April traditionally brings changes to National Minimum Wage Rates and statutory pay rates. This year there is also an increase to National Insurance Contributions (NICs) to remember.
We set out below the changes for the financial year 2022/2023:
National Minimum Wage
Following the advice of the Low Pay Commission, the government will increase the National Minimum Wage rates from 1 April 2022 as follows:
- The National Living Wage (which since 2021 has applied to those aged 23 and over) will increase to £9.50 (up from £8.91).
- The minimum hourly rate for 21-22 year olds will increase to £9.18 (up from £8.36).
- The minimum hourly rate for 18-20 year olds will increase to £6.83 (up from £6.56).
- The minimum hourly rate for 16-17 year olds will increase to £4.81 (up from £4.62).
- The apprentice rate (for those under 19 years or those over 19 in their first year of apprenticeship) will increase to £4.81 (up from 4.30).
The accommodation offset rates will also increase, with a daily rate of £8.70 (up from £8.36) and a weekly rate of £60.90 (up from £58.52).
National Insurance Contributions
From 6 April 2022, NICs for both employers and employees will increase by 1.25% in order to provide additional funding to health and social care services.
At the time of writing, despite growing pressure on the government to abandon plans to increase NICs it seems there is no intention to do so.
Statutory Sick Pay
From 6 April 2022, the rate of Statutory Sick Pay (SSP) will increase to £99.35 per week (up from £96.35 per week).
For the first time in two years, the minimum average weekly earnings required to qualify for SSP will increase to £123 per week (up from £120 per week).
Family-related Pay
From 3 April 2022, the rates for Statutory Maternity, Paternity, Adoption, Parental Bereavement, and Shared Parental Pay, are set to increase to £156.66 per week (up from £151.97 per week); the employee will only be entitled to the lesser of 90% of their normal weekly earnings and this new weekly rate (with the exception for Statutory Maternity Pay and Statutory Adoption Pay, where 90% of normal weekly earnings is guaranteed for the first six weeks).
As with SSP, for the first time in two years, the minimum average weekly earnings required to qualify for these family-related payments will increase to £123 per week (up from £120 per week).
Compensation Limits – Statutory Redundancy Pay and Unfair Dismissal
From 6 April 2022, the compensation limits for compensation awarded in successful claims at the employment tribunals are set to increase. The new rates will apply to dismissals where the employee’s effective date of termination is on or after 6 April 2022.
The statutory limit on a week’s pay (for the purpose of calculating statutory redundancy pay and the basic award for unfair dismissal) has increased to £571 (up from £544). This means that the maximum basic award for unfair dismissal and the maximum statutory redundancy pay available is now £17,130 (up from £16,320).
The statutory cap on the compensatory element of a successful unfair dismissal claim has also increased, to £93,878 (from £89,493). Therefore, a successful Claimant can be awarded a compensatory award up to the lower of the value of 52 weeks’ of their actual gross pay or £93,878.
What do you need to do?
To avoid a breach of National Minimum Wage legislation and potentially being named and shamed, you should ensure that the rates of pay in your organisation from April are compliant with the increases to the National Minimum and National Living Wage rates. Also remember the changes to the Statutory rates of pay and the increase to NICs from April and ensure that payroll is implementing all of these changes.
To discuss how any of these changes affect you or your organisation, please contact a member of our Employment team.
This article contains a general overview of information only. It does not constitute, and should not be relied upon, as legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter.
This article was updated on 2 March 2022 to reflect the updated guidance on compensation limits for statutory redundancy pay and unfair dismissal.
