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25 Mar 2021

Annual increase to employment compensation limits


With effect from 6 April 2021 there will be increases to certain employment compensation limits, the key changes include:

  • the maximum compensatory award for unfair dismissal will be the lower of 12 months' salary or £89,493 (up from £88,519); 
  • the limit on a week's pay for the purposes of calculating statutory redundancy payments and the basic award for unfair dismissal increases from £538 to £544;
  • consequently the maximum statutory redundancy payment will increase to £16,320.

The new rates will apply where an individual's effective date of termination of employment falls on or after 6 April 2021. 

The rates of maternity pay, paternity pay, shared parental pay, adoption pay and parental bereavement pay applicable from Sunday 4 April 2021 and the rate of sick pay applicable from 6 April 2021 will be as follows:

  • Maternity/Paternity/Shared Parental/Adoption/parental bereavement pay increase from £151.20 to £151.97; and
  • Sick pay increase from £95.85 to £96.35.

From 1 April 2021, national minimum wage rates are also set to increase. The new hourly rates are as follows:

  • The National Living Wage for workers aged 23 and over will increase from £8.72 to £8.91. Currently, the National Living Wage is payable only to those aged 25 and over, but the threshold is being lowered to include all those aged 23 and over.  
  • The 21-22-Year-Old Rate will increase from £8.20 to £8.36.
  • Youth Development Rate for workers aged 18-20 will increase from £6.45 to £6.56
  • Young Workers Rate for workers aged 16-17 will increase from £4.55 to £4.62.
  • Apprentice Rate for under 19, or over 19 and in first year of the apprenticeship, will increase from £4.15 to £4.30.

If you require further information about anything covered in this alert please contact Paul Reeves, Leanne Raven, Aaron Pooni or your usual Stephenson Harwood contact.



Paul Reeves

Paul Reeves

T:  +44 20 7809 2916 M:  +44 7919 694 135 Email Paul | Vcard Office:  London

Leanne Raven

Leanne Raven
Professional support lawyer

T:  +44 20 7809 2560 M:  +44 7827 353 108 Email Leanne | Vcard Office:  London