In 2023, there have been significant increases in several employment law rates and limits.
Increases to UK national minimum wage and NLW
The government will implement the Low Pay Commission’s (LPC’s) recommendations in full and the national living wage (NLW) will increase by 9.7% in April 2023 to £10.42. This is consistent with the government’s target of two-thirds of median earnings by 2024.
The new rates that will come into force on 1 April 2023 are as follows:
- national living wage (age 23 and above) – £10.42;
- age 21-22 – £10.18;
- age 18-20 – £7.49; and
- age 16-17 – £5.28.
The accommodation offset will also rise to £9.10 per day.
Employers may want to review contracts and arrangements for lower paid staff to identify areas of risk and areas where their existing practices might not take sufficient account of the NLW framework.
Increases to other employment limits and statutory payments
The limits in relation to unfair dismissal and redundancy pay are increasing as follows:
- England and Wales unfair dismissal and redundancy pay – from 6 April 2023, the limit on a statutory week’s pay will increase to £643 (up from £571). This means that the maximum statutory redundancy payment and unfair dismissal basic award will be £19,290. The cap on the compensatory award for unfair dismissal will increase from £93,878 to £105,707; and
- Northern Ireland unfair dismissal and redundancy pay – from 6 April 2023, the limit on a statutory week’s pay will be £669 (up from £594). This means that the maximum statutory redundancy payment and unfair dismissal basic award will rise to £20,070. Meanwhile, the cap on the compensatory award for unfair dismissal will increase from £94,063 to £105,915.
The capped weekly pay amount is used in calculating statutory redundancy payments, so the increase is of particular relevance to businesses that are in the process of restructuring their workforce as a result of the challenging economic climate that the United Kingdom is currently experiencing.
When determining which cap applies in relation to a dismissal, the relevant date is typically, but not always, the date upon which employment effectively ceased. If the employee has accepted an offer of alternative employment and leaves during the trial period, employers should look at when the original contract ended.
From early April 2023, other limits and statutory payments will increase as follows:
- family-related benefits – the prescribed or flat rate of statutory maternity, adoption, paternity and shared parental pay will rise from £156.66 to £172.48 per week; and
- statutory sick pay (SSP) – SSP will increase from £99.35 to £109.40 per week.
Source: Lexology
This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are reported, the information does not set out all of the facts, the legal arguments presented and the judgments made in every aspect of the case. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, we cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.
