Employment Tribunal Increases to Compensation Limits and Statutory Payments

 

April 2026 brings the usual annual review to key employment law compensation thresholds and statutory payment rates. Two statutory instruments are particularly significant for employers this year: 

 

• The Employment Rights (Increase of Limits) Order 2026 (SI 2026/310), which increases compensation limits and minimum awards under employment legislation; and 

• The Social Security Benefits Up-rating Order 2026 (SI 2026/148), which raises the rates payable for a range of statutory family-related payments and statutory sick pay. 

 

These changes will take effect in early April and will affect both tribunal exposure and payroll administration. 

 

 

The Employment Rights (Increase of Limits) Order 2026, made on 16 March 2026, increases a number of key statutory limits with effect from 6 April 2026. 

 

The principal changes are as follows: 

 

• Increased from £118,223 to £123,543 

• Increased from £719 to £751 

This figure is used in calculating, among other things: 

o the basic award for unfair dismissal; and 

o statutory redundancy pay 

• Increased from £5,135 to £5,366 

• Increased from £39 to £41 per day 

• Increased from £8,763 to £9,157 

 

This applies where the dismissal is unfair by reason of certain: 

o health and safety grounds, 

o working time grounds, 

o employee representative functions, 

o trade union reasons, or 

o occupational pension trustee reasons 

 

 

The revised limits apply only where the relevant “appropriate date” falls on or after 6 April 2026. This means that the applicable rate will depend on the date associated with the cause of action, rather than the date on which compensation is assessed or awarded. 

 

For example: 

• in an unfair dismissal claim, the relevant date will generally be the effective date of termination; and 

• where that date falls before 6 April 2026, the previous limits will continue to apply, even if the tribunal hearing or award takes place later. 

 

This distinction remains important for liability assessment, early conciliation strategy, and settlement valuation. 

 

Potential Final Increase to the Unfair Dismissal Compensatory Cap: This year’s increase to the unfair dismissal compensatory award may be particularly notable because it is likely to be the last annual increase of this kind. 

 

Under section 25(3) of the Employment Rights Act 2025, the compensatory award cap for unfair dismissal is due to be removed. That change is anticipated to come into force on 1 January 2027, alongside the reduction of the qualifying period for ordinary unfair dismissal from two years to six months. 

 

If implemented as expected, this will mark a substantial shift in unfair dismissal litigation risk and may significantly alter how employers assess exposure in termination cases. 

 

Increases to Statutory Family Leave Payments and Statutory Sick Pay: The Social Security Benefits Up-rating Order 2026, made on 2 March 2026, increases a range of statutory payment rates. 

 

From 5 April 2026, the rate of statutory maternity pay after the first six weeks will increase to: 

• £194.32 per week (up from £187.18), or 

• 90% of the employee’s average weekly earnings, if lower 

The same increased weekly rate will apply, from 6 April 2026, to: 

• statutory adoption pay (after the first six weeks) 

• statutory paternity pay 

• statutory shared parental pay 

• statutory neonatal care pay 

• statutory parental bereavement pay 

• maternity allowance 

In addition, statutory sick pay will increase from £118.75 to £123.25 per week from 6 April 2026. 

 

Statutory Sick Pay Reform: Payment from Day One. A further significant development is expected in relation to statutory sick pay. 

 

By virtue of section 10 of the Employment Rights Act 2025, the existing three-day waiting period for statutory sick pay is due to be abolished, with the result that SSP will become payable from the first day of sickness absence. This reform is also expected to take effect on 6 April 2026. 

 

For employers, this change will have practical implications for: 

• absence management processes, 

• payroll systems, 

• sickness reporting procedures, and 

• the drafting of sickness absence policies 

 

Practical Implications for Employers: Employers should now ensure that they are prepared for the April 2026 changes by: 

• updating payroll systems to reflect the revised statutory payment rates; 

• reviewing redundancy and dismissal cost calculations using the new £751 week’s pay cap; 

• reassessing potential tribunal exposure in light of the increased compensation limits; 

• checking template settlement agreements and internal guidance materials; and 

• preparing for the anticipated day-one SSP entitlement. 

 

These annual uplifts are routine, but in the context of wider reform under the Employment Rights Act 2025, they also form part of a broader and more consequential shift in the employment law landscape. 

 

 

The April 2026 exercise increases both tribunal compensation thresholds and statutory payment rates across several key areas. While the numerical changes are modest in isolation, they have immediate consequences for claims valuation, payroll compliance, and workforce planning. 

More significantly, the 2026 adjustments appear to sit against the backdrop of major reform still to come, including the prospective removal of the unfair dismissal compensatory cap and the shortening of the qualifying period for bringing an unfair dismissal claim. Employers would therefore be well advised to treat this year’s changes as more than a routine annual update. 

Key Dates at a Glance 

• 5 April 2026: new rate for statutory maternity pay takes effect 

• 6 April 2026: new tribunal compensation limits take effect 

• 6 April 2026: updated statutory payment rates generally take effect 

• Expected from 6 April 2026: abolition of the three-day waiting period for SSP 

• Expected from 1 January 2027: removal of the unfair dismissal compensatory cap and reduction of the qualifying period to six months