Key employee payments and limits increased for 2023/24

Employers should be aware of key employee payments and limits increased for 2023/24 that take effect in April 2023 – increases to national minimum wage, plus statutory payments including maternity pay, paternity pay and statutory sick pay. Along with increases to awards for unfair dismissal, discrimination and redundancy claims.

The risks of not making statutory payments correctly to your staff, such as the minimum wage, include claims from staff, paying arrears, significant penalties and damage to your reputation as an employer.

What are the key employee payments and limits increased for 2023/24? 

National Minimum Wage and Living Wage

The following new rates were announced in the government’s Autumn Statement, and will come into force on 1st April 2023:

Rate from 1 April 2023 Current Rate (April 2022 to March 2023) Increase
National Living Wage (23 years plus) £10.42 £9.50 9.7%
21-22 year old rate £10.18 £9.18 10.9%
18-20 year old rate £7.49 £6.83 9.7%
16-17 year old rate £5.28 £4.81 9.7%
Apprentice rate £5.28 £4.81 9.7%
Accommodation Offset (daily rate and weekly rate) £9.10/£63.70 £8.70/£60.90 4.6%

Complications with Pay

Getting pay right is very important. On 9 December 2021 over 200 employers were named and shamed by the government for failing to pay staff the minimum wage. The employers ranged from multinational businesses and large high street names to SMEs and sole traders. These businesses have since reportedly had to pay back what they owe to staff and face significant financial penalties of up to 200% of what was owed, which are paid to the government.

Statutory Parental Payments

From 10 April 2023, 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 shall be the lower of 90% of average weekly earnings or £172.48 (increasing from £156.66).

From 10 April 2023, Statutory Paternity Pay (up to two weeks), Statutory Shared Parental Pay (up to 37 weeks) and Statutory Parental Bereavement Pay (up to two weeks) are paid at the same increased weekly rate of £172.48 (increasing from £156.66) or 90% of average weekly earnings whichever is lower.

Statutory Sick Pay

From 10 April 2023, the weekly rate for Statutory Sick Pay increased from £99.35 to £109.40. This is a 10.1% increase.

Statutory redundancy payments, unfair dismissal and discrimination awards

A week’s pay for calculating the basic award in an unfair dismissal claim and statutory redundancy payments has increased to £643 (from £571). There has also been an increase in the maximum compensation award in an unfair dismissal claim. This has increased to £105,707 (from £93,878). Both of these changes apply to dismissals occurring on or after 6 April 2022.

Increase to Vento Bands

New Vento bands have come into force along with the other April 2023 changes. The Presidents of the Employment Tribunals in England and Wales and Scotland have issued guidance updating guidance on the sums of compensation awarded by tribunals for injury to feelings awards in discrimination cases. These bands are increased in line with inflation and case law.

The new Vento bands are as follows and apply to cases presented on or after 6 April 2023:

  • Lower band of £1,100 to £11,200 for less serious cases;
  • Middle band of £11,200 to £33,700 for cases that do not merit an award in upper band;
  • Upper band of £33,700 to £56,200 for the most serious cases such as where there has been a lengthy campaign of discriminatory harassment
  • With the most exceptional cases being capable of awards exceeding £56,200.

We are experienced in advising employers on the national minimum wage and other payments to staff, and advising employees on their rights. If you would like to discuss the increases to national minimum wage and any other payment, please get in touch with our Employment team.