Legal update
Changes to compensation limits and statutory payment rates from April 2026
Following on from our recent update on the new statutory rates of sick pay and family leave pay, as well as the National Living Wage and the National Minimum Wage, this article summarises the new compensation limits and minimum awards that will apply to certain Employment Tribunal awards.
These changes will take effect on 6 April 2026:
Limit on compensatory award for unfair dismissal
Note that the compensatory award will be removed by the Employment Rights Act 2025 (ERA). This change is expected to come into effect on 1 January 2027. Read more in our previous update on the ERA here.
Limit on a week's pay
This figure is used to calculate statutory redundancy payments and the basic award for unfair dismissal.
Guarantee pay
Employees are eligible for guarantee pay during layoff or short-time working. In order to be eligible, employees must: have been employed continuously for one month (including part-time workers); reasonably have been available for work; not refuse any reasonable alternative work; and not have been laid off because of industrial action,
Minimum basic award for unfair dismissal for certain reasons
This will include where a dismissal is unfair because it is related to: health and safety; working time; employee representative; trade union; or occupational pension trustee reasons.
