New rates and limits for unfair dismissal compensation, redundancy payments and statutory pay for family leave have been announced from 6 April 2025.
This year's changes include:
Redundancy and unfair dismissal
- The limit on 'a week's pay' (used to calculate, for example, statutory redundancy payments and the unfair dismissal 'basic award') increases from £700 to £719.
- The maximum 'compensatory award' for unfair dismissal increases from £115,115 to £118,223.
- The minimum 'basic award' for certain unfair dismissals (including health and safety dismissals) increases from £8,533 to £8,763.
These increases affect cases where the effective date of termination is on or after 6 April 2025. They reflect the increase in the retail prices index (RPI) of 2.7% from September 2023 to September 2024 (which is significantly lower than the previous year's increase of 8.9%).
Statutory pay during absence
- The flat rate of statutory pay used for employees on statutory maternity leave, paternity leave, adoption leave, shared parental leave, or parental bereavement leave increases from £184.03 to £187.18 with effect from 6 April 2025. The same flat rate will also be used for statutory pay during neonatal care leave. The flat rate is one of two rates that might apply during statutory family leave (the other being the earnings-related rate of 90% of normal weekly earnings).
- Statutory sick pay ('SSP') increases from £116.75 to £118.75 with effect from 6 April 2025. However, the rate of SSP is likely to change further in the future for some employees. The Government is proposing to remove the lower earnings limit, thereby allowing lower earners to claim SSP, and to change the rate of SSP to be this flat rate or (if lower) 80% of normal weekly earnings. The Government also proposes to do away with the current 3-day waiting period for SSP, meaning that in future SSP will be payable from day one of the absence, not day four, a cost that will be borne by employers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
