Minimum wage rates to increase from 1 April
On the 1st of April there will be an increase in the National Minimum Wage and the National Living Wage across the UK. From this April all national minimum wage rates including the national living wage will be uprated at the same time. Here we have a look at each new increase:
National Living Wage rate:
- 25 and Over: £7.50 from £7.20
National Minimum Wage rates:
- 21 - 24 Years: £7.05 from £6.95
- 18 - 20 Years: £5.60 from £5.55
- Under 18: £4.05 from £4.00
Apprentices:
- £3.50 for those under 19 or those in the first year of their apprenticeship. Apprentices over 19 or who have completed the first year of their apprenticeship are entitled to the minimum wage rate for their age.
Penalties and non-compliance
It is extremely important for employers to keep up-to-date employee records to ensure that you are complying with the new rates of pay as employees have a birthday and move from one rate to another. The consequence of non-compliance, even unintentional but rather an administrative error, may be significant for your company. Penalties can be up to 200% of arrears (halved if employers pay within 14 days) up to a maximum penalty of £20,000 per worker.
Government Name and Shame
Even worse than that, you do not want your company to be named and shamed by the government for not paying the correct minimum and national wage rate. Since the government scheme was introduced in 2013 over 400 employers have been named and shamed for underpaying their staff by over £1,179,000 with total penalties of over £511,000. Read more about it in our blog here.
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April sees an increase to statutory payments
This year will see the first increase in 2 years to statutory rates for maternity pay, shared parental pay, paternity pay, adoption pay and sick pay, as these rates have been frozen since April 2015.
Statutory Maternity, Shared Parental Pay, Paternity and Adoption
On 2 April 2017 the weekly amount of statutory maternity pay, statutory shared parental pay, statutory paternity pay and statutory adoption pay will increase from £139.58 to £140.98.
- Statutory maternity pay and statutory adoption pay is paid at 90% of the employees weekly wage for the first 6 weeks and at 90% of their weekly wage or £140.98 (depending on which one is lower) for the remaining 33 weeks.
- Employees taking paternity pay can choose to take either 1 or 2 weeks consecutive leave and are paid at 90% of their weekly wage or £140.98 (depending on which one is lower).
- Shared parental leave is paid at 90% of the employees weekly wage or £140.98 (depending on which one is lower).
Sick Pay
On 6 April 2017 the weekly amount for statutory sick pay is set to increase from £88.45 to £89.35 and will be paid by the employer for up to 28 weeks.
To be eligible for the above payments the individual average earnings must be equal to or higher than the lower earnings limit which is also set to increase from £112 to £113 in April 2017.
It is important for all business owners to be aware of the changes that are coming into place and make sure that these changes are implemented by the relevant dates.
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The Apprentice Levy, what it means for SMEs
The apprenticeship levy is due to come into effect on 6 April 2017. It is a levy on UK employers to fund the costs of apprenticeship training.
One of the aims of the apprentice levy is to ensure SMEs have access to funding to hire and train apprentices, so that they can build a talented and skilled workforce for the future.
The Apprentice Levy
From 6 April 2017, employers with a paybill of more than £3 million will be subject to a levy of 0.5%. Through a digital account these employers will be able to access the apprentice levy fund, which they can use to pay for apprenticeship training and end-point assessment (the assessment of apprentices by an independent organisation, required before they can complete the apprenticeship).
SMEs
It is estimated that 98% of UK SMEs do not have a wage bill of £3 million, meaning most will be exempt from the levy. However, SMEs will still be able to receive government funding towards the costs of apprenticeship training and assessment through co-investment.
How it will work
- Employers will simply use the register available on the apprentice service to select each of the following:
- the training they want their apprentice to receive
- the approved trainer
- the assessment organisation
Assistance with this is available from the National Apprenticeship service.
- The Government will pay 90% of the price agreed with the training provider, up to the maximum allowed by the funding band for the relevant apprenticeship standard or framework. This is referred to as co-investment.
- Employers with less than 50 employees will not be required to contribute to the cost of the apprenticeship where the apprentice is:
- Aged 16 to 18
- Aged 19 to 24 and has previously been in care or has a local authority education, health, and care plan
- Additionally, the Government will pay a £1,000 grant to companies that take on a 16-18 year old apprentice.
