Annual increases to minimum wage limits, statutory rates and compensation limits for 2025: what action do employers need to take?

New minimum wage thresholds, statutory limits and rates came into effect from the beginning of April 2025. In this article, we outline the changes coming into effect and advise next steps for employers.

What are the new rates of pay?

The new rates of pay were first proposed by Chancellor Rachel Reeves in her Autumn Budget in 2024. Employers are likely to be aware of the changes by now, but should make sure that as of 1 April 2025, they are paying their employees and workers in line with the new rates below:

National Minimum Wage

• For apprentices, an increase from £6.40 to £7.55.
• For 18 to 20 year olds, an increase from £8.60 to £10.00.
• For 16 and 17 year olds and apprentices, an increase from £6.40 to £7.55.

National Living Wage

• For 21 year olds upwards, an increase from £11.44 to 12.21.

Statutory rates 

As well as the changes to the National Minimum Wage and National Living Wage, a host of increases have been proposed that will also see statutory rates rise from 6 April 2025. These include the following:

• Statutory sick pay is increasing to £118.75 per week, previously £116.75.
• Statutory maternity, adoption, paternity, shared parental and parental bereavement pay is increasing to £187.18 per week, previously £187.18.
• The statutory limit on one week’s pay for various purposes, including statutory redundancy pay, will increase to £719, previously £700).
• Statutory guarantee pay will increase to £39 per day, previously £38. 
• The statutory cap for compensatory awards in unfair dismissal claims will increase to £118,223, previously £115,115.

Compensation for injury to feelings

There is also an annual increase to the Vento bands, which are used by the Employment Tribunal to determine financial awards for injury to feelings in claims such as discrimination or harassment. The parameters of each Vento band is increasing as follows:

What action do employers need to take?

As well as communicating these changes to those affected, all employers should make sure that their employees and workers are set to be paid in line with the increased rates, and ensure that all contractual documentation, policies and procedures are updated as necessary to reflect the changes. 

If you would like any assistance with reviewing or updating employment contracts, policies or procedures to incorporate these changes, please contact our employment team.