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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
Head of employment

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

Leanne Raven

Leanne Raven
Senior knowledge lawyer

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