The annual update to the statutory cap has just been announced with the release of The Employment Rights (Increase of Limits) Order 2024. The changes will take effect on the 6th April 2024.
Statutory Cap
The statutory cap on a weeks pay for the purposes of calculating the basic award and statutory redundancy pay, will increase from £643.00 to £700.00 with effect from the 6th April 2024. Hence, the unfair dismissal basic award in employment tribunal cases will increase, and the maximum is now £21,000.00 (i.e. 20 x £700.00 x 1.5).
The maximum amount that can be awarded for the unfair dismissal compensatory award will also increase from £105,707.00 to £115,115.00 on the 6th April 2024.
Statutory Redundancy Pay
The statutory cap on a weeks pay also increases from £643.00 to £700.00 on the 6th April 2024 for the purposes of calculating statutory redundancy pay, and the maximum is now £21,000.00 (i.e. 20 x £700.00 x 1.5).
Hence, from the 6th April 2024, the amount of statutory redundancy pay an employee is entitled to is the number of weeks which can be taken into account multiplied by the lower of either their average weekly wage or £700.00. The number of weeks which can be taken into consideration depends on how long the employee has been continuously employed by their employer and how their years of continuous service relate to certain age bands.
In terms of age bands, for each complete year of continuous service under the age of 22, they will receive half a week’s pay. For each complete year of continuous service between the ages of 22 and 40, they will receive one week’s pay. For each complete year of continuous service between the ages of 41 and above, they will receive 1½ weeks’ pay. The maximum number of years which can be taken into account is 20.
Other April 2024 Rate Changes
In addition to the new statutory cap, other April 2024 rate have already been announced - changes to the National Minimum Wage and National Living Wage, statutory sick pay (SSP), and changes to family friendly payments.
National Minimum Wage / National Living Wage
The National Minimum Wage and the National Living Wage will also be increasing, although those rates will increase on the 1st April 2024, whereas the increase in the statutory cap takes effect on the 6th April 2024.
- For workers aged 21 and over (i.e. the National Living Wage), the rate will increase by £1.02 per hour (9.8%) from £10.42 per hour to £11.44 per hour. The age threshold for receiving the National Living wage has been reduced from 23 years of age to 21 years of age, with those aged 21-22 years of age benefitting from an increase of £1.26 per hour (12.4%) from £10.18 per hour to £11.44 per hour
- For workers aged 18-20 inclusive, the rate will increase by £1.11 per hour (14.8%) from £7.49 per hour to £8.60 per hour
- For workers aged 16-17 inclusive, the rate will increase by £1.12 per hour (21.2%) from £5.28 per hour to £6.40 per hour
- The apprentice rate will increase by £1.12 per hour (21.2%) from £5.28 per hour to £6.40 per hour
- The daily rate for the accommodation offset will increase by £0.89 (9.8%) from £9.10 to £9.99
Statutory Sick Pay (SSP)
As with the increase in the statutory cap, the increase in statutory sick pay (SSP) will take place on the 6th April 2024.
The new rate for SSP was announced on the 22nd November 2023, with statutory sick pay (SSP) increasing from £109.40 to £116.75 per week.
Family Friendly Payments
The new rates for family friendly payments were announced on the 22nd November 2023. They will come into effect on the 7th April 2024. The new rates are as follows:-
- Statutory maternity pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly pay per week, subject to a maximum of £184.03 per week (up from £172.48 per week) after the first 6 weeks.
- Statutory Paternity Pay – the smaller of £184.03 per week (up from £172.48 per week) or 90 per cent of their average weekly earnings per week
- Statutory Shared Parental Pay – the smaller of £184.03 per week (up from £172.48 per week) or 90 per cent of their average weekly earnings per week
- Statutory Adoption Pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly pay per week, subject to a maximum of £184.03 per week (up from £172.48 per week) after the first 6 weeks.
- Statutory Parental Bereavement Pay – the smaller of £184.03 per week (up from £172.48 per week) or 90 per cent of their average weekly earnings per week
The average gross weekly earnings required to qualify for Statutory Maternity Pay and these other family friendly payments remains at £123.00 or more.
Maternity Allowance will also increase from the 7th April 2024. Where an employee earns less than £123.00 per week on average, but was employed for 26 of the 66 previous weeks earning at least £30 per week (averaged over any 13 week period during the said 66 weeks), then they will be entitled to Maternity Allowance for 39 weeks of the smaller of £184.03 or 90 per cent of their average gross weekly earnings per week (up from the smaller of £172.48 or 90 per cent of their average gross weekly earnings per week).
Not Yet Announced
Now that the new rate for the statutory cap has been announced, the only April 2024 rate changes that are still awaited are the new rates for the Vento bands. That announcement is expected towards the end of March 2024.
As with the new rate for the statutory cap, the new rates for the Vento bands will come into effect on the 6th April 2024.
The announcement of the new rate for the statutory cap was made on the 27th February 2024, and has come earlier in the year than previously. Normally, the new rate is announced in early-mid March.
The Statutory Cap And Inflation
The increase in the statutory cap was larger than usual last year (i.e. £72.00), on account of the increase in inflation. The increase in the statutory cap this year (i.e. £57.00) has been smaller on account of the fall in inflation.
