Changes to compensation limits and statutory payment rates are made in April each year. Annual updates to the so-called Vento bands for compensation for injury to feelings are also made in April. The changes that employers need to be aware of this month are set out below.
Changes to statutory payments and compensation limits
The annual changes to compensation limits and statutory payments are now in effect. This includes an increase to the rate of payment for a range of statutory leave entitlements:
- Statutory maternity pay (after the first six weeks) increased on 5 April 2026 from £187.18 to £194.32 per week, or 90% of the employee’s average weekly earnings, whichever is lower
- Statutory adoption pay (after the first six weeks), statutory paternity pay, statutory shared parental pay, statutory neonatal care pay and statutory parental bereavement pay increased on 6 April 2026 from £187.18 to £194.32 per week, or 90% of the employee’s average weekly earnings, whichever is lower
- The same increase applies to maternity allowance from 6 April 2026
- Additionally, statutory sick pay (SSP) increased from £118.75 to £123.25 per week from 6 April 2026
There has also been an increase to the compensation limits and minimum awards that employment tribunals can make:
- The limit on the compensatory award for unfair dismissal has increased from £118,223 to £123,543
- The limit on a week’s pay for the purpose of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal has increased from £719 to £751
- The limit on the compensatory award for failure to allocate and pay tips fairly has increased from £5,135 to £5,366
- Guarantee pay has increased from £39 to £41 per day
- The minimum basic award in cases where a dismissal is unfair by virtue of certain health and safety, working time, employee representative, trade union, or occupational pension trustee reasons has increased from £8,763 to £9,157
These new rates apply where the ‘appropriate date’ for the cause of action (such as the effective date of termination in an unfair dismissal claim) falls on or after 6 April 2026. Where the appropriate date falls before 6 April 2026, the old limits will still apply, irrespective of the date on which compensation is awarded.
Employment Rights (Increase of Limits) Order 2026
Social Security Benefits Up-rating Order 2026
Vento guidelines
On 30 March 2026, the Presidents of the Employment Tribunals in England and Wales and in Scotland issued the latest annual update for awards for injury to feelings and psychiatric injury in discrimination and detriment cases. These are referred to as the Vento bands and help tribunals to determine appropriate compensation for non-financial harm. Injury to feelings awards are entirely discretionary and are usually made at some level in most successful discrimination claims:
- A lower band of £1,300 to £12,600 (increasing from £1,200 to £12,100) for less serious cases
- A middle band of £12,600 to £37,700 (increasing from £12,100 to £36,400) for cases which do not merit an award in the upper band
- An upper band of £37,700 to £62,900 (increasing from £36,400 to £60,700) for the most serious cases
- Amounts in excess of £62,900 can be awarded in the most exceptional cases
The new bands will apply to employment tribunal claims presented on or after 6 April 2026.
What does this mean for employers?
Employers must ensure that their payroll systems are updated to ensure that statutory payments are made at the correct rates. Systems will also need updating to reflect the fact that, from 6 April 2026, SSP is payable from an employee's first day of sickness absence, under changes brought in by the Employment Rights Act 2025 (ERA 2025) - see our previous article for further information.
Employers should also note that this year's increase to the unfair dismissal compensatory award limit will be the last, as the limit is due to be removed entirely from 1 January 2027 under the Employment Rights Act 2025 - see our ERA 2025 tracker for further details.
