Annual increases to statutory compensation limits

The Employment Rights (Increase of Limits) Order 2025 will increase the maximum amount of a “week’s pay” from £700 to £719 from 6 April 2025. A “week’s pay” is used to calculate statutory redundancy payments, payments to employees in the event of insolvency and various awards including the unfair dismissal basic and additional awards. Other key increases are:

• the maximum compensatory award for unfair dismissal will rise from £115,115 to £118,223 (there is an additional cap of one year’s salary on the unfair dismissal compensatory award)
• the limit on the daily amount of statutory guarantee pay will rise from £38 to £39
• the minimum basic award for certain unfair dismissals, such as dismissals for reasons of trade union membership or activities, health and safety duties or acting as an employee representative or workforce representative, will rise from £8,533 to £8,763.

The increases apply where the event giving rise to the entitlement to compensation or other payment occurs on or after 6 April 2025. In unfair dismissal claims, that date is the effective date of termination of employment. The limits previously in force will still apply where the effective date of termination was before 6 April 2025.