From 6 April 2026, several key updates to employment compensation limits and statutory payments will take effect. While these annual adjustments may seem routine, the precise timing and application of the new rates are often overlooked and errors can carry significant consequences for employers.What are the key changes from 6 April 2026?
- Weekly pay cap: The cap on a week’s pay, used to calculate statutory redundancy payments and the basic award for unfair dismissal will increase to £751 which will affects the cost of redundancy programmes and the minimum compensation employers may face in Tribunal proceedings.
- Guarantee pay: The minimum amount employees are entitled to receive on days when their employer cannot provide work will increase from £39 to £41.
- Minimum basic award: The minimum basic award in certain dismissal cases, including those involving trade union activities and health and safety dismissals, will also increase to £9,157.
Why the “appropriate date” matters
One detail that is easy to miss but very important, is that the new rates will not automatically apply from 6 April 2026 in every situation. Instead, they only apply for cases where the relevant date for the claim falls on or after 6 April.
In unfair dismissal claims, for example, the relevant date is typically the effective date of termination. This means that where an employee’s employment ends on or after 6 April 2026, the updated rates will apply, even if the dismissal process began before that date. Conversely, where the effective date of termination falls before 6 April 2026, the old rates will continue to apply.
This distinction matters in practice. Employers managing ongoing redundancy exercises, disciplinary processes or dismissals that straddle the April date need to be clear on which set of rates governs each case. Applying the wrong figures, whether in a settlement calculation, a redundancy payment or a Tribunal response, could result in underpayment to employees or errors in legal submissions.
Other Rate Changes: From April, parental leave entitlements will also increase. Statutory maternity pay will rise from 5 April followed by increases to statutory adoption pay, paternity pay, shared parental pay and neonatal care pay from 6 April.
What employers should do now
Employers should act now to:
- Review and update their approach to employment risk in light of the increased compensation limits where the termination date will fall on or after 6 April 2026. Higher caps mean greater financial exposure in claims, particularly for unfair dismissal, making it essential to reassess current practices.
- Update payroll and HR systems to reflect the new statutory maternity pay rate and guarantee pay limit.
- Review redundancy calculations and dismissal procedures to ensure they reflect the updated statutory limits.
- Update settlement strategies and template agreements to account for the higher potential awards.
Now is also a good time to brief HR teams and managers on these changes, ensuring they understand the increased risks and handle employee matters consistently and fairly. Taking proactive steps now will help minimise risk and avoid costly disputes later.
Get In Touch
Sylviane Kokouendo is an Associate Partner in our Employment & HR team. She has extensive experience advising clients on all aspects of employment law, from day-to-day HR matters to complex, high-stakes corporate transactions. Sylviane supports both employers and employees with contracts, policies, disciplinary and grievance matters, redundancy processes, restrictive covenants, settlement agreements, and Tribunal proceedings.
Our employment law team regularly advises employers on statutory rate changes and their practical implications, from redundancy cost planning to Tribunal proceedings. If you would like support ensuring your calculations and processes reflect the April 2026 updates, please contact our employment team on 03300 299 419 or via our online enquiry form.
