Minimum Wage Increase
On the 1st April 2018 the minimum wage rates will increase as follows:-
|Age Range||Minimum Wage|
|Living wage (over 25s)||£7.83|
From the 6th April 2018 all pay in lieu of notice payments (PILON) made to employees will be subject to tax and Class 1 National Insurance contributions irrespective of there being no contractual clause allowing a payment in lieu of notice.
The new provisions also provide that where there is a termination payment “post-employment notice pay” (PENP) must be deducted which will then be subject to tax and NICs (both employer and employee). PENP essentially represents any unworked notice period e.g. if the employee has a 2 month notice period but only works 1 month then the 1 month that has not been worked must be deducted from the termination payment.
There is a tricky calculation that employer’s will have to use to calculate a PENP payment which will be dependent upon, amongst other things, whether the employee’s notice period is expressed in months and dependent upon the frequency of pay. Where PILON is paid, PENP will in the majority of cases be nil in any event and is still remains unclear as to whether a PENP calculation will be necessary where PILON has been paid or in circumstances where an employer submits there is a summary dismissal. Notice for PENP purposes is based on basic pay and would not account for any salary sacrifice the employee may have entered into for example in which case the PENP calculation will be more than a PILON calculation.
It should be noted that PENP will not be deductible from statutory redundancy pay payments but will apply to non-statutory redundancy pay.
The tax and Class 1 National Insurance exemption for termination payments will remain capped at £30,000 however any payment made above £30,000 will be subject to employer only Class 1 National Insurance contributions.
Auto-enrolment Pension contributions
From the 6th April there will be an increase in the auto-enrolment pension contributions for both employer and employees. Employers will be required to contribute 2% and employees a minimum of 3%. These increases represent a legal requirement and non-compliance could result in a fine.
Since the abolishment of Tribunal Fees on the 26th July 2017 there has been approximately 3,000 new cases issued every month and with that in mind, it is good to keep up to date with the awards the Tribunal has the jurisdiction to make. I set out below some of the increases
|Compensation limit||Current||From 06.04.18|
|Maximum limit on a week’s pay||£489||£508|
|Maximum compensation award for unfair dismissal||£80,541||£83,863|
|Minimum basic award for certain unfair dismissals (e.g. trade union membership/activities, health and safety)||£5,970||£6,203|
|Maximum basic award||£14,670||£15,240|