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The annual changes to compensation limits have been announced and are set out here.
The amount of a week’s pay for calculating the basic award for unfair dismissal and statutory redundancy pay increases from £719 to £751.
The cap on the compensatory award for unfair dismissal rises from £118,223 to £123,543.
The newest limit on the compensatory award is likely to be the last since section 25(3) of the Employment Rights Act 2025 will remove the cap. This change is anticipated to come into effect from 1 January 2027 along with the reduction in the qualifying period for unfair dismissal which reduces from 2 years to 6 months.
Note that there is no qualifying period for unfair dismissal if the dismissal is due to discrimination, whistleblowing and a number of other defined circumstances.
These changes to limits take effect where the ‘appropriate date’ for the cause of action (the effective date of termination in a dismissal claim, for example) falls on or after 6 April 2026.
Statutory maternity pay increases with effect from 5 April 2026 (after the first 6 weeks) from £187.18 to £194.32 per week or 90% of the employee’s average weekly earnings, whichever is lower.
From 6 April 2026 the same increase as per maternity pay applies to statutory paternity pay, statutory shared parental leave, statutory neonatal care pay, statutory parental bereavement pay and maternity allowance.
Statutory sick pay (SSP) increases from £118.75 to £123.25 per week from 6 April 2026. Section 10 of the Employment Rights Act 2025 will abolish the 3 day waiting period making sick pay payable from the first day of absence from 6 April.
Sources:
Employment Rights Act (Increase of Limits) Order 2026 SI 2026/310.
Social Security Benefits Up-rating Order 2026 SI 2026/148.
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.
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