The Insider Issue One

STATUTORY PAY AND NATIONAL LIVING WAGE CHANGES - WHAT YOU NEED TO KNOW

In the 2016/2017 tax year commencing on the 6th April 2016, Statutory Parental payments covering Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP) and Statutory Shared Parental Pay (SShPP), will not be increasing from the current rate of £139.58 per week or 90% of the employee’s average weekly earnings, if less than this amount. Although it is not a requirement to increase these rates, it is unusual that it is not happening this April. Since 2013/2014, the rates have seen an increase of 1% year on year in line with the general rise in inflation or consumer price index (CPI). However, as the CPI fell by 0.1% in September 2015, there has been no increase in the rate. What this means for employers, is that the wage costs for employees when they take time off will be reduced across the course of this year. Rather than having to prepare for further increase, employers can now be confident that their expenditure for sickness absence and parental payments will remain stable over the next tax year. Similarly, the Lower Earnings Limit (LEL) – what an employee needs to earn weekly to qualify for these payments – will not increase and remains at £112 per week. The UK Government has also announced that a National Living Wage of £7.20 per hour will be introduced on 1st April 2016 for all working people aged 25 and over. This will be over and above

the National Minimum Wage which will remain in place for those aged under 25. The National Living Wage will be compulsory and the Low Pay Commission will be asked to recommend future rises, with the Government aiming for an hourly rate of £9.00 by 2020. The adult NMW rate is currently £6.70. From 1 April 2016 the premium will come into effect on top of the NMW, taking the national living wage to £7.20. The NMW will continue to apply for those aged 21 to 24, with the premium added on top for those aged 25 and over, taking the total hourly rate to the national living wage.

The new rates from 1st April 2016 are:

• £7.20 for workers over age 25 • £6.70 for workers 21 to 25 • £5.39 for workers 18 to 20 yrs • £3.87 for workers aged 16 to 17 yrs • £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

It is against the law for employers to pay workers less than the National Minimum Wage or to falsify payment records.

For more information on any of these changes, please call our consultants today on 0161 785 2000

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