Annual changes to compensation limits, statutory payments and National Minimum Wage

1 April 2026

1) National Minimum Wage

From 1 April 2026, national minimum wage increases will take effect as follows:-

The Real Living Wage, which is not a legal requirement, is increasing from £13.85 to £14.80 in London and £12.60 to £13.45 for the rest of the UK.

5 April – 6 April

1) Statutory Rates affecting Family Friendly rights

From 5 April 2026, Statutory Maternity Pay (after the first 6 weeks) will increase from £187.18 per week to £194.32 per week.

The same increase applies from the 6 April 2026 to Statutory Adoption Pay, Paternity Pay, Shared Parental Pay, Neonatal Car Pay, Parental Bereavement Pay and Maternity Allowance.

2) A week’s pay

From 6 April 2026, the statutory cap on a week’s pay will increase from £719 to £751 affecting both the calculation for the unfair dismissal award and statutory redundancy pay. The maximum basic award / statutory redundancy pay will be £22,530 (30 x £751)

3) Maximum Compensatory Award for Unfair Dismissal

For dismissals occurring on or after 6 April 2026, the cap on the compensatory award for unfair dismissal will increase from £118,223 to £123,543, or 52 weeks’ gross pay (whichever is the lower). This revised cap will apply until 1 January 2027, when the cap is due to be abolished altogether, aligning compensation for unfair dismissal with the uncapped compensatory awards available in discrimination and whistleblowing claims

4) Minimum Basic Award for Automatic Unfair Dismissal

For dismissals occurring on or after  6 April 2026, the minimum basic award for certain automatic unfair dismissals, including dismissals for trade union activities, acting as a health and safety representative, employee representative or pension scheme trustee, will increase from £8,763 to £9,157.

5) Limit on Compensatory Award – Tipping

From 6 April 2026, the maximum compensatory award for failure to allocate and pay tips fairly will increase from £5,135 to £5,366.

6) Statutory Guarantee Pay

From 6 April 2026, for lay-off and short time working, the maximum guarantee pay will increase from £39 per day to £41 per day.

7) Statutory Sick Pay

From 6 April 2026, “waiting days” will no longer be applicable and Statutory Sick Pay will be payable from the first day of sickness. The rate of Statutory Sick Pay will increase from £118.75 per week to £123.25 per week.

8) Award for Failure to Collectively Consult for Redundancy

Employers who propose to dismiss 20 or more employees at the same establishment within a 90-day period have an obligation to collectively consult with employees over a minimum period of 30-45 days (depending on the number of redundancies). Currently, if an employer fails to collectively consult, affected employees may be entitled to a protected award of up to 90 days’ gross pay. From 6 April 2026 this will increase to a maximum of 180 days’ gross pay.

These annual uplifts will increase employment-related costs and the potential value of claims arising from April 2026 onwards. Employers should ensure that payroll systems, HR policies and template documents are updated to reflect the new rates, and that decision‑makers are aware of the increased financial exposure when managing dismissals, redundancies and sickness absence. With further significant reform on the horizon—most notably the abolition of the unfair dismissal compensation cap from 1 January 2027 and the qualifying period for unfair dismissal claims being reduced to 6 months service—now is an opportune time for employers to review their workforce strategies, risk management approach and employee relations processes.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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