The annual update to the statutory cap has now been confirmed with the publication of The Employment Rights (Increase of Limits) Order 2026. The changes will take effect from the 6th April 2026.
Key Points
- The statutory cap on a week’s pay increases from £719.00 to £751.00 from 6 April 2026.
- The maximum unfair dismissal basic award increases to £22,530.00.
- The maximum unfair dismissal compensatory award rises to £123,543.00.
- The minimum basic award for certain automatically unfair dismissals increases to £9,157.00.
- Statutory Sick Pay increases to £123.25 per week, with wider reforms taking effect at the same time.
- Family friendly payments increase to £194.32 per week, with the qualifying earnings threshold rising to £129.00.
Statutory Cap
The statutory cap on a week’s pay, used for the purposes of calculating the basic award in unfair dismissal claims and statutory redundancy pay, will increase from £719.00 to £751.00 with effect from the 6th April 2026. As a result, the maximum basic award in unfair dismissal cases will increase to £22,530.00 (i.e. 20 x £751.00 x 1.5).
The maximum amount that can be awarded for the unfair dismissal compensatory award will also increase from £118,223.00 to £123,543.00 on the 6th April 2026. In addition, the minimum basic award for certain automatically unfair dismissals will rise from £8,763.00 to £9,157.00.
Statutory Redundancy Pay
The statutory cap on a week’s pay will also increase from £719.00 to £751.00 on the 6th April 2026 for the purposes of calculating statutory redundancy pay. Accordingly, the maximum amount of statutory redundancy pay will increase to £22,530.00 (i.e. 20 x £751.00 x 1.5).
The amount of statutory redundancy pay an employee is entitled to from the 6th April 2026 will be the number of qualifying weeks multiplied by the lower of either the average weekly pay or £751.00. The number of qualifying weeks that can be taken into account depends on length of continuous service and the statutory age bands, with a maximum of 20 years’ service counting towards the calculation.
In terms of age bands, for each complete year of continuous service under the age of 22, an employee is entitled to half a week’s pay. For each complete year of continuous service between the ages of 22 and 40, they are entitled to one week’s pay. For each complete year of continuous service aged 41 and over, they are entitled to 1.5 weeks’ pay.
Other April 2026 Rate Changes
In addition to the new statutory cap, other April 2026 rate changes 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 be increasing, although those rates will increase on the 1st April 2026, whereas the increase in the statutory cap takes effect on the 6th April 2026.
The National Living Wage and National Minimum Wage increases that will apply from the 1st April 2026 will be as follows:-
- For workers aged 21 and over (i.e. the National Living Wage): The rate will increase by £0.50 per hour (4.1%), rising from £12.21 per hour to £12.71 per hour.
- For workers aged 18–20 inclusive: The rate will increase by £0.85 per hour (8.5%), rising from £10.00 per hour to £10.85 per hour.
- For workers aged 16–17 inclusive: The rate will increase by £0.45 per hour (6.0%), rising from £7.55 per hour to £8.00 per hour.
- The apprentice rate: The rate will increase by £0.45 per hour (6.0%), rising from £7.55 per hour to £8.00 per hour.
- Accommodation offset: The daily rate will increase by £0.44 (4.1%), rising from £10.66 to £11.10.
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 2026.
The rate for SSP increases from £118.75 to £123.25 per week. In addition, major reforms to SSP are due to take effect from the 6th April 2026 under the Employment Rights Act 2025. These are:-
- SSP becomes payable from the first day of sickness absence (rather than only from the fourth day).
- The Lower Earnings Limit (LEL) threshold is abolished - all employees will be eligible regardless of income level.
- For employees earning below the previous LEL, SSP will be calculated as the lower of either 80% of their average weekly earnings or the flat rate £123.25.
Family Friendly Payments
The new rates for family friendly payments were announced on the 27th November 2025. They will come into effect on the 6th April 2026. 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, subject to a maximum of £194.32 per week (up from £187.18 per week) after the first 6 weeks.
- Statutory Paternity Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings
- Statutory Shared Parental Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings
- Statutory Adoption Pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly pay, subject to a maximum of £194.32 per week (up from £187.18 per week) after the first 6 weeks.
- Statutory Parental Bereavement Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings
- Statutory Neonatal Care Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings
The average gross weekly earnings required to qualify for Statutory Maternity Pay and the other family friendly payments will increase from £125.00 or more per week, to £129.00 or more per week.
Maternity Allowance will also increase from the 6th April 2026. Where an employee earns less than £129.00 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 £194.32 or 90 per cent of their average gross weekly earnings.
Not Yet Announced
Now that the new rate for the statutory cap has been announced, the only April 2026 rate change that is still awaited is the new rates for the Vento bands. That announcement is expected towards the end of March 2026.
As with the new rate for the statutory cap, the new rates for the Vento bands will come into effect on the 6th April 2026.
Two years ago, the announcement of the new rate for the statutory cap was made on the 27th February 2024, and came earlier in the year than previously. Last year's announcement in relation to the statutory cap came on the 14th March 2025 and marked a return to the norm, as the new rate for the statutory cap is traditionally announced in early-mid March. Consistent with that, this year’s announcement of the new statutory cap was made on the 16th March 2026.
Employers: What This Means
- Increased statutory limits mean higher potential liability in unfair dismissal and redundancy scenarios.
- Employers should review redundancy calculations and ensure payroll systems reflect the new £751 weekly cap.
- Dismissal procedures should be carefully followed, as tribunal awards will increase from April 2026.
- HR policies and systems should be updated to reflect changes to SSP and family-related statutory payments.
