Pay, Awards & Tax – Latest Changes

Taking Effect from April

Here below we set out the details behind the important employment law changes that will naturally have an impact on HR functions in the UK.

1 April

The National Living Wage for workers aged 25+ increased to £7.83 per hour.

The national minimum wage (NWM) rates  increase as outlined below:

£7.05 to £7.38 for 21 – 24 year olds

£5.60 to £5.90 for 18 – 20 year olds

£4.05 to £4.20 for 16 – 17 year olds

£3.50 to £3.70 for apprentices.

Statutory Maternity Pay (SMP)

Weekly rate for first 6 weeks 90% of the employee’s average weekly earnings SMP – weekly rate for remaining weeks £145.18 or 90% of the employee’s average weekly earnings, whichever is lower.

Statutory Paternity Pay (SPP)

Weekly rate £145.18 or 90% of the employee’s average weekly earnings, whichever is lower.

Statutory Adoption Pay (SAP)

Weekly rate for first 6 weeks 90% of employee’s average weekly earnings SAP – weekly rate for remaining weeks £145.18 or 90% of the employee’s average weekly earnings, whichever is lower.

Statutory Shared Parental Pay (ShPP)

Weekly rate £145.18 or 90% of the employee’s average weekly earnings, whichever is lower.

SMP/SPP/ShPP/SAP

Proportion of payments employees can recover from HMRC 92% if the total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year.  103% if the total Class 1 National Insurance for the previous tax year is £45,000 or lower.

5 April 2018

Gender Pay Reporting

Private Employers and Voluntary Sector organisations with 250+ employees must submit and publish their snapshot reports covering variances in pay by gender by 5 April.  Public Sector employers had a deadline of 31 March.

6 April 2018

Unfair Dismissal

The maximum compensatory award increases to £83,682 and applies to cases where the effective date of termination is 6 April 2018 or later.

Redundancy calculation

The maximum for a week’s pay rises to £508. This increase will apply to any organisation making redundancies on or after 6 April 2018.

Tax and Termination

Notice pay is, from 6 April, to be treated as earnings and therefore subject to tax and national insurance contributions.  This applies regardless of any pay in lieu of notice (PILON) agreement or contractual obligation.  Terminations prior to 6 April will be subject to the previous rules.

Statutory Sick Pay

SSP rises to £92.05 per week.

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