Along with spring time and the lighter evenings arrived the latest instalment of employment law changes for 2016 that will impact on all employers.
To ensure your business is up to date and paying staff what’s due, here’s a summary of the key financial changes that came into force from 1 April 2016:
1. National Living Wage introduced
After all the build-up, the national living wage (NLW) is finally here! This means workers aged 25 and over are entitled to be paid a new hourly rate of £7.20 from the first pay reference period beginning on, or after 1 April 2016.
The NLW is a top up rate of the existing national minimum wage (NMW), which remains in place.For those under 25, the current NMW rates continue to apply, i.e. £6.70 per hour for those aged 21 to 24.
2. Penalties for non-payment of the NMW increased
Harsher, increased penalties can now be enforced against employers who failto pay workers the NMW. The penalties for non-payment have doubled from 100% of arrears owed to 200%, although these will be halved if paid by the employer within 14 days of receiving the enforcement notice. The maximum penalty remains capped at £20,000 for each worker who has not been paid the NMW and also applies to employers who fail to pay the NLW.
The public ‘naming and shaming’ by government of employers who fail to pay the NMW to their staff will also continue moving forwards.
3. Employment Tribunal compensation limits increase
From 6 April 2016, the maximum compensatory award for unfair dismissal increased from £78,335 to £78,682. As did the maximum amount of a week’s pay used to calculate statutory redundancy payments, which has increased to £479 (from £475). This means for employers making any redundancies on, or after 6 April 2016, it’s this new figure that should be used when calculating what needs to be paid in terms of statutory redundancy.
4. Financial penalties for non-payment of awards
Also from 6 April 2016, financial penalties can now be imposed on employers who fail to pay the successful claimant a tribunal award, or ACAS conciliated settlement.The amount of the penalty will be 50% of the amount owed, subject to a minimum of £100 and maximum of £5,000.
However, the amount of the penalty will be reduced by 50%, if the employer pays both the unpaid sum owed and the penalty within 14 days of the notice.
5. Employer NICs are scrapped for apprentices under the age of 25
As part of the government’s drive to encourage businesses to create more apprenticeships for young people, from 6 April 2016, employers no longer have to pay employer national insurance contributions for apprentices aged under 25. The apprenticeship rate remains at £3.30 per hour.
Written by Mike Patterson of Berwins Solicitors.