From April 2026, employers will need to navigate a new round of statutory increases affecting pay and employee entitlements. These include rises to the National Living Wage and National Minimum Wage. This is alongside updated rates for statutory maternity, paternity and statutory sick pay. The financial limits applicable to compensation for unfair dismissal, discrimination and whistle-blowing claims, and statutory redundancy payments will increase too.
With the Government continuing to enforce minimum wage compliance rigorously including through the new Fair Work Agency, the risk of incorrect statutory payments remains significant. Employers who fall short face arrears, financial penalties, and reputational damage through public naming for breaches.
There are also changes in April under the Employment Right Act 2025, which include new Day 1 rights for employees to statutory sick pay and paternity/unpaid parental leave.
What are the Key Employee Payments and Limits Increased for 2026/27?
1.National Living Wage and Minimum Wage – 1 April 2026
| 21 and over | 18 to 20 | 16-17 | Apprentice | |
| April 2025 (current rate) | £12.21 | £10.00 | £7.55 | £7.55 |
| April 2026 | £12.71 | £10.85 | £8.00 | £8.00 |
The top rate of the minimum wage now represents an annual salary of £24,454 for an employee working a 37-hour week. As the minimum wage rates increase, a greater proportion of your staff may now sit on close to the minimum rate, increasing the risk of non-compliance, as more of your staff are likely to be affected. The Government publishes ‘naming and shaming’ list, which in March 2026 featured over 389 employers including well-known brands, ordered to repay over £7.3 million in wages. As well as risking repaying arrears, businesses additionally face significant penalties and interest.
2.Statutory Sick Pay – 6 April 2026
From 6 April 2026, the weekly rate for Statutory Sick Pay (SSP) will increase from £118.75 to £123.25 (a 3.79% increase).
On the same date there are significant Statutory Sick Pay (SSP) reforms under the Employment Rights Act 2025. The lower earnings limit (currently £123 a week) will be removed, so that all eligible employees will be due SSP regardless of earnings. Those earning below the new lower earnings limit (£129 per week as of 6 April 2026) will be entitled to receive SSP at the rate of 80% of their weekly earnings where this is lower than the flat rate. The existing earnings threshold will, however, continue to apply in respect of family‑related statutory payments, which remain subject to established qualifying criteria.
As of 6 April, SSP will be payable from day one of sickness, removing the current three waiting days required to qualify for payment. It is important that sickness is managed appropriately and that your policies and payroll processes are updated to reflect this change.
3.Changes to Family Leave and Pay Rights – 6 April 2026
Statutory Maternity Pay and other Statutory Parental Leave Pay
From 6 April 2026, the first six weeks of Statutory Maternity Pay and Statutory Adoption Pay remain the same, at 90% of the employee’s average weekly earnings. The statutory weekly rate for the next 33 weeks is the lower of 90% of average weekly earnings or £194.32 (increasing from £187.18).
Statutory Paternity Pay (up to two weeks), Statutory Shared Parental Pay (up to 37 weeks), Neonatal Care Pay (twelve weeks) and Statutory Parental Bereavement Pay (up to two weeks) share the same weekly rate of £194.32 (increasing from £151.97) or 90% of average weekly earnings whichever is lower.
Day 1 Statutory Paternity/Unpaid Parental Leave
From 6 April 2026, statutory paternity leave will become a day‑one right for parents of children born or placed for adoption on or after that date. However, eligibility for statutory paternity pay will continue to depend on meeting the existing service requirement of 26 weeks’ continuous employment by the 15th week before the expected week of childbirth.
From the same date, the current restriction preventing employees from taking paternity leave immediately after a period of shared parental leave will be removed. This change will provide new parents with greater flexibility in structuring their leave and managing childcare arrangements during the earliest stages of family life.
For unpaid parental leave, the length of service eligibility requirement of one year will be removed. This is for babies born on or after 6 April 2026, or due on or after 5 April 2026.
These changes requires employers to treat family leave entitlements as immediate statutory rights, increasing the likelihood that new starters may take leave very early in employment, including during probation. This will become even more significant when the unfair dismissal qualifying period reduces to six months on 1 January 2027. HR and payroll teams should ensure policies are updated and managers are briefed accordingly.
HR and payroll teams will need to ensure that this is communicated and that the policies are updated to remove the qualifying service references.
