April Changes to Statutory Payment Rates, Compensation Limits and the ERA 2025 Reforms

From 1 April 2026, National Living and Minimum Wage rates are increasing from:

• £12.21 per hour to £12.71 per hour for workers aged 21 and over
• £10.00 per hour to £10.85 per hour for workers aged 18-20
• £7.55 per hour to £8.00 per hour for workers aged 16-17 and apprentices

Compensation Limits

The following changes will take effect from 6 April 2026 where the cause of action arises on or after this date:

• The limit on the compensatory award for unfair dismissal will increase from £118,223 to £123,543. Given the changes set to be introduced by the ERA 2025 in January 2027, this will likely be the last increase before the compensation cap for unfair dismissal claims is removed
• The limit on a week’s pay will increase from £719 to £751 – used for statutory redundancy payments, the basic award for unfair dismissal and breaches of the flexible working regulations. The maximum statutory redundancy payment and basic award will therefore increase to £22,530
• There will be an increase from £5,135 to £5,366 to the limit on the compensatory award for failure to allocate and pay tips fairly
• Guarantee pay will increase from £39 to £41 per day
• The minimum basic award where a dismissal is unfair as a result of certain working time, health and safety, employee representative, trade union, or occupational pension trustee reasons will increase from £8,763 to £9,157

We anticipate that the Vento Bands, which are used by tribunals to calculate compensation for injury to feelings in discrimination claims, will also increase at the same time, however, as of 25 March 2026 (time of writing), details are still awaited.

SSP

From 6 April 2026, SSP will increase from £118.75 to £123.25.

As highlighted below, the ERA 2025 is introducing further reforms to SSP, which are also due to take effect in April. Please see our article here for further information.

Statutory Family Leave

The rates for paid statutory family leaves (including maternity pay, paternity pay, adoption pay, shared parental pay, maternity allowance, parental bereavement pay and neonatal care pay) will increase from £187.18 to £194.32 per week. These are effective from 6 April 2026, with the exception of statutory maternity pay which will increase on 5 April 2026.

A brief summary of the reforms are below, along with a few significant developments (see our Reform Hub and previous article for more):

• Collective Redundancy Protective Awards – Where employers fail to comply with statutory information and consultation requirements for collective redundancies, the protective award that may be awarded by an Employment Tribunal will double from 90 to 180 days’ gross pay in respect of dismissals taking effect on or after 6 April.

• Day One Paternity Leave and Unpaid Parental Leave – The current 26-week service requirement for paternity leave and the one-year service requirement for unpaid parental leave will be removed (although note that the qualifying service requirement for paternity pay remains unchanged). The prohibition on taking paternity leave after shared parental leave will also be lifted

• Whistleblowing – The list of disclosures qualifying for protection under whistleblowing laws will be amended to expressly include sexual harassment

• Statutory Sick Pay – SSP will become a day one right, meaning that SSP will be available from the first day of absence. The Lower Earnings Limit on eligibility is also being removed and the rate of SSP will be capped at the lower of the weekly SSP rate set by the Government (reviewed annually) or 80% of the employee’s average weekly earnings

• Equality Action Plans and Menopause Guidance – Equality action plans showing the steps employers are taking in relation to prescribed matters related to gender equality will be introduced on a voluntary basis (expected to be mandatory for large employers with 250 or more employees in 2027)

• Simplification of Trade Union Recognition Process – Changes will be introduced which are aimed at making the statutory recognition process for trade unions simpler. This includes requiring only a simple majority of workers voting to vote for recognition (as opposed to the current 40% bargaining unit support requirement), preventing recognition of a non-independent union from blocking an independent union’s recognition application and removing the requirement for unions to show when submitting an application that a majority of workers in the bargaining unit are likely to support recognition. The Secretary of State will also have the power to lower the threshold for the Central Arbitration Committee to accept a trade union recognition application from 10% of the workers in a bargaining unit being members of the union to between 2% and 10%

• Annual Leave Records – In an unexpected development, recent commencement regulations confirm that the new requirement for employers to keep certain adequate records relating to annual leave and pay entitlements will also come into effect on 6 April 2026. This had not featured in the Government’s previously published implementation timelines. Employers will be required to keep “adequate” records to demonstrate compliance with certain obligations in respect of annual leave and pay, which must be retained for six years. Employers have discretion to create, maintain and keep the records in such manner and format as they reasonably see fit. If an employer fails to comply with this duty it will be an offence, punishable by a fine

• Bereaved Partner’s Paternity Leave – A new right to Bereaved Partner’s Paternity Leave will be introduced (not under the ERA 2025 – see our article here)

• Fair Work Agency (‘FWA’) Established – The FWA will be established on 7 April 2026 as a single enforcement body to consolidate enforcement across various labour market areas, including National Minimum Wage, SSP, employment agencies, gangmasters licensing, modern slavery, annual leave and certain fraud offences. One of the FWA’s new areas of enforcement will include the enforcement of holiday pay, along with the new obligation for employers to keep records of annual leave for six years (see above). The FWA will have various enforcement powers, such as the power to issue enforcement undertakings or notices of underpayment (including in respect of holiday pay) and to bring tribunal proceedings on behalf of employees. The enforcement powers are expected to be implemented in phases, with some taking effect on 7 April 2026 (including in respect of employment agencies, gangmasters, National Minimum Wage, fraud offences and modern slavery) and others, including SSP, annual leave and pay to follow. The powers to bring tribunal proceedings on a worker’s behalf, to provide legal assistance and to recover the costs of legal assistance and enforcement are also expected to take effect later but we wait for further developments

The Government is introducing tax reforms to umbrella company arrangements under the Finance Bill 2026, which are due to take effect from 6 April 2026. These changes will essentially introduce joint and several liability provisions within the labour supply chain.