Under the Employment Rights (Increase of Limits) Order 2025 (the “Employment Order”), there will be changes to the compensation limits that apply to certain awards that Employment Tribunals can make and other amounts payable under employment legislation with effect from 6 April 2025. The Employment Order applies to England, Wales and Scotland.

The new limits will apply where the ‘appropriate date’ for the cause of action occurs on or after 6 April 2025. For example, in the case of unfair dismissal, the rates apply to all dismissals where the effective date of termination falls on or after this date. If the appropriate date (e.g., the date of dismissal) falls before 6 April 2025, the previous limits mentioned below will apply irrespective of the date on which the compensation is awarded. 

Here is a brief overview of the changes which will take effect from 6 April 2025 under the Employment Order:

• the maximum compensatory award for unfair dismissal is increasing from £115,115 to £118,223 (the upper limit remains the lower of a year’s salary or the maximum statutory limit of £118,223);
• the maximum amount of a ‘week’s pay’ (for the purpose of calculating statutory redundancy payments and the basic award for unfair dismissal) is increasing from £700 to £719;
• the limit on the compensatory award for failure to allocate and pay tips fairly is increasing from £5,000 to £5,135;
• guarantee daily pay is increasing from £38 to £39; and
• the minimum basic award in cases where a dismissal is unfair because of reasons to do with health and safety, working time, employee representative, trade union, or occupational pension trustees is increasing from £8,533 to £8,763.

Additionally, the Social Security Benefits Up-rating Order 2025 (the “Social Security Order”) will increase the rate of payment for a range of statutory leave entitlements, also with effect from 6 April 2025. Most of the statutory benefits will increase by 1.7% from the previous year’s rates, in line with inflation. These changes are part of the UK Government’s reforms seeking to greater support those in financial need.

Here is a brief overview of the changes which will take effect from 6 April 2025 under the Social Security Order:

• Statutory sick pay is increasing from £116.75 to £118.75 per week.
• The below payments are all increasing from £184.03 to £187.18 per week or 90% of the employee’s average weekly earnings, whichever is lower:
  • statutory maternity pay (after the first six weeks);
  • statutory adoption pay (after the first six weeks up to thirty nine weeks);
  • statutory paternity pay (up to two weeks from the date agreed with the employee);
  • statutory shared parental pay (up to thirty seven weeks); 
  • statutory parental bereavement pay (up to two weeks per bereavement); and
  • maternity allowance (although the payment increase for maternity allowance will only apply from 7 April 2025).
    • The earnings threshold to be eligible for all the above payments is also increasing slightly from £123 to £125 weekly.

Maya Sterrie, trainee in the Employment Litigation practice, contributed to this article.