Employment law changes April 2016
1 May 2016
National living wage
The introduction of the national living wage on 1 April 2016 is the biggest change to occur in April. It will be payable to workers who are aged 25 and over and the initial rate will be £7.20 per hour. It is effectively a top-up rate of the national minimum wage. It has been estimated that 50 per cent of employers will need to increase pay for relevant workers and you should check that you are paying workers the correct amount. Employers may also need to consider how they will fund the national living wage; do you need to increase prices, improve productivity or cut staff numbers or benefits?
National minimum wage enforcement
The government is consolidating enforcement of the national minimum wage by doubling the penalties for a failure to pay it up to 200 per cent of arrears, with a maximum penalty of £20,000 per worker. Company directors can also be disqualified for up to 15 years if they are in breach. The same penalties apply to a failure to pay the new national living wage. Employers should check that workers are being paid the correct amounts.
Repayment of public sector exit payments
A public sector employee who earns more than £80,000 per year and leaves employment with an exit payment will have to repay the whole amount, or a proportion of it, if he returns to the public sector within 12 months. Other reforms to public sector exit payments are currently being considered by the government.
Employment tribunal news
The limits on employment tribunal awards usually rise on 6 April each year and 2016 is no exception. The maximum basic award in an unfair dismissal case will be £14,370 and the maximum compensatory award will be £78,962 (or 52 weeks’ pay if this is a lesser sum). The cap on a week’s pay, which is used to calculate statutory redundancy payments, is increasing to £479.
Currently, fewer than half of employment tribunal claimants who have been awarded compensation receive the full amount from their employer. New provisions are due to come into force on 1 April that will provide for financial penalties to be levied on employers who do not pay employment tribunal awards or Acas settlement sums. Under the new regime, an employer who fails to pay will be issued with a warning notice requiring the sum to be paid by a specific date. If the employer still does not pay, a penalty notice can be issued requiring the employer to pay 50 per cent of the compensation to the government as a penalty. The minimum penalty is £100 and the maximum is £5,000. If the employer pays the outstanding compensation and the penalty within 14 days, the penalty will be reduced by 50 per cent. Employers can avoid having to pay a penalty by ensuring that they pay any compensation due to employees promptly.
The employment tribunal rules are being changed in order to reduce delays. Each party will only be able to apply for two postponements to hearings in a case, unless there are exceptional circumstances. A late postponement, where the application is made less than seven days before the hearing, will only be granted in exceptional circumstances, in which case the tribunal will have to consider making a costs order against the party that applied for the postponement. Employers are encouraged to take legal advice to ensure they are properly prepared for hearings so that postponements are not necessary.
The rates of statutory sick pay and statutory maternity, paternity, adoption and shared parental pay usually increase at the beginning of April but there is no change this year. This means that statutory sick pay is still £88.45 per week and statutory maternity pay remains at £139.58 per week.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.