Employment Law changes 2018/2019

With April fast approaching, your clients need to be aware of the changes in statutory pay rates which are set to come into force.

April brings with it several developments which are set to alter the landscape of employment law, particularly in the area of employee wages and other monetary issues. It is important your clients are aware of these and review their practices to ensure they’re acting lawfully.

Minimum wage increases

National Minimum Wage (NMW) and National Living Wage (NLW) will increase for pay reference periods starting on or after 1st April as follows:

  • Age 25 and over – £7.83 per hour
  • Age 21-24 years old – £7.38 per hour
  • Age 18-20 – £5.90 per hour
  • Over compulsory school age but not 18 – £4.20 per hour
  • Apprentice rate – £3.70 per hour

Statutory pay rates rise

‘Family friendly’ payments will also increase on 1st April. The weekly pay rates of statutory maternity pay (SMP), statutory adoption pay (SAP), statutory paternity pay (SPP) and shared parental pay (ShPP) will all increase from £140.98 to £145.18.

Coinciding with the new tax year, statutory sick pay (SSP) will increase from 6th April from £89.25 to £92.05 a week. The average weekly earnings limit which an employee must reach to be eligible for these statutory payments will also rise from £113 to £116 a week.

Tribunals to become more expensive

Maximum tribunal awards will increase on 6th April as part of the government’s annual review procedure. Most notably the new maximum award for an unfair dismissal, totalling the maximum basic and compensatory award, will rise from £95,211 to £98,922. Your clients should be wary that this publicised increase, coupled with the fact that individuals no longer have to pay to lodge a claim with the employment tribunal, may lead to an increase in potential claims against them.

Pension Auto Enrolment

With effect from 6th April, the minimum automatic enrolment (AE) contributions your clients must pay towards their employees’ pensions will also increase. Your client will now need to contribute at least 2%, whilst the employee is required to contribute 3% themselves through automatic wage deductions. The government has warned that any failure to abide by these new regulations will lead to financial penalties for the organisation in question.

Taxation Payments

Finally, your client needs to be aware that, with effect from 6th April, payments in lieu of notice upon termination of employment will become subject to income tax and employee National Insurance contributions, regardless of whether the right to pay is included within the contract or not.

Courtesy : Croner Taxwise

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