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Employment Law Update – Spring


Employment Law Update – Spring

National Minimum and Living Wage

From 1st April 2016, the new National Living Wage applies to workers aged 25 and over at a rate of £7.20 an hour (to increase again in April 2017).

Further, the following hourly rates of national minimum wage will increase on 1st October 2016:

• The rate for workers aged 21 to 24: up to £6.95.
• The development rate (workers aged 18 to 20): up to £5.55.
• The young workers rate (non-apprentices aged under 18 but above compulsory school age): up to £4.00.
• The apprenticeship rate: to £3.40.

The Budget

The main employment-related announcements in the recent Budget were:

• A consultation on extending Shared Parental Leave and Pay to working grandparents will begin in May 2016.
• From April 2018, termination payments that are subject to income tax on amounts in excess of £30,000 will be subject to employer National Insurance Contributions (NICs). All payments in lieu of notice and some damages payments will also be taxed as earnings.
• The government will consider restricting the range of benefits that may be offered through salary sacrifice schemes (salary sacrifice for enhanced employer pension contributions, childcare benefits and health-related benefits, such as the cycle to work scheme, will be unaffected).
• Employers will receive a government payment equal to 10% of their monthly apprenticeship levy contributions that will be available for them to spend on apprenticeship training.
• From April 2017, employers will be denied the NICs employment allowance for a period of one year if they are subject to a civil penalty for employing illegal workers.

Annual Compensation Limit Increases

As with previous years, the annual compensation limits have increased again. These apply to dismissals occurring on or after 6th April 2016. The main changes are:

• A week’s pay (used to calculate things like statutory redundancy payments and basic awards in unfair dismissal cases) – £479 (from £475);
• Maximum compensatory award in unfair dismissal cases – £78,962 (from £78,335).