From April, there will be some significant changes to employment law, which are well worth noting.
With increases in the minimum wage and changes in the way staff are taxed on their severance pay – businesses need to be up to speed.
Minimum wage increase
Some of Staffordshire’s lowest paid workers will be receiving an increase, thanks to changes in the National Living Wage, which is the minimum rate paid to workers aged 25 and over. It will go up by 4.4% to £7.83 an hour from April 1.
Other national minimum wages will also rise from that date, with workers on the apprenticeship rate receiving a record 5.7% increase from £3.50 to £3.70 per hour.
Changes to taxation of termination payments
At the moment, there is a tax distinction between contractual pay you get for doing your job and the non-contractual pay in lieu of notice (PILON) payments you get when you change and move on.
This tax difference is set to be removed on the starting day of the new tax year, April 6th and it could make a big difference for anyone moving jobs after that.
PILON payments will be subject to normal deductions like income tax and national insurance contributions whether or not there is a contractual PILON clause.
It means employers making termination payments will have to carry out a complicated calculation to split the sum into ‘post-employment notice pay’ and the remaining balance. This ‘post-employment notice pay’ will be taxable, while the remaining balance is tax-free up to £30,000.
Gender pay gap reports deadline
The gender pay gap has been big news recently, but the first deadline for private companies to publish their reports on wage difference is also in the first week of April.
It’s a hot topic, so businesses need to stay on top of it.
Auto-enrolment contributions up
Employers will need to increase the minimum auto-enrolment contributions they pay towards workers’ pensions from April 6th.
They will have to contribute 2% (up from 1%) and employees have to contribute a minimum of 3% (also up from 1%).
The minimum contributions will increase again from April 2019.
This is enshrined in law – a failure to increase contributions appropriately could lead to a daily fine and the ignominy of being named for non-compliance.
Tribunal awards become more expensive
Companies who lose claims at tribunal will have to pay out more in compensation from April, as the limits on tribunal awards are revised
From April 6th, the start of the 2018/19 tax year, the maximum award for an unfair dismissal will be £98,922! A figure which will frighten many in the business world.
If you wish to know more about any of these changes, or have any questions about employment law, please contact us here at Keelys. We are happy to help.