Increase of limits on tribunal awards and statutory payments from April 2026

Background

The Employment Rights (Increase of Limits) Order 2026 raises compensation limits for certain tribunal awards, including unfair dismissal claims, while the Social Security Benefits Up-rating Order 2026 increases statutory payments such as maternity pay and sick pay. These adjustments are part of the government's annual review process, designed to align statutory entitlements with inflation and economic conditions.

The key changes to employment tribunal payments include:

• Limit on a week's pay: Increased from £719 to £751.
• Maximum compensatory award for unfair dismissal: Increased from £118,223 to £123,543.
• Minimum basic award for certain unfair dismissals (e.g., health and safety dismissals): Increased from £8,763 to £9,157.
• Compensatory award for failure to have a written tips policy or failure to allocate and pay tips fairly: Increased from £5,135 to £5,366. 

Statutory payments will increase as follows:

• Statutory maternity pay and maternity allowance: Increased from £187.18 to £194.32.
• Statutory paternity, adoption, shared parental, parental bereavement, and neonatal care pay: Increased from £187.18 to £194.32.
• Statutory sick pay: Increased from £118.75 to £123.25. 

Learning points for employers

The changes to employment tribunal payments will apply to cases where the effective date of termination falls on or after 6 April 2026. With the exception of statutory maternity pay which will take effect on 5 April 2026, all other payments will be effective from 6 April 2026.

Employers should review and update their payroll systems to reflect the new limits and statutory payment rates. This is particularly important for HR and payroll teams, who need to ensure that policies and procedures are aligned with the updated legislation.

Additionally, employers should communicate these changes to employees who may be directly affected by the increases. Employers may also wish to review their budgets to account for potential increases in costs associated with these changes, particularly in cases of unfair dismissal or statutory leave entitlements.

For more information or advice please contact Alastair Fatemi in our Employment team.