April is set to be a busy month for HR and payroll as new rules and rates are introduced.
As from 1 April 2018, the national minimum wage rates have been increased:
- 16 – 17 year olds: £4.05 to £4.20 per hour;
- 18 – 20 year olds: £5.60 to £5.90 per hour;
- 21 and over: £7.05 to £7.38 per hour;
- 25 and over: £7.50 to £7.83 per hour (National Living Wage); and
- Apprenticeship rate (for apprentices under 19 years old, or over 19 but in the first year of their apprenticeship): £3.50 to £3.70 per hour.
Also, as from 1 April 2018 the rate of statutory payments for employees on maternity, paternity, adoption and shared parental leave has increased from £140.98 to £145.18 per week.
From 6 April 2018, statutory sick pay increases from £89.35 per week to £92.05 per week.
Where dismissal takes effect on or after 6 April 2018, there are increased limits on Employment Tribunal compensation awards:
- The maximum basic award for unfair dismissal increases from £14,670 to £15,240;
- The maximum compensatory award for unfair dismissal increases from £80,541 to £83,682 (or a year’s gross pay if this is lower); and
- The limit on a statutory redundancy payment increases from £14,670 to £15,240.
The three bands of awards on which injury to feelings awards are based are also updated from the same date.
- Lower band range – for less serious cases – increases from £800 – £8,400 to £900 – £8,600;
- Middle band range – for more serious cases – increases from £8,400 – £25,200 to £8,600 – £25,700;
- Upper band range – for the most serious cases – increases from £25,200 – £42,000 to £25,700 – £42,900;
- Exceptional cases may still attract awards over £42,900.
For those dealing with termination payments there is also a big change to the way in which payments in lieu of notice (PILON) are treated for tax purposes.
If the employment ends and payment is made on or after 6 April 2018, the new taxation rules require that all payments in lieu of notice are subject to tax and national insurance. It will no longer make any difference whether an employee’s contract of employment contains a PILON clause. Previously where there had been no such clause it may have been possible to use the £30,000 income tax exemption for any such payments to pay the departing employee gross.
This blog post was written by Christopher Davies. For further information, please contact:
Christopher Davies, professional support lawyer, Employment
T: 0161 836 7936