Compensation limits in Employment Tribunals awards to increase
Employers who lose claims at tribunal will be instructed to pay more in compensation from April as the maximum limits on tribunal awards are updated. These increases come at a time when employment tribunal claims are on the up, with claims increasing by 90% between October to December 2017, compared to the previous year.
These increases will come into force from 6th April 2018 and if the action or appropriate date for action falls before this date, the old limits will apply. The increases maximum limit on compensatory award for unfair dismissal will increase to £83,682 (from £80,541);
Minimum wage increase
Both the national minimum wage (NMW) and national living wage (NLW) are not guides, these are mandatory rates which need to be applied with effect to all relevant staff from 1 April 2018.
The National Living Wage, which is the minimum rate paid to workers aged 25 and over, will go up by 4.4% to £7.83 an hour. All other national minimum wages will also rise from the same date, with workers on the apprenticeship rate receiving a record 5.7% increase from £3.50 to £3.70 per hour.
You should place any changes in writing to your employees to let them know about any changes to their pay relevant to them. For those Companies with staff who claim benefits such housing benefit or tax credits, they will more than likely need to produce confirmation of their increase for benefit purposes so it is important to be prepared and ensure you update all those affected.
Deadline for gender pay gap reporting
Deadline of 4th April 2018 the gender pay gap is the difference between the average earnings of men and women, expressed relative to men’s earnings. For example, ‘women earn 15% less than men per hour’. Any organisation with 250 or more employees must publish and report specific figures about their gender pay gap. If your organisation has fewer than 250 employees, it can publish and report voluntarily but is not obliged to do so.
Changes to the taxation of termination payments
The current tax difference between contractual pay you get for doing your job and the non-contractual pay in lieu of notice (PILON) payments you get when you leave a role is set to be removed on 6th April 2018. This could make a big difference for any employees moving jobs after the deadline.
From the 6th April 2018, PILON payments will be subject to normal deductions like income tax and national insurance contributions – even if there’s a contractual PILON clause in place.
This ‘post-employment notice pay’ will be taxable, while the remaining balance is tax-free up to £30,000.
Auto-enrolment contributions going up
Along with the rise to minimum wages, employers will face further increases from 6th April 2018 when the contributions payable under auto enrolment will also increase.
Employers will need to contribute 2% (up from 1%) and employees contribute a minimum of 3% (also up from 1%).
Employees always have the option to opt out of pensions, but this must be their decision and you must not seek to encourage opt out amongst your workforce.
This is an extra cost for Employers, but it is also a rise for employees so you need to be letting your employees know that this rise is happening so there are no shock when they receive their future payslip.
To make sure you’ve complied with the above we can help you work your way through these changes to ensure you stay on the right side of the law!
Call us now on 020 3950 0604