Employment rates and limits – Changes for April 2025

April 2025 brings further increases to employment rates and limits, which are updated yearly in response to changes in inflation rates. The impact of these increases will include national minimum wage rates, family-related leave pay rates and employment tribunal awards.

Among the various increases, the most important ones for employers to be aware of are outlined below.

National Minimum Wage

From 1 April 2025, the national minimum wage rates (including the national living wage rate) will increase as follows:

• the national living wage for workers aged 21 and over will increase from £11.44 to £12.21 per hour;
• for workers aged 18 to 20, from £8.60 to £10.00 per hour; and
• for workers aged 16 to 17, from £6.40 to £7.55 per hour.

For apprentices, the minimum hourly rate will increase from £6.40 to £7.55 per hour. The apprentice rate, which is equal to the 16 to 17 year old rate, continues to apply to apprentices under the age of 19, or apprentices who are 19 and over and in the first year of their apprenticeship.

The daily rate for the accommodation offset limit will increase to £10.66. The accommodation offset limit is the maximum amount an employer can deduct from an employee’s pay for any accommodation provided by the employer.

The Government accepted in full the Low Pay Commission’s recommendations for the national minimum wage rate increases, resulting in the highest real value in the history of the UK’s minimum wage regime. The increase for 18 to 20 year olds sees a shift closer to the national living wage rate, which could be extended to 18 year olds in the coming years.

Statutory sick pay

From 6 April 2025, statutory sick pay will increase from £116.75 to £118.75 per week. The Lower Earnings Limit will also increase from £123 to £125 per week.

Generally, employers cannot recover statutory sick pay from HM Revenue & Customs.

Family-related leave

From 6 April 2025, statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase from £184.03 to £187.18 per week. The earnings threshold will also increase, from £123 to £125 per week. The earnings threshold for maternity allowance remains unchanged at £30 per week.

Additionally, from 6 April 2025, there will be new statutory rights to neonatal care leave and pay. Statutory neonatal care pay will be paid at £187.18 per week. For further information about these new rights, see our update: Navigating the Neonatal Care (Leave and Pay) Act 2023.   

Employers can reclaim all or most of these statutory payments from HMRC.

Limits on employment tribunal awards

The statutory limit on several employment tribunal awards will also increase. For events giving rise to compensation which occurred on or after 6 April 2025:

• the maximum amount of a week’s pay (used for calculating statutory redundancy pay and various awards including the unfair dismissal basic and compensatory awards) will increase from £700 to £719; and
• the maximum compensatory award for an unfair dismissal claim (provided it falls below the additional cap of 52 weeks’ pay) will increase from £115,115 to £118,223.

Vento bands for injury to feelings awards

The Vento bands, which serve as guidelines for employment tribunals in determining awards for injury to feelings in discrimination (and certain other) claims, will be adjusted for claims made on or after 6 April 2025, as follows.

• Lower band (for less serious cases): £1,200 to £12,100 (previously £1,200 to £11,700)
• Middle band (for cases not meriting an award in the upper band): £12,100 to £36,400 (previously £11,700 to £35,200)
• Upper band (for the most serious cases): £36,400 to £60,700 (previously £35,200 to £58,700)

In exceptional cases an award may exceed £60,700.

What’s ahead?

We outlined significant upcoming reforms in 2025 and beyond in our update: The People Agenda 2025 including those set out in the Employment Rights Bill which continues its journey through Parliament. We analysed the latest changes to the Bill in our update, Employment Rights Bill – What’s new? and you can access our other commentary via our ERB hub. 

If you would like to discuss the potential impact of any of these rates and limits changes on your business operations and employees, please get in touch with your usual contact in the CMS Employment team.

Article co-authored by Abbie Smith, a trainee solicitor in the employment team at CMS.

Authors: Alison Woods (Partner), Aisleen Pugh (Professional Support Lawyer) and Val Dougan (Professional Support Lawyer)