- Businesses will also receive a grant of £1,000 when taking on apprentices who are aged between 19-24 and have previously been in care or have a Local Authority Education, Health and Care plan.
Overall, the new apprentice levy should provide a real opportunity for SMEs. By taking advantage of the funds available, SMEs have the prospect of significantly improving the skills and expertise of employees and ultimately their own competitiveness.
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Highest Amount Ever of Zero-hours Contracts
New information released from the Office of National Statistics have revealed that 910,000 employees are now working on zero hour contracts, the highest amount to date. Back in 2005 there were only 100,000 originally on zero-hour contracts.
The research revealed that over the last number of years there has been a significant growth in the number of zero-hours contracts being used by UK employers. In 2015 it is believed that 805,000 employees where on zero-hours contracts. Furthermore, In comparison to 2014, there is an increase of 30%. However, it must be noted that even though the figure released is a record high, the report does show a rapid slow down in the rate of the increase in the last six months of 2016.
A zero-hours contract is an employment contract that an employee has that has no set minimum hours or definite schedule of work. It allows employers to hire employees with no guarantee of work. Many employers use such contracts to cover situations where work fluctuates. Employees under these contracts are required to be flexible, and due to personal circumstances this can be a suitable working arrangement for some.
Conor D’Arcy, policy analyst at the Resolution Foundation, which undertook the analysis of the ONS’s Labour Force Survey, said: “It’s notable that the increase of 0.8% in the second half of 2016 compares to a 7.7% rise over the same period in 2015."
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8 Employment Myths Busted
We've clarified the truth on some of the most common employment law myths.
Myth 1: No employment contract exists if there is nothing in writing or signed.
Fact: Even verbal agreements are binding. An employment contract exists from the moment a job offer is accepted. Legally, an employer should within two months of an employee starting work, issue a written statement of terms and conditions of employment. However, if this document has never been issued a binding employment contract still exists between the employer and employee. Where terms are agreed orally, the situation is ripe for disputes.
Myth 2: Holidays start to accrue once the probationary period is successfully completed.
Fact: Holidays start to accrue from the first day an employee is employed. The existence of a probationary period will not affect a new employee's length of service or statutory employment rights.
Myth 3: Employees can say when they take their holidays.
Fact: Employees requests for annual leave can be refused by an employer for business reasons. However, when considering leave requests employers should also bear in mind the employees family responsibilities and entitlement to rest periods. Based on business needs employers can specify certain periods where annual leave can or cannot be taken. Employers should consult with employees at least one month before any holidays are due to commence. Employers are advised to agree with employees how and when employees should give notice of annual leave, ideally through an annual leave policy.
Myth 4: Employees on long-term sick leave should be left alone.
Fact: Although employers should not put undue pressure on employees who are on long-term sick leave, they are entitled to find out more information about the illness with the aim of establishing when and how the employee could return to work.
Myth 5: An employee’s continuous service resets after moving roles within a company.
Fact: Moving roles within the same company does not ‘reset’ an employee’s continuous service.
Myth 6: Employees have the right to have bank holidays off work, or to be paid overtime for working them.
Fact: Employees are not automatically entitled to a day off or extra pay on a bank holiday. Any such right will depend on the contract of employment. Employees are entitled to 5.6 weeks annual leave per year, whether or not bank holidays are included as part of this leave will be up to individual employers.
Myth 7: An employee who is dismissed for gross misconduct is not entitled to pay in lieu for holidays accrued.
Fact: Regardless of the reason for dismissal, if an employee is dismissed part way through a holiday year, they will be entitled to pay in lieu of untaken statutory holiday that has accrued up to the termination date. Regarding holidays over and above statutory entailment, payment for these should be made unless the contract of employment specifically states that these days will be forfeited in cases of dismissal for gross misconduct.
Myth 8: The 10 keeping-in-touch days for employees on maternity leave, adoption or additional paternity leave and 20 shared parental leave KIT days are pro rated for part-time employees.
Fact: The legislation does not make provision for the 10 keeping-in-touch days or 20 shared-parental-leave-in-touch days to be pro-rated for part-time employees. For example, an employee on maternity leave who normally works only a three-day week is still entitled to 10 keeping-in-touch days.
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