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Changes to Statutory Payments

April is the traditional month when the Government introduces changes to statutory payments, the National Minimum Wage and employment compensation limits.

Changes to statutory payments, including National Minimum Wage increases can be found detailed here.

The Employment Rights (Increase of Limits) Order 2018 comes into effect on the 6 April 2018. This order increases, from 6 April 2018, the limits applying to certain awards of employment tribunals, and other amounts payable under employment legislation, such as redundancy payments and unfair dismissal awards. A summary of the key changes can be found below

 

Statutory Payment Increases

Current rates will increase from 1 April 2018, as set out below:

                   STATUTORY RATES     CURRENT    NEW
Statutory Adoption Pay    
Standard Rate     £140.98   £145.18
Statutory Maternity Pay    
Standard Rate     £140.98   £145.18
Statutory Paternity Pay    
Standard Rate     £140.98   £145.18
Statutory Shared Parental Pay    
Standard Rate     £140.98   £145.18
Statutory Sick Pay    
Standard Rate     £89.35   £92.05

 

The earnings threshold (the Lower Earnings Limit) for the above statutory payments has increased from £113 to £116.

For the first 6 weeks of maternity and adoption pay, payments are made by the employer at 90% of the employee’s normal weekly earnings i.e. the “earnings-related rate”. For the remaining 33 weeks, employers must pay either the “prescribed rate” or the “earnings-related rate”, whichever is lower. Paternity pay must be paid by employers for at least 2 weeks at the “prescribed rate” (as above) or the “earnings-related rate”, whichever is lower. 

Parents seeking to take shared parental leave are entitled to 39 weeks of ShPP less any weeks spent by the child’s mother or adopter in receipt of Statutory Maternity or Adoption pay. As above, ShPP must be paid at the “prescribed rate” or the “earnings-related rate”, whichever is lower.  

From 1 April 2018, statutory sick pay will increase to £92.05 from £89.35 per week. Employees that have been absent from work for 4 consecutive days or more are entitled to a weekly SSP for up to 28 weeks. 

 

National Minimum Wage

Current rates will increase from 1 April 2018, as set out below:

  25 and over 21 to 24 18 to 20 Under 18 Apprentice
Current Figure    £7.50   £7.05   £5.60   £4.05   £3.50
From 01 April 2018   £7.83   £7.38   £5.90   £4.20   £3.70

 

Employment Compensation Limit Increases from 6 April 2018

The increases are:

  1. Maximum limit on compensatory award for unfair dismissal will increase to £83,682 (from £80,541);
  2. Maximum limit on a week's pay for calculating basic award and statutory redundancy payments increase to £508 (from £489);
  3. Guarantee pay will increase from £27 to £28 per day;
  4. 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 increase from £5,970 to £6,203;
  5. Award for unlawful inducement relating to trade union membership or activities, or for unlawful inducement relating to collective bargaining increased to £4,059 (from £3,907)
  6. Minimum amount of compensation where individual excluded or expelled from union in contravention and not admitted or re-admitted by date of tribunal application to £9,474 (from £9,118)

 

The increased limits will apply where the Effective Date of Termination (EDT) falls on or after 6 April 2018. The EDT is either the date on which the employee’s notice expire or the date on which the termination takes effect e.g. a summary dismissal where the employee is dismissed without notice.  

Pension contributions will also increase from 6th April 2018 to a total contribution of 5% (2% from the employer and 3% from the employee (with tax relief).

 

This article is intended as a guide and for general information only and is not a substitute for taking specific advice relating to your situation. For specific advice regarding this or any other issue relating to employment law, speak to one of our advisors by calling 01455 444222 or click here and complete our online enquiry form and an advisor will contact you shortly.