As you may or may not be aware, each year in April the Government introduces new legislation in respect of employment rights and responsibilities. Below is a summary of the key changes being implemented this month.
- National Living Wage
From 1st April 2016, workers aged 25 and over are entitled to the ‘national living wage’ rate of £7.20 per hour – this is essentially a new ‘top rate’ of the national minimum wage.
NOTE FOR EMPLOYERS:
– The new rate is applicable from the first pay reference period commencing on or after 1st April 2016.
– Please ensure you check that employees’ pay is not brought below the new rate by any form of salary-sacrifice scheme.
- Penalties for non-payment of the national minimum wage doubled
This has also taken effect from 1st April 2016 and the same enforcement provisions apply for failure to pay the national living wage. Further details can be found here: https://www.gov.uk/government/news/measures-to-ensure-people-receive-fair-pay-announced.
- Employer NICs and Apprentices
You may have noticed the Government’s recent campaign to entice employers to provide more apprenticeships – in their latest drive they have decided to abolish National Insurance Contributions for apprentices aged under 25. These changes have been introduced with effect from 6th April 2016 and it is hoped they will incentivise employers to offer more apprenticeships going forwards.
- Statutory family-related pay and sick pay
Employers will be surprised to note that there will be no increase to statutory adoption, maternity, paternity or shared parental pay rates this year, and statutory sick pay is similarly unchanged. Details of the current applicable rates can be found here: https://www.gov.uk/government/collections/statutory-pay.
However new limits for statutory redundancy pay and employment tribunal awards have been introduced from 6th April 2016, and are as follows:
- Maximum weekly pay for redundancy: £479 (from £475)
- Maximum amount of compensatory award for unfair dismissal: £78,962 (from £78,335)
- Non-payment of tribunal awards
In order to combat situations where employers either simply refuse to pay or make a reduced payment to an employee following an employment tribunal award (or indeed an ACAS settlement), from April 2016 legislation has been introduced to allow tribunal enforcement officers to impose a financial penalty on employers in these circumstances.
It is expected that this penalty will be 50% of the total award (which will be subject to minimum and maximum amounts) and reductions can be made for prompt payment by the employer.
- Introduction of new state pension scheme
Once again with effect from 6th April 2016, a new state pension scheme has been introduced to replace the existing basic and additional state pension scheme.
The effect of this for employers is that employer pension schemes will not be permitted to ‘contract out’ of the state pension, which would previously mean they would gain a national insurance rebate. It is therefore likely that following these changes, both employer and employee national insurance contributions will increase.
Although the new scheme is designed to be a lot simpler and easier to follow than the old one, it does contain some complicated changeover arrangements which you will need to be aware of if contributions have previously been made under the ‘old’ scheme.
Both employers and employees are therefore encouraged to seek further specialist advice and the Government have also produced a handy guide to the new rules, here: https://www.gov.uk/new-state-pension/youve-been-in-a-workplace-personal-or-stakeholder-pension.
- Repayment of exit payments by public-sector employees
Employees leaving their public-sector employers on the grounds of redundancy, early retirement and voluntarily (and receiving an enhanced payment as a result) will be made to repay such exit payments if they decide to re-join the public-sector organisation within a year of their termination date.
Again the above changes have taken effect from April 2016.