This newsflash looks at the key employment law changes taking place in April 2018.

Increase in Statutory Payments

From 1 April 2018, the National Minimum Wage will increase as follows:

  • 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)
  • 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.

From 1 April 2018, Statutory Maternity, Paternity, Adoption and Shared Parental Pay will increase from £140.98 to £145.18 per week.

From 6 April 2018, Statutory Sick Pay will increase from £89.35 per week to £92.05 per week.

From 6 April 2018, compensation and redundancy payments will increase as follows:

  • The cap on a statutory week’s pay will increase from £489 to £508;
  • The maximum Basic Award for unfair dismissal will rise from £14,670 to £15,240;
  • Statutory Redundancy Payments will be capped at a maximum of £15,240 (from £14,670);
  • Compensatory Awards for unfair dismissal will increase to a maximum of £83,682 (from £80,541) or a year’s gross pay, whichever is lower.

Gender Pay Gap Reporting

The Gender Pay Gap Reporting obligations came into force on 6 April 2017 (31 March 2017 for the public sector). Any employer with 250 or more employees must comply with these regulations. Private sector employers must publish their report by 4 April 2018 (and thereafter by 4 April every year). Public sector employers must publish their reports by 30 March 2018 (and thereafter by 30 March every year). The reports must set out:

  • Difference in mean and median hourly pay between male and female employees;
  • Difference in mean and median bonus pay between male and female employees;
  • Proportion of male and female employees who received bonuses; and
  • Proportion of male and female employees in each of 4 pay quartiles.

Tax Treatment of Payments In Lieu of Notice

From 6 April 2018, all payments in lieu of notice will be subject to tax and national insurance regardless of whether an employee’s contract of employment contains a payment in lieu of notice (“PILON”) clause. The amount will be treated as earnings and employers will no longer be able to utilise use the £30,000 income tax exemption for any such payments even if there is no PILON in an employee’s contract.

Auto-Enrolment

From 6 April 2018 there will be an increase in the minimum contribution that employers and employees must pay into automatic enrolment workplace pensions, from 2% to 5%, with an employer minimum contribution of 2%. The employee will need to make up the shortfall between the employer’s contribution and the statutory minimum.

Matthew Potter comments:

"April is always a key month for changes in employment law and it’s important that those dealing with payroll are aware of the changes to statutory pay rates and changes to tax treatment of notice pay.”