With April just around the corner are you ready for the statutory pay changes that are due to come into effect next month?
Know the figures
Every year there are rate increases for certain statutory pay entitlements. You need to make sure your payroll is prepared and ready so you don’t get caught out. From 1 April 2019 the standard rates for the following will be increasing:
- Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP) and Statutory Shared Parental Pay (SSPP) will increase from £145.18 per week to £148.68 per week. The Statutory Sick Pay (SSP) rate will also increase from £92.05 per week to £94.25 per week.
- The qualifying weekly lower earnings limit threshold for SMP, SPP, SAP, SSPP and SSP will rise from £116 per week to £118 per week.
- The National Living Wage (NLW) and the National Minimum Wage (NMW) are arguably seeing the biggest changes and there is a prospect that employers may get caught out. From 1 April the new pay rates will be as follows:
- The NLW for workers aged 25 or older will increase from £7.83 to £8.21 per hour.
- The rate for workers aged 21 to 24 will increase from £7.38 to £7.70 per hour.
- The development rate for workers aged 18 to 20 will increase from £5.90 to £6.15 per hour.
- The young workers rate (non-apprentices aged under 18) will increase from £4.20 to £4.35 per hour.
- The apprenticeship rate will increase from £3.70 to £3.90 per hour.
- The amount of a week’s pay for various statutory calculations, including statutory redundancy payments, will increase from £508 to £525.
- The statutory cap for unfair dismissal compensation will increase from £83,682 to £86,444.
National Living and Minimum Wage
The increases to the NLW and NMW rates are significant and employers should remember that underpayment of NLW or NMW to eligible workers is against the law and a worker who believes they have been underpaid may trigger an investigation by HM Revenue & Customs (HMRC). A notice of underpayment may be issued by HMRC covering all outstanding arrears and penalty fines of up to 200% of the total underpayment (up to £20,000 per underpaid worker). They also have the power to “name and shame” employers for non-payment. This is a good time to review your pay arrangements for all staff, including those paid on a salary to ensure that their contracted hourly rate remains above the new minimum rates.
The minimum contributions you and your employees pay into your automatic enrolment workplace pension scheme will increase from 6 April 2019, and it is down to you to ensure these increases are implemented on time.
All employers who have staff in a pension scheme for automatic enrolment must take the appropriate action to make sure at least the minimum amounts are being paid into their pension scheme.
What are the increases?
Current rate: 6 April 2018 to 5 April 2019 – Total required contribution is 5%
The employer is required to contribute 2%, with a 3% employee contribution
New rate: 6 April 2019 onwards – Total required contribution is 8%
The employer is required to contribute 3%, with a 5% employee contribution
As the employer you are required to make at least the minimum employer contribution towards the total required amount and your staff member must make up the difference (if any). By law a total minimum amount of contributions must be paid into the scheme, and so if you are in a position to increase your minimum contribution, your employees’ required contribution will decrease.
Another change due to come into force is an amendment to ‘The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018 (SI 2018/529)’. From 6 April 2019, the right to an itemised pay statement will extend to workers, not just employees. Furthermore, where a member of staff’s pay varies according to time worked, the employer will have to include the total number of hours worked for which variable pay is received on the itemised pay statement.