1st April marks the implementation date of government enforced new rates and legislation for employers and their workforces. The most important thing to note this year is that there has been no increase to the Statutory payments to which a worker is entitled, including Maternity, Paternity, Adoption and Sick pay. This is due to the introduction of the National Living Wage, creating a higher tier for the National Minimum Wage. There are, however, various other changes to legislation that could be relevant to you and your workforce.
- National Living Wage 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 the 1st April 2016. This is the new top rate of the National Minimum Wage and employers should ensure salary sacrifice arrangements do not cause employee’s pay to fall under this new rate.
- Penalties for non-payment of National Minimum Wage increased – The penalty for non-payment of National Minimum Wage rates has doubled from 100% of amount owed to a worker to 200%. This penalty also applies for non-payment of the National Living Wage.
- New State Pension Scheme Introduced – A single tier state pension introduced from 6th April, 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. 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.
- Employer NICs are abolished for Apprentices under the age of 25 – As part of the Government’s drive to encourage employers to create more apprenticeships for young people, from 6th April employers will not pay employee national insurance contributions for apprentices aged under 25.
- 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 from prompt payment.
- Statutory family-related pay and sick pay rates are frozen – As mentioned above, unlike in previous years, there will be no increase to Statutory Adoption Pay, Statutory Maternity Pay or Statutory Paternity Pay rates in April 2016. Statutory Sick Pay will also remain at the same rate that has applied since April 2015.