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National Living Wage, National Minimum Wage and New Compensation Limits set to increase

Napthens - March 1st 2017

The draft National Minimum Wage (Amendment) Regulations 2017 have been published and will come into force on 1 April 2017. They raise the National Living Wage as follows:

  • for those aged 25 or over an increase from £7.20 per hour to £7.50 per hour;
  • for those aged 21 or over (but not yet 25) an increase from £6.95 to £7.05;
  • for those aged 18 or over (but not yet 21) an increase from £5.55 to £5.60; and
  • for those under the age of 18 an increase from £4.00 to £4.05 per hour.

Tribunal compensation limits are also set to increase on 6 April 2017 pursuant to the Employment Rights (Increase of Limits) Order 2017 (SI 2017/175). The maximum compensatory award for unfair dismissal will rise from £78,962 to £80,541. The maximum amount of a week's pay, used to calculate statutory redundancy payments and various awards including the basic and additional awards for unfair dismissal, will also rise from £479 to £489. The minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons will also increase from £5,853 to £5,970.

The above new rates will take effect where the ‘appropriate date’ for the cause of action (such as the date of termination in an unfair dismissal claim) falls on or after 6 April 2017. Where the appropriate date falls before 6 April 2017, the old limits will still apply, irrespective of the date on which compensation is awarded.