April 2023 will see changes to employment rates and limits which are adjusted annually in line with the retail prices index. The RPI has risen significantly over the last year and statutory redundancy payments, employment tribunal awards and national minimum wage rates will all be affected. The key changes for employers to be aware of are outlined below.
National minimum wage
The increases in the national minimum wage rates (including the national living wage rate) that apply from 1 April 2023 are as follows:
- for workers aged 23 and over, from £9.50 to £10.42 per hour;
- for those aged 21-22, from £9.18 to £10.18 per hour;
- for those aged 18-20, from £6.83 to £7.49 per hour; and
- for those aged under 18, from £4.81 to £5.28 per hour.
The minimum hourly rate for apprentices will increase from £4.81 to £5.28 and applies to apprentices who are under the age of 19 or those who are 19 and over and in the first year of their apprenticeship.
The daily rate for the accommodation offset limit, which is the maximum daily deduction an employer can make from national minimum wage payments in respect of the provision of accommodation, will increase from £8.70 to £9.10.
Statutory maternity, paternity, adoption, shared parental and parental bereavement pay
Statutory maternity, paternity, adoption, shared parental and parental bereavement pay increase from £156.66 to £172.48 per week on 2 April 2023.
Employers are entitled to recover all, or most of, these statutory payments from HMRC.
Statutory sick pay
Statutory sick pay increases from £99.35 to £109.40 per week on 6 April 2023.
Note that statutory sick pay is not generally recoverable from HMRC.
Limits on employment tribunal awards
The statutory limit on certain employment tribunal awards will increase. Where the event giving rise to compensation occurred on or after 6 April 2023:
- the maximum amount of a week’s pay (for the purposes of calculating statutory redundancy pay and various awards including the unfair dismissal basic award) will increase from £571 to £643; and
- the maximum compensatory award for an unfair dismissal claim (provided this is lower than the additional cap on the compensatory award of 52 weeks' pay) will increase from £93,878 to £105,707.
Vento bands for injury to feelings awards
The Vento bands, which provide guidance for employment tribunals when deciding awards for injury to feelings in discrimination claims, will increase in respect of claims presented on or after 6 April 2023 as follows.
- Lower band (less serious cases) – £1,100 to £11,200 (from £990 to £9,900).
- Middle band (cases that do not merit an award in the upper band) – £11,200 to £33,700 (from £9,900 to £29,600).
- Upper band (the most serious cases) – £33,700 to £56,200 (from £29,600 to £49,300).
The most exceptional cases are capable of exceeding an award of £56,200.
In January, we looked at a number of people-related changes in the pipeline in our update The People Agenda 2023. While none of the parliamentary bills mentioned in that update have made it onto the statute books yet, employers should continue to keep a watching brief on those anticipated developments.
Please do get in touch with your usual CMS contact if you would like to discuss the potential implications of any of these measures for your business and workforce.
Article co-authored by Taiya Cooper, Solicitor Apprentice at CMS.
Author: Alison Woods (Partner, Employment)