March 22, 2016

April increases for minimum wage, redundancy pay and unfair dismissal compensation

April is the time of year that normally sees plenty of alterations and updates to a lot of legal legislation in our country. This can be alterations to the rate of corporation tax or it can be alterations to the employment legislation and April 2016 is going to be no different.


From an Employment Law perspective, it’s been surprising which areas have changes and which haven’t. For example, Statutory Redundancy Pay will rise however certain payments across other employment rights remain unchanged.


For the upcoming tax year (w/c 6th April) statutory pay rates for maternity, maternity, shared parental and adoption will all remain at £139.58 per week. This rate will apply to the majority of employees during their 33 weeks of statutory maternity or adoption pay which follows the enhanced 6 week period of leave when 90% of salary is to be paid. Statutory Sick Pay will also stay at £88.45 per week which is payable for up to 28 weeks.


The legislation and rates which are to be updated apply to employment terminations that take place after the 6th April. If the dismissal is before the 6th April then the old rates will be applicable. The changes are as follows:


  • Increase to the maximum amount of pay for calculating Statutory Redundancy Pay and Unfair Dismissal. Increase of £4 from £475 to £479
  • Increase in the maximum Statutory Redundancy Payment and basic award for unfair dismissal. Increase of £120 from £14,250 to £14,370.
  • Increase in the maximum compensatory award made after unfair dismissal tribunal claim. Increase of £627 from £78,335 to £78,962
  • Increase in maximum potential award when combining basic and compensatory awards. Increase of £747 from £92,585 to £93,332.


For unfair dismissal, the award is capped at a year’s gross salary however, for cases of unfair dismissal on the grounds of discrimination of protected characteristics, there is no cap.


In advance of the budget the government also announced increases to the national minimum wage. That will mean from this October, the minimum wage for 21-24 year olds will rise by 25p per hour from £6.70 to £6.95 per hour. 18-20 year olds will also rise by 25p per hour to £5.55, 16-17 year olds will increase to £4 per hour (from £3.87) and rates for apprentices will go up from £3.30 per hour to £3.40.


Employees aged 25 and over will be entitled to the governments new National Living Wage which, from April, starts at £7.20 per hour.

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