In this article Will Ford reviews the changes to Employment Tribunal limits, National Minimum Wage and statutory rates of pay that come into effect in April.
From April 2023 there will be increases to Employment Tribunal compensatory limits and injury to feelings awards. There will also be an increase in the National Minimum Wage as well as statutory rates of pay.
Organisations should be aware of these changes and ensure that necessary action has been taken to avoid falling foul of, or being caught out by, the prescribed amounts.
Employment Tribunal Limits and Injury to Feelings Awards
The maximum compensatory award for a successful unfair dismissal claim will increase from £93,878 to £105,707. A successful Claimant, being awarded the maximum compensatory award, will therefore receive the lower of the value of 52 weeks’ gross pay and £105,707.
Additionally, the statutory limit on a week’s pay (for the purposes of calculating the basic award for unfair dismissal claims, as well as for statutory redundancy pay) will increase from £571 to £643. That takes the maximum basic award for unfair dismissal and the maximum statutory redundancy pay up to £19,290 (from £17,130).
The changes come into force on 6 April 2023, and will affect dismissals where the employee’s effective date of termination is on or after that date. Successful unfair dismissal claims, as well as redundancy packages, may now carry a greater cost to employers, though the changes are made in each year to reflect inflation rates.
Employment Tribunals can make awards for injury to feelings in discrimination and whistleblowing cases. The awards fall within three bands - low, middle and upper - (often known as the Vento bands after the case in which the three bands were first set out) depending upon how serious the Tribunal considers the injury to feelings to be.
For cases brought on or after 6 April 2023 the bands have increased, taking into account inflation, to:
- Lower: £1,100 to £11,200
- Middle: £11,200 to £33,700
- Upper: £33,700 to £56,200
In the most exceptional cases awards can be made in excess of £56,200.
National Minimum Wage
As we discussed in our Autumn Budget 2022 update, the National Minimum Wage will increase from 1 April 2023. As a reminder, minimum hourly wage rates will increase as follows:
- National Living Wage (NLW) (those aged 23 and over) will increase from £9.50 to £10.42 (9.7% increase).
- 21–22-year-olds will increase from £9.18 to £10.18 (10.9% increase).
- 18–20-year-olds will increase from £6.83 to £7.49 (9.7% increase).
- 16–17-year-olds will increase from £4.81 to £5.28 (9.8% increase).
- Apprentice rate (for those under 19, or those 19 years of age and older but in the first year of their apprenticeship) will increase from £4.81 to £5.28 (9.8.% increase).
According to the Government’s press release about the minimum wage increases, these increases ‘will support the wages and living standards of low-paid workers at a time when many are feeling increased pressure from a rising cost of living, and will ensure that ‘the NLW continues on track to reach the Government’s target of two-thirds of median earnings by 2024’.
Employers should ensure that payroll is ready in advance of 1 April to avoid any payments going out on or after that date which fail to comply with the above minimum wage requirements.
Statutory Sick Pay
Statutory Sick Pay will increase from £99.35 to £109.40 per week with effect from 6 April 2023. This represents a 10.1% increase from the previous year.
Family-related Pay
The Department for Work and Pensions have also confirmed that family related pay will see an increase from 2 April 2023.
Statutory Maternity, Paternity, Adoption, Shared Parental as well as Parental Bereavement Pay will increase from £156.66 to £172.48 per week. The employee will be entitled to the lesser of 90% of their average weekly earnings and the £172.48 figure.
That is with the exception of Statutory Maternity and Adoption Pay, where the 90% figure is guaranteed (where higher than the £172.48 figure) for the first 6 weeks.
The minimum average weekly earnings required to qualify for these family-related payments is to remain at £123.
To discuss how any of these changes affect you or your organisation, please contact a member of our Employment team.
This article contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.
