Compensation limits
Annually, the compensation limits for certain employment claims are increased. From 6 April 2023 inclusive the following limits will apply:
- A week's pay (for basic award and redundancy payments) will be £643, increasing from £571.
- The maximum compensatory award for unfair dismissal will be £105,707, increasing from £93,878.
Summary of other rate changes
National Minimum Wage
From 1 April 2023 inclusive the following hourly national minimum wage rates will apply:
- Age 23 or over: £10.42, increasing from £9.50
- Age 21 to 22: £10.18, increasing from £9.18
- Age 18 to 20: £7.49, increasing from £6.83
- Age 16 to 17: £5.28, increasing from £4.81
- Apprentice: £5.28, increasing from £4.81
Sick Pay
From 6 April 2023 inclusive the weekly rate of statutory sick pay will be £109.40, increasing from £99.35.
Pay for various types of family leave
From 2 April 2023, the weekly rate of statutory maternity, paternity, shared parental, adoption and parental bereavement pay will be £172.48 (increasing from £156.66)or 90% of the employee’s average weekly earnings, whichever is lower.
Next steps
- Ensure systems are updated with the relevant new pay rates as applicable.
- Ensure that the new national minimum wage rates are being paid from 1 April 2023.
- When calculating redundancy payments, basic awards for unfair dismissal and possible maximum liabilities for unfair dismissal claims, take into account the new compensation limits. Where relevant, consider if any planned redundancies can be made before the end of this tax year to take advantage of the lower compensation limits.
