Employment Law Changes - April 2016
Changes to employment law and practice are normally implemented in either April or October each year in order to make life easier for employers, who must ensure that their policies and procedures are updated accordingly.
The main employment law changes introduced this April are as follows:
The National Living Wage
Employers are reminded that a new statutory minimum rate of pay, the National Living Wage (NLW), applies to workers aged 25 and over from 1 April 2016. The NLW replaces the current National Minimum Wage (NMW) rate for these workers and is set at an initial rate of £7.20 per hour.
Penalties for Non-Payment of the NMW
From 1 April 2016, penalties for non-payment of the NMW are doubled from 100 per cent of the arrears to 200 per cent, reduced by half if the employer pays the sum owing within 14 days. The maximum penalty remains at £20,000 per worker. In addition, anyone found guilty of the offence will be considered for disqualification from being a company director for up to 15 years. The enforcement rules apply equally to non-payment of the NLW.
Abolition of Employer NICs for Apprentices Under 25
From 6 April 2016, employers of apprentices under the age of 25 are no longer required to pay secondary Class 1 (employer) National Insurance Contributions (NICs) on earnings up to the Upper Earnings Limit for those employees. Further information is available on the GOV.UK website.
The Repayment of Public Sector Exit Payments
Regulations due to come into force on 1 April 2016 will require high earning public sector employees or office holders to repay exit payments – on a pro rata basis – should they return to the public sector within 12 months. Individuals will be required to repay the full amount if they return before 28 days and a pro rata amount should they return between 28 days and 12 months.
Penalties for Non-Payment of Employment Tribunal Awards
From 6 April 2016, the Small Business, Enterprise and Employment Act 2015 introduces a new penalty for employers that fail to pay employment tribunal awards or settlements reached through the Advisory, Conciliation and Arbitration Service in the hope that this will improve compliance. Where the amount due remains unpaid, an enforcement officer will issue a 'warning notice'. If the employer fails to pay by a specified date, a penalty of 50 per cent of the relevant amount will be imposed, subject to a minimum of £100 and a maximum of £5,000. The penalty will be reduced if payment is made promptly. The penalty is payable to the Secretary of State, not the claimant employee. Employers who are fined also face the prospect of being publicly 'named and shamed'.
Annual Inflation-Linked Changes in Tribunal Awards
The Employment Rights (Increase of Limits) Order 2016, which details the annual inflation-linked changes in limits on the compensation amounts which can be awarded by employment tribunals, applies where the appropriate date falls on or after 6 April 2016.
The main changes are:
- The maximum amount of a week's pay for the purpose of calculating a redundancy payment, or for various awards including the basic or additional award of compensation for unfair dismissal, increases from £475 to £479;
- The minimum amount of compensation where an individual is found to have been unlawfully excluded or expelled from a trade union increases from £8,868 to £8,939; and
- The statutory maximum compensatory award for unfair dismissal increases from £78,335 to £78,962.
There is no statutory cap on the amount a tribunal can award in discrimination cases.