As we’re getting close to the next financial year, there are a few changes which will take effect from 6 April 2018:

• The maximum limit on a week’s pay will increase from £489 to £508. If you need to make any redundancies in the next financial year, this change will increase the statutory redundancy payments you have to make.

• A payment in lieu of notice will be subject to both income tax and National Insurance contributions, regardless of what the contract of employment says.

• The first £30,000 of a compensation payment to an employee will continue to be tax free. Any balance over and above £30,000 will be subject to both income tax and employer’s National Insurance contributions.

• The maximum limit on compensatory awards for unfair dismissal will increase from £80,541 to £83,682 (or a year’s gross salary if lower). It is unusual for a compensatory award to reach this maximum limit as in most cases the Claimant will be expected to find alternative employment within a year.

In addition, the National Minimum Wage rates will increase with effect from 1 April 2018 as follows:

• National Living Wage (workers aged 25 and over): £7.83
• Standard adult rate (workers aged between 21 and 24): £7.38
• Development rate (workers aged between 18 and 20): £5.90
• Young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices): £4.20
• Apprentices: £3.70

In addition, from 1 April 2018 the accommodation offset will be £7.00 each day.

The statutory rates for paid family leave will increase with effect from 1 April 2018 as follows:

• Statutory Maternity Leave: 90% of normal earnings or the statutory rate or the statutory rate (whichever is higher) for the first six weeks, followed by 90% of normal earnings or the statutory rate or the statutory rate (whichever is lower) for the remaining 33 weeks. The statutory rate being £145.18 per week.
• Statutory Adoption Leave: as for maternity leave.
• Statutory Paternity Leave: £145.18 per week for a maximum of two weeks.
• Statutory, Shared Parental Leave: 90% of normal earnings or the statutory rate or the statutory rate (whichever is lower) for 39 weeks LESS any time spent on statutory maternity or adoption leave. Incidentally, take up of shared parental leave has been very low (estimated at around 2% of new parents), and so the government has launched a £1.5million campaign to raise awareness of it. This may mean that you receive some enquiries from staff about how the shared parental leave scheme works. If you do, and you want some help, just let me know.

And, the Statutory Sick Pay rate will increase with effect from 6 April 2018 to £92.05 per week. You may have got the feeling that more of your staff were off sick this year than last, and you’d be right. A magazine for GPs has reported that there has been an increase of 9% in the number of fit notes issued by GPs, with the biggest increase being for fit notes relating to mental and behavioural disorders.

Please note that from April 2019 it will become necessary for employers to itemise payslips to show the number of hours paid for where the employee is paid on an hourly basis. If the employee’s hourly rate varies e.g. for different types of work or overtime then the hours worked at each rate must be specified.

For more information please contact Hannah at hannahstrawbridge@eatonsmith.co.uk