Employers should be aware of key employee payments and limits increased for 2025/26 that take effect in April 2025. Those increases are to National Living/Minimum Wage, plus statutory payments including maternity pay, paternity pay and statutory sick pay and 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 2025/26
National Living Wage and Minimum Wage
The following new rates were announced in the Budget on 30 October 2024, and will come into force on 1 April 2025:
| 21 and over | 18 to 20 | Under 18 | Apprentice | |
| April 2024 (current rate) | £11.44 | £8.60 | £6.40 | £6.40 |
| April 2025 | £12.21 | £10.00 | £7.55 | £7.55 |
The top rate of pay now represents just under £24,000 for an employee working a 37-hour week and as the minimum wage rates increase, it is likely that a higher proportion of your staff may be paid at that minimum rate. That could, in turn, increase the risk of non-compliance, as more of your staff are likely to be affected. The Government issues its ‘naming and shaming’ list each year, which last year featured over 500 employers including multinational businesses and high street names. As well as repaying those arrears, businesses additionally face significant penalties and interest.
Statutory Parental Payments
From 6 April 2025, the statutory weekly rate for maternity and adoption pay increases to £187.18 from £184.03. The first six weeks of leave are paid at 90% of an employee’s average weekly earnings, with the following 33 weeks paid at the lower of that rate or the statutory weekly rate.
Statutory Paternity Pay (up to two weeks), Statutory Shared Parental Pay (up to 37 weeks) and Statutory Parental Bereavement Pay (up to two weeks) all also increase from 6 April 2025 to the same increased weekly rate of £187.18 or 90% of average weekly earnings, whichever is lower.
Statutory Sick Pay
From 6 April 2025, the weekly rate for Statutory Sick Pay will increase from £116.75 to £118.75 (a 1.71% increase).
Employer’s National Insurance Contributions
6 April 2025 will also see a change in the rate of employer’s National Insurance Contributions (NICs). The rate is increasing from 13.8% to 15% (a 1.2% increase). The secondary threshold (the threshold after which employers start paying NICs on their employees’ earnings) will also decrease from £9,100 a year to £5,000 a year (£758 a month to £417 a month)
On the flip side, the maximum Employment Allowance, which can be used by employers to reduce their NIC liability, is increasing from £5,000 to £10,500 and the £100,000 restriction (based on Class 1 NICs paid in the previous tax year) that currently applies to the Employment Allowance will be removed. This should therefore enable more small employers to take advantage of the Employment Allowance and offset their NIC liability.
Increase to maximum compensation and weekly pay limits
There are anticipated increases to tribunal compensation limits and the rate of weekly pay which applies when, for example, calculating statutory redundancy pay. The new limits for unfair dismissal awards, the new redundancy pay rate and Vento bands for discrimination awards are yet to be announced, but we will update when this information is available. These changes to compensation and Vento bands are expected to be reviewed and publicised shortly.
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 enquiries@stephens-scown.co.uk