April is always a busy time for business with many ending and starting a new financial year – this year is no exception and to add to the mix we have 5 key employment law changes which you also need to know for April.
Minimum wage increase
Perhaps one of the key changes to take place which employers ignore at their peril, with the Government producing a “name and shame” list along with penalties for those not complying. Make sure you are ahead of the game and update your payroll in time to take account of these changes.
Remember both the national minimum wage (NMW) and national living wage (NLW) are not guides, these are mandatory rates which need to be applied with effect to all relevant staff from 1 April 2018.
The National Living Wage, which is the minimum rate paid to workers aged 25 and over, will go up by 4.4% to £7.83 an hour. All other national minimum wages will also rise from the same date, with workers on the apprenticeship rate receiving a record 5.7% increase from £3.50 to £3.70 per hour. For a full list of changes take a look at the Gov.UK site.
Don’t forget to write to your employees to let them know about any changes to their pay relevant to them. For those Companies with staff who claim benefits such housing benefit or tax credits, they will more than likely need to produce confirmation of their increase for benefit purposes so it is important to be prepared and ensure you update all those affected.
Changes to the taxation of termination payments
The current tax difference between contractual pay you get for doing your job and the non-contractual pay in lieu of notice (PILON) payments you get when you leave a role is set to be removed on 6 April 2018. This could make a big difference for any employees moving jobs after the deadline.
From the 6th PILON payments will be subject to normal deductions like income tax and national insurance contributions – even if there’s a contractual PILON clause in place.
This ‘post-employment notice pay’ will be taxable, while the remaining balance is tax-free up to £30,000.
Deadline for gender pay gap reporting
We have already seen increased reporting in the media as the deadline of 4th April 2018 approaches and this is only set to increase in the spotlight during April as we see which Companies comply and what will happen to those that miss the deadline.
The gender pay gap is the difference between the average earnings of men and women, expressed relative to men’s earnings. For example, ‘women earn 15% less than men per hour’. Any organisation with 250 or more employees must publish and report specific figures about their gender pay gap. If your organisation has fewer than 250 employees, it can publish and report voluntarily but is not obliged to do so.
You can find out more about whether you are a ‘relevant employer’ along with ‘snapshot dates’ for reporting here.
Auto-enrolment contributions going up
Along with the rise to minimum wages, employers will face further increases from 6th April 2018 when the contributions payable under auto enrolment will also increase.
Employers will have to contribute 2% (up from 1%) and employees have to contribute a minimum of 3% (also up from 1%).
Again, these increases are a legal requirement and a failure to act on these increases could see Companies being fined and publicly named for non-compliance.
Whilst this is an extra cost for Employers, it is also a rise for employees so if you haven’t already, you need to be letting your staff know that this rise is coming so there are no shock when they receive their April payslip. Staff always have the option to opt out of pensions, but this must be their decision and Companies must not seek to encourage opt out amongst their workforce.
Don’t forget that this will rise again in April 2019.
Compensation limits in Employment Tribunals awards to increase
Employers who lose claims at tribunal will have to pay more in compensation from April as the maximum limits on tribunal awards are updated. These increases come at a time when employment tribunal claims are on the up, with claims increasing by 90% between October to December 2017, compared to the previous year.
These increases will come into force from 6 April 2018 and if the action or appropriate date for action falls before this date, the old limits will apply.
The increases are:
maximum limit on compensatory award for unfair dismissal will increase to £83,682 (from £80,541);
maximum limit on a week’s pay for calculating basic award and statutory redundancy payments increase to £508 (from £489);
guarantee pay will increase from £27 to £28 per day;
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;
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)
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)
If you’re running out of time to make sure you’ve complied with the above our HR team can help you navigate your way to ensure you stay on the right side of the law!