New employment rates and limits – what you need to know

The annual increases to employment rates and awards are higher than in recent years.

The statutory minimum amounts employers must pay to their staff and maximum awards available at the Employment Tribunal are increasing from 6 April 2022.  This is not a surprise, given the annual nature of the increases.  What is surprising, though, is that the increases are higher than in the last few years.  In particular, the compensatory award for unfair dismissal has jumped from £89,493 to £93,878.

We have set out the key increases below.  Note that the increased rates are based on the September 2021 retail prices index (RPI), which itself had increased 4.9% on the previous year.

Unfair dismissal/redundancy pay from 6 April 2022

Under the The Employment Rights (Increase of Limits) Order 2022:

• The maximum limit on a week’s pay, including for the purposes of calculating statutory redundancy or for various awards, including the basic or additional award of compensation for unfair dismissal, will increase from £544 to £571.
• The maximum compensatory award for unfair dismissal increases from £89,493 to £93,878.

Other statutory rate increases from April 2022

Under the Social Security Benefits Up-rating Order 2022, employers must increase minimum weekly payments to eligible employees as follows:

• National minimum wage:  £9.50 per hour (up from £8.91).
• Statutory sick pay:  £99.35 per week (up from £96.35).
• Family leave-related pay: £155.66 per week, or 90% of the employee’s average earnings, whichever is lower (up from £151.97).
• Maximum statutory redundancy payment:  £17,130 (up from £16,320).

What you need to do 

• Implement:  Make sure the company is prepared to implement the changes (particularly in relation to national minimum wage) from the correct dates.
• Tribunal claims:  If you are facing a potential claim in the Tribunal with a termination date post-6 April 2022, keep in mind the above increases to awards as, no doubt, claimant solicitors will be sure to mention these increases in any pre-claim settlement discussions.
• Diarise:  Be prepared, and keep an eye out for the next round of changes in April 2023.

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