National Living Wage, Statutory Rates Freeze and Holiday Pay


Welcome to my first news update of 2016. Yes, more legislation, but I’m here to help, so please be reassured that I’ll be doing all I can to interpret and translate what is most relevant to you and your business!

National Living Wage (April 2016)

The new National Living Wage comes into force this April, replacing the minimum wage for over-25s, starting at £7.20 and rising to £9 an hour by 2020. To help offset these increases, the government is cutting corporation tax to 19% in 2017 (18% in 2020) and increasing the Employment Allowance to £3,000 for small businesses.

Kay’s comment: Employers should be planning ahead to assess the direct effect of this increase to their wage bill, along with indirect effects to pay differentials between other staff within their organisation. If this is cause for concern, please give me a call so that I can help you explore the best way to manage these changes.

Statutory Rate Freeze (April 2016)

There is normally an annual increase to statutory rates in April to keep pace with inflation. As the Consumer Prices Index fell by 0.1% there will be no increases made this year. Therefore, Statutory Sick Pay will stay at the same rate ie £88.45 per week and Statutory Maternity, Paternity, Adoption and Shared Parental Pay will also stay at the same rate ie £139.58 per week.

Kay’s comment: Do remember that many small business employers can claim 103% of maternity and paternal payments if they qualify for Small Business Relief, which is dependent on their Class 1 National Insurance payments in the last complete tax year – check details with your Payroll provider.

Holiday Pay (Ongoing)

European Court and tribunal hearings have been changing the way holiday pay is calculated and further case law is expected this year. However, it is yet unclear if there will be a change to the UK’s Working Time Regulations.

Kay’s comment: Remember that where employers are obliged to include overtime in holiday pay calculations, this only applies to four weeks of the employee’s holiday pay granted under the EU Working Time Directive. Also, if there is a gap in a series of underpayments of more than three months, employers are not liable to pay them. Furthermore, since July, claims for back pay for incorrectly calculated holiday pay are limited to two years under the Deduction from Wages (Limitation) Regulations 2014.

Shared Parental Leave and Grandparents (2018?)

The government is considering extending shared parental leave rights to include working grandparents. A consultation process starts this month, but any legislation changes are not likely to come into force until 2018 at the earliest. Extended rights would still only provide flexibility for families during the child’s first year.

Kay’s comment: A useful HR planning exercise at this stage would be to review the composition of your workforce and assess the likely numbers of employees who might be able to assert their right to take shared parental leave as grandparents. Although initial take-up of shared parental leave has been quite low, an extension to grandparents (bearing in mind that grandparents might have numerous grandchildren) may become a more attractive proposition. I think this will be especially true for families of single parents and where grandparents are able to access enhanced maternity benefits whilst assisting with kinship care.

RECENT BLOG POST: MULTI-GENERATIONAL WORKPLACES – are you daunted by the thought of managing up to four different generations?

Please Note: The information contained in this e-newsletter is provided for your general use only.  It should not be treated as a substitute for obtaining professional employment advice on specific issues.

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