April marks the annual increase in the limits (maximum and minimum) applying to certain awards of Employment Tribunals and other amounts payable under employment legislation. Employers should ensure that they are aware of these changes and make adjustments where appropriate.

Maximum Compensation Limits

From 6 April 2023, there will be increases to the maximum compensation limits:

  • The limit on a week’s pay will increase to £643 from £571 the previous year.
  • The maximum statutory redundancy payment will increase to £19,290 from £17,130 the previous year.
  • The maximum basic award for unfair dismissal, which is calculated based on the employee’s age and length of service, will increase to £19,290 from £17,130 the previous year.
  • The maximum compensatory award for unfair dismissal will increase to £105,707 from £93,878 the previous year.*

Statutory benefits

From April 2023, there will also be increases to statutory payments for time off work:

  • Maternity, paternity, shared parental, adoption and parental bereavement pay at the maximum prescribed rate will increase to a weekly payment of £172.48 from £156.66 in the previous year, effective from 2 April 2023.
  • Sick pay will increase to a weekly payment of £109.40 from £99.35 in the previous year, effective from 6 April 2023.
  • The lower earnings limit will remain at a weekly rate of £123.

National Minimum Wage and National Living Wage

The new hourly rates for National Minimum Wage and National Living Wage, effective from 1 April 2023, are as follows:

  • For Apprentices – £5.28, increased from £4.81.
  • For ages 16-17 – £5.28, increased from £4.81.
  • For ages 18-20 – £7.49, increased from £6.83.
  • For ages 21-22 – £10.18, increased from £9.18.
  • National Living Wage (ages 23+) – £10.42, increased from £9.50.

* The maximum compensatory award is the lower of the statutory limit or 52 weeks’ actual gross pay at the time of dismissal. The limit will not apply where the reason for dismissal or redundancy selection is carrying out health and safety activities or making a protected disclosure.

Thank you to Emily Bailey for her help in drafting this blog post.

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