Compensation Limits and Statutory Payments: What changes from April 2026?

New compensation limits

From 6 April 2026, the new payment rates will apply. The revised limits are as follows:

• Unfair dismissal claims: the compensatory award limit will rise from £118,223 to £123,543.
• A week’s pay (i.e. redundancy pay or basic award for unfair dismissal): the statutory cap will increase from £719 to £751.
• Failure to fairly allocate tips: the limit will increase from £5,135 to £5,366.
• Certain automatic unfair dismissal claims: the minimum basic award will increase from £8,763 to £9,157.

New statutory leave entitlements

There will also be changes to the rates payable for various statutory leave entitlements, including:

• Statutory maternity pay (5 April 2026): this will be payable (after the first six weeks) at the lower rate of (i) £194.32 per week, rising from £187.18; or (ii) 90% of the employee’s average weekly earnings.
• Other statutory parental leave pay (6 April 2026): the same rates as above will also apply to statutory adoption pay, statutory paternity pay, statutory shared parental pay, statutory neonatal care pay, statutory parental bereavement pay and maternity allowance.
• Statutory sick pay (6 April 2026): this will increase from £118.75 to £123.25 per week and will be payable from the first day of sickness absence, following the removal of the current three-day waiting period on 6 April 2026.

Comment

It is important for employers to be aware of these annual changes. The increase to the unfair dismissal compensation cap may affect the value of claims arising on or after 6 April 2026. Looking ahead, it should be noted that the cap on unfair dismissal compensation will be removed in its entirety from 1 January 2027, allowing employment tribunals to award uncapped compensation where an employee makes a successful claim.

If you'd like to discuss the above in more detail, please reach out to our employment team.