New changes to employment and pensions law could have serious ramifications for employers.
April is traditionally the time of year when new statutory pay rates and Employment laws come into force.
Here we set out for you some of the most important changes that could impact on your organisation.
National Minimum Wage
1 April saw the national minimum wage hourly rates increase as follows:
- National Living Wage (those aged 25 and over) is now £8.21
- Standard adult rate (those aged 21 and 24 inclusive) has increased to £7.70
- Development rate (those aged 18- 20 inclusive) is now £6.15
- Young workers rate (those aged under 18 but above the compulsory school age and who are not apprentices) is £4.35
- Apprentice rate is £3.90 (for those apprentices less than 19 years old or those 19 years of age and older but in the first year of their apprenticeship)
Statutory Sick Pay
As of 6 April 2019 statutory sick pay is now £94.25 per week (up from £92.05 per week).
Family- related pay
The rates for statutory maternity, paternity, adoption and shared parental pay increased from £145.18 per week to £148.68 per week with effect from 7 April.
Statutory redundancy pay and awards for unfair dismissal
The statutory limit on a week’s pay for the purposes of calculating both statutory redundancy pay and unfair dismissal basic award has increased from 6 April 2019 to £525. This rate applies to dismissals where the employee’s effective date of termination is on or after 6 April 2019.
This means that the maximum basic award or statutory redundancy payment is now £15,750.
At the same time the statutory cap on the compensatory award element of a successful claim for unfair dismissal has now increased to £86,444. This means that the maximum amount a Claimant can be awarded for a compensatory award is now the lower of 52 weeks’ actual gross pay of the employee or £86,444.
Changes to payslips
Since 6 April 2019 all workers now have the same legal rights as employees to an itemised payslip. With effect from the same date, all payslips for hourly paid workers must now state the number of hours paid for.
Pensions auto- enrolment
From 6 April 2019, minimum overall contributions to pensions will increase from 5% to 8% of an employee’s qualifying earnings under the auto-enrolment rules. Employers’ minimum contributions will rise from 1% to 3%, with employees making up the shortfall to reach the 8% threshold. This results in an increase in employee contributions from 3% to 5% if the employer makes the minimum contribution.
The rationale for the changes is to increase employees’ pension savings for the future- the DWP forecasts that the overall level of pension saving among the eligible target population is estimated to be £18.62 billion in 2019/20, £209 million higher than it would have been if the thresholds had remained at 2018/19 levels in equivalent earnings terms.
As has been the case previously, both employers and employees will be able to contribute more than the minimum amount should they wish to do so. Failure by an employer to make the minimum contributions could result in a fine so it is imperative that the changes are observed.
Find out more on any of the above topics by contacting a member of our Employment and Pensions team.
