Every April, new legislation affecting employment rights and responsibilities is introduced. This year, the development receiving the most attention is the introduction of the national living wage. But are you aware of other important employment law changes on their way?
Our recent Webinar: Introduction to the national living wage, available to watch on-demand, discusses the implications of the new law, the need for employers to prepare for increases in the minimum wage rate over the coming years, and why employers might consider paying the higher, voluntary Living Wage.
1. The national living wage is introduced
Workers aged 25 and over will be entitled to the national living wage rate of £7.20 per hour from the first pay reference period beginning on or after 1 April 2016.
The national living wage is a new top rate of the national minimum wage.
Employers should check, in particular, that employees’ pay is not brought below the new rate by salary-sacrifice arrangements.
- If 1 April 2016 falls part way through a payroll period, from which date does the employer have to start paying the national living wage?
- Model letter advising a worker of a pay increase because of the introduction of the national living wage
- National living wage survey: January 2016
2. Penalties for non-payment of the national minimum wage are increased
The penalty for employers found not to have paid the national minimum wage doubles from 1 April 2016. The enforcement regime is the same for non-payment of the national living wage.
- Employment law manual: National minimum wage enforcement
- What are the consequences if an employer pays workers less than the national minimum wage?
3. A new state pension scheme is introduced, ending contracting-out
A single-tier state pension is introduced from 6 April 2016, replacing the previous basic state pension and additional state pension.
Employer-provided pension schemes will no longer be able to contract out of the state pension and receive a national insurance rebate.
This means that, where an employer provides a previously contracted-out scheme, its employer and employee national insurance contribution liability will increase.
Employers should ensure that employees are aware that there may be an impact on their pay packet and that they understand the reasons for this.
4. Employer NICs are abolished for apprentices under age 25
As part of the Government’s drive to encourage employers to create more apprenticeships for young people, from 6 April 2016, employers will not pay employer national insurance contributions for apprentices aged under 25.
5. Public-sector employees can be required to repay exit payments
Employment law changes April 2016
XpertHR’s legal timetable provides summaries of all pending employment laws and regulations, with implementation dates.
Regulations requiring higher earning public-sector employees to repay exit payments if they re-join the public sector within a year are expected to come into force in April 2016 or soon after.
The duty to repay will include redundancy payments, voluntary exit payments and payments made to reduce an actuarial reduction to a pension on early retirement.
- Public-sector exit payments repayable
- Employment law manual: Redundancy rights – Local authority
- Employment law manual: Final payments
6. Financial penalties can be imposed for non-payment of tribunal awards
Legislation allowing tribunal enforcement officers to impose a financial penalty on an employer that fails to pay a tribunal award or Acas settlement sum is expected to come into force in April 2016.
Research carried out in 2013 showed that less than half of tribunal claimants who had been awarded compensation received the full award from the employer.
The penalty will be 50% of the unpaid award, subject to minimum and maximum amounts and a reduction for prompt payment.
- Non-payment of tribunal awards to incur financial penalty
- Employment law manual: Tribunal procedures and penalties
7. A salary requirement is introduced for tier 2 workers
Employers can sponsor skilled foreign workers to come to the UK to work for them under tier 2 of the immigration points system. A new requirement for a minimum salary of £35,000 will apply from 6 April 2016.
New limits on employment tribunal awards and statutory redundancy pay come into force on 6 April 2016. The maximum amount of a week’s pay for these purposes increases to £479, and the maximum amount of a compensatory award for unfair dismissal increases to £78,962.
- Employment law manual: Employing foreign workers
- How to apply for a sponsor licence
- How to retain a sponsor licence
8. Statutory family-related pay and sick pay rates are frozen
Our final change for April isn’t actually a change at all, but many employers might be expecting one around statutory rates of pay. Unlike in previous years, there will be no increase to statutory adoption, maternity, paternity or shared parental pay rates in April 2016.
Statutory sick pay will also remain at the same rate that has applied since April 2015.