Business owners and HR personnel need to be aware of the imminent changes in April 2018 due to new employment legislation coming into force.
The most significant development will be the change to the rules on taxation of termination payments coming into force on 6th April 2018. However, there are a number of other key changes affecting employers and summarised below:
- National minimum wage increases – 1st April 2018
- The national living wage for workers aged 25 and over has increased from £7.50 to £7.83 an hour.
- The rates of other minimum wage bands have also increased with rates rising to £7.38 per hour for workers aged 21 to 24, to £5.90 per hour for workers ages 18 to 20 and to £4.20 for workers under 18 who are no longer of compulsory school age.
- Mandatory gender pay gap reporting deadline – 4th April 2018
- For private-sector and voluntary-sector employers with 250 employees or more, the deadline for the obligation to report data about their gender pay gap including bonus payments is 4th April 2018.
- The gender pay gap report must appear on the employer’s website in a publicly accessible manner and remain there for three years.
- All payments in lieu of notice are taxable – 6th April 2018
- A major change to the rules on taxation of termination payments comes into force on 6th April 2018. It is imperative that employers now review how they make termination payments.
- All payments in lieu, whether contractual or not, are taxable and the £30,000.00 exemption does not apply to any payments in lieu of notice.
- Whether or not a payment in lieu of notice (PILON) is taxable has traditionally been dependent on the terms of the employee’s contract of employment.
- Historically, the position to date has been a) if there is no express PILON, but the employer by custom and practice pays in lieu, a PILON has been implied and it deemed taxable; or b) if there has been no express clause and no chance of a clause being implied, the payment has been regarded as compensation for breach of contract and the first £30,000.00 tax-free.
- From 6th April 2018, Employers should ensure that no payments in lieu of notice are treated as non-taxable.
- Statutory family-related pay and sick pay rates increases – on or after 1st April 2018 & 6th April 2018
- The weekly level of statutory maternity, adoption, paternity and shared parental pay is increased to £145.18 for pay weeks commencing on or after 1st April 2018.
- Statutory sick pay rises to £92.05 per week on 6 April 2018.
- Employers need to make sure employees are paid the correct entitlements and review their policies that mention the rates, such as maternity policies and sickness absence procedures.
- Statutory redundancy pay increases – 6th April 2018
- New limits on employment statutory redundancy pay come into force on 6 April 2018.
- Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age.
- The weekly pay is subject to a maximum amount. From 6 April 2018, this will be £508.00 which will be an increase from the current rate of £489.00.
- Employers should ensure that calculations for statutory redundancy payments are made on this basis for redundancy dismissals on or after 6th April 2018.
Farleys Solicitors LLP specialise in a commercial employment law & HR for businesses. Advice and support includes contracts of employment, staff handbooks, directors service agreements, apprentices, equal pay, recruitment, restructures, disciplinaries, grievances, employee exits, settlement agreements; and Employment Tribunal defence and representation.
If you require any assistance with any of the above please contact Farleys Employment Law & HR team on 0845 287 0939 or complete our online contact form.