Government reforms (1): Spring changes – are you ready?

living wageThe following changes are on their way in April:

1 April 2016

National Living Wage: a new mandatory National Living Wage of £7.20 per hour will be introduced from 1 April 2016 for workers aged 25 or over. The National Minimum Wage will continue to apply to other workers (current rate (until September 2016) is £6.70 per hour for 21 – 25 year olds, £5.30 per hour for 18-20 year olds: £3.87 an hour for 16-17 year olds and £3.30 per hour for apprentices).

No increase to statutory rates: There will be no increase this year in statutory rates (see our December 2015 Newsflash No increase to statutory rates). This is because the CPI fell by 0.1% in the year to September 2015.  The current weekly rates of such statutory payments will remain at their current 2015/16 levels which are as follows:

  • Maternity, paternity, adoption and shared parental pay: £139.58 per week (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate); and
  • Statutory sick pay (SSP): £88.45 per week.

6 April 2016

Financial penalties for employers:  From 6 April 2016 a financial penalty of 50% of the outstanding amount, subject to a minimum of £100 and a maximum of £5,000 will be levied on employers who fail to pay sums ordered by a Tribunal or owed under settlement agreements reached following ACAS conciliation (see our update in our January 2016 Newsletter Government reforms: Financial penalties for unpaid awards).

Tribunal award limit increase: On 6 April 2016 the limits to Tribunal compensation will increase where the dismissal (or detriment, or whatever it is that is being complained about) takes place on or after 6 April 2016:

    • Unfair dismissal compensatory award:
      • Current limit – £78,335
      • Limit from 6 April – £78,962
  • Week’s pay (used to calculate redundancy payments and other awards):
    • Current limit – £475
    • Limit from 6 April – £479

    The weekly pay rate is the maximum amount of a week’s pay for working out redundancy pay which means that the maximum amount of statutory redundancy pay that an employee made redundant on or after 6 April 2016 will be able to receive will be £14,370

  • Basic award for certain unfair dismissals (trade union membership or activities, health and safety duties, pension scheme trustee duties or acting as an employee representative)
    • Current limit – £5,807
    • Limit from 6 April – £5,853