Bereaved Partner’s Paternity Leave
A new statutory right to bereaved partner’s paternity leave will come into force on 6 April 2026. Under this entitlement, a bereaved partner may take up to 52 weeks of leave following the birth or placement for adoption of a child, where the child’s primary carer dies within the first year. This will be a day‑one right, requiring no minimum period of service.
The notice requirements will vary depending on the timing of the leave. Where the leave is taken within the first eight weeks following the bereavement, notice can be given shortly before the leave begins. If the leave is to start more than eight weeks after the bereavement, the employee will be required to give at least one week’s notice.
There is currently no statutory entitlement for this leave to be paid, although employers may elect to offer pay, whether in full or in part, in line with any enhanced maternity, adoption or shared parental leave provisions already in place.
4.Statutory Redundancy and Guarantee Payments – 6 April 2026
The statutory cap on a week’s pay will have its usual annual increase from £719 to £751 on 6 April 2026 for the purposes of calculating statutory redundancy pay, and the maximum therefore increasing to £22,530 (i.e. 20 x £751 x 1.5).
Therefore, from 6 April 2026, the amount of statutory redundancy pay an employee is entitled to is calculated by multiplying the number of weeks’ entitlement by either their average weekly wage or £751, whichever is the lower. The number of weeks which can be taken into consideration depends on how long the employee has been continuously employed by their employer and how their years of continuous service relate to certain age bands.
In terms of age bands, for each complete year of continuous service under the age of 22, they will receive half a week’s pay. For each complete year of continuous service between the ages of 22 and 40, they will receive one week’s pay. For each complete year of continuous service between the ages of 41 and above, they will receive 1½ weeks’ pay. The maximum number of years which can be taken into account is 20.
As of 6 April, the maximum protective award for failing to consult on collective redundancies will have a huge increase, doubling from 90 days to 180 days, therefore highlighting the importance of seeking expert advice early. Furthermore, statutory guarantee payments will increase from £39 a day to £41 a day. A guarantee payment is the amount to be paid to an employee who isn’t given work on a day on which they normally would have worked under their contract of employment. See our article here for more information.
5.Employment Tribunal Awards and Compensation – 6 April 2026
Compensation for Unfair Dismissal Claims
The anticipated increases to employment tribunal compensation have also been announced for 6 April 2026.
The maximum compensatory award for an unfair dismissal award will increase from £118,223 to £123,543 while continuing to be capped at the lower of a year’s salary or this statutory maximum amount, for the time being.
It is also important to note that from 1 January 2027, the financial cap on the compensatory award for unfair dismissal will be abolished for dismissals taking place on or after that date.
The existing financial cap on a week’s pay for the purpose of calculating the basic award for unfair dismissal and statutory redundancy payments will remain in force, although it will increase on 6 April 2026 to £751 per week. Keep an eye out for more of our articles on the Employment Rights Act 2025 for details on the upcoming changes.
Vento Bands
For claims brought on or after 6 April 2026, the updated Vento bands for awards for injury to feelings for discrimination and whistle-blowing claims will apply as follows: the lower band, covering less serious cases, will range from £1,300 to £12,600; the middle band (for cases that do not justify an award in the upper band), will range from £12,600 to £37,700; and the upper band, reserved for the most serious forms of discrimination, will range from £37,700 to £62,900. In the most exceptional cases, awards may exceed £62,900.
6.New Fair Work Agency launched – 7 April 2026
On 7 April 2026, we will see the introduction of the new Fair Work Agency (FWA), a regulatory and enforcement body responsible for enforcing the national minimum wage, holiday pay and statutory sick pay. The FWA will bring together the enforcement of existing employee rights and employer obligations across areas including employment agencies, modern slavery, labour exploitation and employment tribunal penalties. Failing to keep adequate holiday pay and holiday entitlement records will become a criminal offence.
The FWA will have broad, interventionist powers to inspect employer records relating to the national minimum wage, statutory sick pay and holiday pay, and to issue penalties for non‑compliance. Employers should therefore maintain well‑organised, accurate and up‑to‑date records of hours worked and paid, statutory sick pay, holiday entitlement and holiday pay. With the FWA able to intervene directly, robust and accessible records will be essential.
We are experienced in advising employers on the National Living/Minimum Wage and other payments to staff and advising employees on their rights. If you would like to discuss any of these increases and how it might impact you, please get in touch with our Employment team on 0345 450 5558 or [email protected]