Employment tribunal compensation limits and statutory leave payments: Annual increases confirmed

From 6 April 2025, there will be changes to employment tribunal compensation limits, as well as to the prescribed rate of pay for employees taking family-related leave and sick leave.

Employment tribunal compensation

From 6 April 2025, the amount of a week’s pay, used for calculating the unfair dismissal basic award and statutory redundancy payments (as well as some other employment tribunal compensation), will rise to £719 (up from £700). At the same time, the cap on the unfair dismissal compensatory award will rise to £118,223 (up from £115,115), although this is capped at 52 weeks’ gross pay, if lower. The increases are based on the September 2024 retail prices index which increased by 2.7% on the previous year.

It is important to remember that there is no cap on the compensatory award where the reason for dismissal is whistleblowing or carrying out health and safety activities (or selection for redundancy for either of those reasons).

The new limits apply where the effective date of termination is on or after 6 April 2025.

Family leave payments

From 6 April 2025, the prescribed rate of statutory maternity, adoption, paternity, shared parental and parental bereavement pay will rise to £187.18 (up from £184.03). The same rate will apply where an employee exercises the new right to take neonatal care leave. Employees earning less than the prescribed rate are entitled to 90% of their normal weekly earnings.

The lower earnings limit (the weekly earnings threshold for qualifying for these payments) will rise to £125 (up from £123).

The new rates represent an increase of 1.7% in line with the Consumer Prices Index to September 2024.

The Government is also increasing the amount of statutory maternity, adoption and paternity pay recoverable by small employers. Employers with a Class 1 NIC liability below £45,000 are currently able to recover 100% of those payments, plus an additional compensatory amount, which relates to National Insurance Contributions payable on those payments. From 6 April 2025, the additional amount recoverable will rise to 8.5% (up from 3%).

Statutory sick pay

From 6 April 2025, the statutory sick pay rate will increase to £118.75 per week (up from £116.75). This rise is again in line with the 1.7% increase in the Consumer Prices Index to September 2024.

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