Employment update – financial changes to expect from April 2023

With the end of the financial year looming, we look ahead at some key financial developments coming into force from April 2023, which should equally be borne in mind by both employers and employees.

National Minimum Wage

The Government has announced the rates of the National Living Wage and National Minimum Wage which will come into force from April 2023. In doing so, the Government has accepted in full the recommendations of the Low Pay Commission.

The rates, which will apply from 1 April 2023, are as follows:

	Rate from April 2023	Annual increase from April 2022
National Living Wage	£10.42	£0.92 (9.7%)
21-22 Year Old Rate	£10.18	£1.00 (10.9%)
18-20 Year Old Rate	£7.49	£0.66 (9.7%)
16-17 Year Old Rate	£5.28	£0.47 (9.7%)
Apprentice Rate	£5.28	£0.47 (9.7%)
Accommodation Offset (the maximum daily deduction from the National Minimum Wage)	£9.10	£0.40 (4.6%)

Unfair dismissal awards

The Compensatory Award:

The compensatory award is intended to compensate an employee for the actual financial losses they have suffered as a result of their unfair dismissal. It is designed to put the employee back in the position they would have been in had they not been unfairly dismissed. The compensatory award is calculated based on the employee’s actual losses, such as lost earnings and benefits, and it can also include compensation for future losses if the employee has not been able to find new employment.

This award in the vast majority of unfair dismissal cases is subject to a statutory upper limit, or “cap”, which is adjusted annually by the Secretary of State in line with any annual increase in the Retail Price Index.

The statutory limit employees can received from 6 April 2023 following a successful unfair dismissal claim has been increased from £93,878 to £105,707.

The Basic Award:

The basic award in unfair dismissal claims is designed to compensate an employee for loss of job security. This award is calculated by reference to an employee’s age, length of service and gross weekly pay (which is subject to a statutory limit).

The statutory limit on a gross week’s pay is also adjusted annually by the Secretary of State in line with any annual increase in the Retail Price Index.

The statutory limit on a gross week’s pay has been increased from £571 to £643.

Automatically unfair dismissals:

Some automatically unfair dismissal attract a minimum basic award. Such cases are where the reason or principal reason for dismissal is:

Trade union membership or activities
Carrying out activities as a health and safety representative
Carrying out functions as a workforce representative
Carrying out duties as an occupational pension scheme trustee, and
Carrying out functions or activities as an employee representative.

The minimum that can be award for these types of dismissals has increased from £6,959 to £7,836, with the maximum increasing from £17,130 to £19,290.

Injury to feelings award

The levels of compensation which can be awarded for injury to feelings and psychiatric injury in discrimination, harassment and victimisation cases have also been amended; please see our recent update blog.

Statutory sick pay

The statutory sick pay scheme entitles qualifying employees who have been absent from work for four or more consecutive days to receive a minimum weekly payment. Employees are entitled to up to 28 weeks’ statutory sick pay in any period of incapacity for work.

Statutory sick pay is increased every April in line with the annual Consumer Prices Index.

From 6 April 2023, weekly statutory sick pay entitlement will be increased from £99.35 to £109.40.

Maternity, Paternity and Adoption

Statutory maternity pay:

Statutory maternity pay is payable at two different rates:

For the first six weeks, at the earnings-related rate, which is 90% of the employee’s normal weekly earnings; and
For the remaining 33 weeks, at either the prescribed rate or the earnings-related rate, whichever is lower.

The prescribed weekly rate for statutory maternity pay, which is raised annually in line with the Consumer Prices Index, has been increased from £156.66 to £172.48. This change is effective from 2 April 2023.

Statutory paternity pay:

Statutory paternity pay is payable for up to two weeks at the prescribed rate, or at the earnings-related rate (which is also 90% of the employee’s normal weekly earnings), whichever is lower.

The prescribed weekly rate for statutory paternity pay, which is also effective from 2 April 2023, has been increased from £156.66 to £172.48.

Statutory adoption pay:

Since 5 April 2015, statutory adoption pay has been payable at two different rates:

For the first six weeks, at the earnings-related rate. This is 90% of the employee’s normal weekly earnings, and
For the remaining 33 weeks, at either the prescribed rate or the earnings-related rate, whichever is lower.

From 2 April 2023, the prescribed weekly rate will be increased from £156.66 to £172.48.

Maternity allowance:

Maternity allowance is payable for up to 39 weeks to women who are not entitled to statutory maternity pay because they are either low-paid or self-employed. The individual is entitled to the lower of the prescribed rate of maternity allowance or 90% of their normal weekly earnings.

From 11 April 2023, the prescribed weekly rate will be increased from £156.66 to £172.48.

Shared parental pay:

The number of weeks of Shared parental pay available to be shared between parents is 39 weeks less any weeks spent by the child’s mother or adopter in receipt of statutory maternity pay, maternity allowance or statutory adoption allowance. The weekly rate of shared parental pay is the lower of the prescribed rate and 90% of the normal weekly earnings of the person claiming shared parental pay.

From 2 April 2023, the prescribed weekly rate of shared parental pay will be increased from £156.66 to £172.48.

Parental bereavement pay:

Employees taking parental bereavement leave may be entitled to statutory parental bereavement pay. To be entitled, employees must meet criteria including having at least six months’ continuous service and normal weekly earnings of at least the lower earnings limit.

Statutory parental bereavement pay can be taken in periods of one week, two consecutive weeks, or two separate weeks and is paid at the same rate as other statutory payments such as paternity pay.

In line with the aforementioned changes, statutory parental bereavement weekly pay is being increased from 2 April 2023 from £156.66 to £172.48.

Should you require any assistance with regards to unfair dismissal or discrimination claims, please do not hesitate to contact partner Linky Trott or any member of the Employment team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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