Increases in employment payments coming in April: what should employers do now?

March 5, 2024

By Bríd Price

The UK Government has announced the new sums to which employees will be entitled if they are made redundant, unfairly dismissed or temporarily laid off from April 2024. Our employment law team has explored what steps employers should take to prepare for these changes.

Why are changes being made and when will they take effect?

The Government adjusts the statutory payments to which employees are entitled in April this year. However, as the increases take account of inflation, they are much bigger in 2024 than in previous years. The changes this year reflect the increase in the Retail Prices Index of 8.9% from September 2022 to September 2023. These figures are subject to final approval, but are due to take effect from 6 April 2024.

How will these changes affect employers?  

From 6 April, the cap on a week’s pay when calculating an employee’s statutory redundancy pay will increase from £643 to £700. Given that one of the most common reasons for making redundancies is as part of a cost-cutting exercise, this increase of almost 9% will certainly give employers something to think about. Therefore, employers need to plan carefully if they are considering making redundancies in the next few months.

Also from the 6 April, the maximum compensatory award for unfair dismissal will rise from £105,707 to £115,115 (although this is capped at the employee’s annual salary if lower). As such, following a proper process and dismissing fairly for redundancy has never been so important.

Other changes will also include:

• The basic award for some forms of unfair dismissal will rise from £7,836 to £8,533.
• The statutory guarantee pay for employees who are temporarily laid off will increase from £35 to £38 per day.

Other linked changes include increases to statutory sick pay, maternity pay, and increases in the National Living Wage and other types of minimum wage, which are also due to take effect in April.

What should employers do now?

• Do not delay. If you are currently considering redundancies, delaying will only make it more expensive. From 6 April, making redundancies will be more costly. If you have already commenced a redundancy process then you may be able to conclude this before the changes take effect.
• Figure out the financial matters. If your employees have been with you for 2 full years or more then, at the very least, you must pay them the legal statutory amount of redundancy pay. Work out these figures now, so you can better prepare the organisation to bear these costs.
• Map out what your business restructure needs to look like. At the start of the process, map out where you want to get to at the end and work back from there.
• Remember that, when making redundancies, employees are also entitled to their notice and accrued holiday. Requiring employees to work their notice periods and take their accrued holidays during these periods can sometimes reduce the financial cost.
• Ask for advice. Getting your restructures and redundancy processes right has never been more important due to the financial implications either if a redundancy is made, or if an employee brings a claim for unfair dismissal. Obtaining legal advice at an early stage will help you to avoid legal pitfalls during a redundancy consultation process.

If you require assistance on any of the above, contact Bríd Price on 02920 829 113 or  bprice@darwingray.com for a free initial chat to see how we can help you.