Employment law update: statutory limits and wage increases from April 2025

The Government has published The Employment Rights (Increase of Limits) Order 2025, confirming key updates to statutory compensation limits and employment-related payments. These changes, many of which come into effect from 6 April 2025, will impact employers and employees across the UK. Here's what you need to know:

Statutory Cap on a Week’s Pay

From 6 April 2025, the statutory cap on a week’s pay—used to calculate redundancy pay and the basic award in unfair dismissal cases—will rise from £700.00 to £719.00.

• This change increases the maximum basic award for unfair dismissal claims to £21,570.00 (calculated as 20 × £719 × 1.5).
• The maximum compensatory award for unfair dismissal will also increase, moving from £115,115.00 to £118,223.00.

Statutory Redundancy Pay

From 6 April 2025, the maximum amount of statutory redundancy pay an employee can receive also increases due to the updated weekly cap:

• Redundancy pay is calculated based on age and length of service:

1. Half a week’s pay for each full year of service under age 22.
2. One week’s pay for each full year of service between ages 22 and 40.
3. One and a half weeks’ pay for each full year of service aged 41 and over.

• The maximum number of years that can be taken into account remains 20.

This means the maximum statutory redundancy payment will also be £21,570.00.

April 2025: Other Key Rate Changes

National Minimum Wage and National Living Wage

Effective from 1 April 2025, the following new hourly rates apply:

• Age 21 and over (National Living Wage): £12.21 (up from £11.44)
• Ages 18–20: £10.00 (up from £8.60)
• Ages 16–17: £7.55 (up from £6.40)
• Apprentices: £7.55 (up from £6.40)
• Accommodation Offset: £10.66 per day (up from £9.99

Statutory Sick Pay (SSP)

From 6 April 2025:

• SSP increases from £116.75 to £118.75 per week
• The minimum earnings threshold to qualify rises to £125.00 per week (up from £123.00)

Family Friendly Payments

Also taking effect 6 April 2025, the weekly maximum rate for the following statutory payments increases from £184.03 to £187.18, or 90% of average weekly earnings if lower:

• Statutory Maternity Pay (after the first 6 weeks)
• Statutory Paternity Pay
• Statutory Shared Parental Pay
• Statutory Adoption Pay (after the first 6 weeks)
• Statutory Parental Bereavement Pay

The earnings threshold for these payments also rises to £125.00 per week.

Maternity Allowance will similarly rise to a maximum of £187.18 per week, provided eligibility criteria are met.

Pending: 2025 Vento Band Updates

At the time of writing, the updated Vento bands (used in discrimination claims for injury to feelings awards) have not yet been announced. These are expected by the end of March 2025 and will also take effect from 6 April 2025.

A Note on Inflation

The £19.00 increase to the weekly pay cap in 2025 is notably smaller than in previous years (compared to £72 in 2023 and £57 in 2024), reflecting the recent decline in inflation. Employers should still review and update internal policies and redundancy packages in line with the new limits.

How Tees Law Can Help

These updates impact both employers and employees, particularly in cases involving redundancy, dismissal, or family-related leave. Our employment law specialists at Tees Law are here to guide you through these changes and ensure your workplace policies, contracts, and practices are compliant and up to date.

Whether you're navigating a redundancy process, reviewing contracts, or managing a tribunal claim, our expert team is here to support you every step of the way.

Get in touch with our Employment Law team for tailored legal advice.