Employment Law Update – March 2017

There are a number of annual increases coming into effect in April 2017.

National Minimum Wage

From 1 April 2017, the following new rates will apply to the national living and minimum wage:-

  • National Living Wage (Age 25+): £7.50
  • Standard Adult Rate (Age 21-25): £7.05
  • Development Rate (Age 18-20): £5.60
  • Young Workers Rate (Age 16-17): £4.05
  • Apprentice Rate: £3.50

Statutory Pay (maternity, paternity, adoption, sick pay)

Statutory Maternity Pay (“SMP”) is paid for 39 weeks of maternity leave as follows:

  • For the first 6 weeks, SMP is paid at 90% of the employee’s normal weekly salary.
  • For the remaining 33 weeks, SMP is paid at either the lower of 90% of the employee’s normally weekly salary, or the “Prescribed Rate”.

From 2 April 2017, the Prescribed Rate will increase from £139.58 to £140.98 per week.

The Prescribed Rate for Statutory Paternity Leave, Shared Parental Pay, Statutory Adoption Leave and Maternity Allowance will also increase to £140.98 per week.

Statutory Sick Pay will increase from £88.45 to £89.35 per week from 6 April 2017.

A “week’s” pay

There is a statutory cap on a week’s pay for the purposes of calculating a statutory redundancy payment and a basic award in unfair dismissal cases. The calculation in both cases (statutory redundancy and basic award) involves the employee’s length of service, age and weekly salary. For dismissals on or after 6 April 2017, the statutory cap on a week’s pay will increase from £479 to £489.

Unfair dismissal compensation

The compensatory award made by a Tribunal in an unfair dismissal case is based on the employee’s loss of earnings as a result of the dismissal. In most unfair dismissal cases, the compensatory award is subject to a statutory cap, although there are exceptions.

Where the cap applies, the maximum compensatory award is the lower of:

  • one year’s gross salary; and
  • the limit set by the government.

The Government limit will increase from £78,962 to £80,541 where the employment has terminated with effect on or after 6 April 2017.

Scully Twiss Recommendations

  • Review the hourly rates of workers to ensure that they are being paid at least the increased National Living Wage. Also be careful of anyone working unpaid overtime who is earning a relatively low annual salary – the time spent working overtime would be taken into account in calculating if they are receiving at least the National Living Wage for hours worked.
  • Review family friendly polices to check if you need to update any pay rates in the policies.