UK Employment Rates and Compensation Increases Take Effect - McDermott Will & Emery

UK Employment Rates and Compensation Increases Take Effect


With the clocks having gone forward and summer on the horizon, April also brings with it an increase in the National Minimum Wage, unfair dismissal compensation and certain other amounts payable under UK employment legislation.

Read on for information on the key changes and some of the important consequences for employers.

In Depth

Key Points for Employers

The changes relating to statutory redundancy payments and unfair dismissal basic and compensatory award payments, as set out in the table below, take effect on 6 April 2023, and will apply to dismissals where the effective date of termination (EDT) occurs on or after that date.

It is important for employers to note:

  • If an employee was given notice prior to 6 April 2023, but the notice period expires on or after 6 April 2023, the new limits will apply.
  • If an employee’s employment is terminated by means of a payment in lieu of notice, the EDT is the actual date the dismissal takes effect, plus the amount of statutory notice applicable to the employee, e.g., one week per year of employment, up to a maximum of 12 weeks. If the statutory notice would take the EDT to or beyond 6 April 2023, the new limits will apply.

 Changes from 1 April 2023

National Minimum Wage Old rate (per hour) New rate (per hour)
23 and over £9.50 £10.42
21-22  £9.18 £10.18
18-20 £6.83 £7.49
16-17 £4.81 £5.28
Apprentices £4.81 £5.28

Changes from 2 April 2023

Old maximum rate  New maximum rate 
Statutory maternity, adoption, paternity and shared parental pay £156.66 per week £172.48 per week

Changes from 6 April 2023

Old maximum rate New maximum rate
One week’s pay for calculating statutory redundancy payment and unfair
dismissal basic award
£571 £643
Maximum basic award for unfair dismissal and statutory redundancy pay  £17,130 £19,290
Maximum unfair dismissal compensatory award £93,878 £105,707
Maximum total award for unfair dismissal i.e. maximum unfair dismissal
compensatory award plus maximum unfair dismissal basic award
£111,008 £124,997
Minimum basic award for certain unfair dismissals, including dismissals relating
to trade union membership or activities and carrying out functions or activities as
an employee representative
£6,959 £7,836
Statutory sick pay £99.35 per week £109.40 per week

Injury to feeling awards in discrimination cases

The “Vento Bands” are the levels of compensation that a successful claimant can be awarded for injury to feelings and psychiatric injury in discrimination, harassment and victimization cases in employment tribunals.

Although there is theoretically no limit on the compensation that may be awarded in discrimination and harassment cases, employment tribunals must follow official guidelines when making awards for injury to feelings. These guidelines set out three bands of compensation, depending on the seriousness of the discrimination and its effect on the victim.

The new bands, in respect of claims presented on or after 6 April 2023, are as follows:

Band Previous award range New award range
Lowest band (less serious cases) £990 – £9,900 £1,100 – £11,200
Middle band (cases that do not merit
an award in the upper band)
 £9,900 – £29,600 £11,200 – £33,700
Highest band (the most serious cases) £29,600 – £49,300 £33,700 – £56,200