to 20) will rise from £8.60 to £10.00 per hour.
The minimum wage for apprentices and under 18s will increase from £6.40 to £7,55 per hour.
For further guidance on what the new statutory limits mean for your business, contact our employment lawyers.
A version of this article was first published on 6 Mar 2024
