Employment Law Update – March 2018

The key recent changes are summarised below.

National Minimum Wage

The new figures for the National Minimum Wage are set out below:

From 1 April 2018:

National Living Wage (Age 25+) £7.83 (33p increase)

Standard Adult Rate (Age 21-25) £7.38 (33p increase)

Development Rate (Age 18-20) £5.90 (30p increase)

Young Workers Rate (Age 16-17) £4.20 (15p increase)

Apprentice Rate £3.70 (20p increase)

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 normal weekly salary, or the “Prescribed Rate”.

From 1 April 2018, the Prescribed Rate will increase to £145.18 per week (an increase of £4.20).

The Prescribed Rate for Statutory Paternity Leave, Statutory Adoption Leave and Maternity Allowance similarly increases to £145.18 per week.

From 6 April 2018 Statutory Sick Pay will increase to £92.05 per week (an increase of £2.70).

Tribunal award increases: A “week’s” pay and the unfair dismissal compensation

In most unfair dismissal cases, Tribunal awards comprise two separate amounts:

  1. the basic award, which is calculated by reference to the employee’s length of service, age and weekly salary (subject to a statutory cap); and
  2. the compensatory award, which is based on the employee’s loss of earnings as a result of the dismissal. In most cases, the compensatory award is subject to a statutory cap, although there are exceptions e.g. whistleblowing or health and safety dismissals.

A week’s pay

From 6 April 2018, the maximum amount of a week’s pay, used to calculate the basic award and also statutory redundancy payments will increase from £489 to £508.

Unfair dismissal Compensatory Award

The maximum compensatory award is the lower of:

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

The Government limit will increase from £80,541 to £83,682 on 6 April 2018.

NB: These increases apply to dismissals where the employment has terminated with effect on or after 6 April 2018.

Gender Pay Reporting

Large private and voluntary sector employers are required to analyse their gender pay gap each April, and publish a gender pay gap report no later than 4 April 2018. Thereafter, they must produce and publish an annual report. Mandatory gender pay gap reporting for many large public sector employers was introduced on 31 March 2017.

We know that many of our clients will be in the process of producing a gender pay report, often working with external organisations to do so. When a gender pay gap is identified, employers are encouraged to provide an explanatory narrative, as there may be objective reasons for the pay gap and it can be helpful to put this into context. There may also be recent organisational changes since the data was analysed last year that will result in a reduced pay gap in the next gender pay report – it can be helpful to refer to such changes now. We are happy to assist our clients in preparing these narratives, presenting the data and in identifying areas for further clarification and explanation.

Scully Twiss Recommendations

  • Review the hourly rates of any workers (and working hours including overtime) to ensure that they are being paid at least the new National Minimum Wage.
  • Review family leave policies and update any references to statutory pay.
  • Check whether your organisation is required to publish a gender pay report. If so, consider whether you would like Scully Twiss to review the explanatory sections of your report.