Q&A: Keep abreast of statutory payment increases

Q&A: Keep abreast of statutory payment increases

Q: Ahead of April, what increases in statutory payments do I need to be aware of?

A: As usual, the month of April sees the introduction of new minimum hourly rates of pay for workers alongside new weekly rates for statutory payments, such as statutory sick pay (SSP).  Employers can use the early confirmation of these increased rates to review their practices and ensure they are paying staff correctly from the date the increases take effect.

Arguably the most important change to consider is the increase in national living wage (NLW) for workers aged 25 and over. As originally revealed in the Autumn Budget 2017, the NLW will increase by 4.4 per cent from £7.50 an hour to £7.83 an hour. This increase was initially recommended by the Low Pay Commission, the independent body which advises the government on the national minimum wage.

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The amended hourly rate represents the government’s attempts to address rises in inflation and the cost of living. Over two million workers in the UK are set to receive this pay rise. 

The other bandings for the national minimum wage are also set to increase in April. Employers should make sure to review their workforces and ensure they are sufficiently increasing their current rates of pay depending on the ages of their workers. The following increases will take place: 

•    Age 21 to 24: from £7.05 to £7.38 per hour
•    Age 18 to 20: from £5.60 to £5.90 per hour
•    Over compulsory school age but not yet 18: from £4.05 to £4.20 per hour
•    Apprentices: from £3.50 to £3.70 per hour

The apprentice wage is payable to apprentices who are under the age of 19, or 19 or over and within the first year of their apprenticeship.

April will also see those who are absent due to sickness receive additional money, as SSP will rise from £89.35 to £92.05 per week. 

In addition, statutory maternity pay, statutory paternity pay, statutory shared parental pay and statutory adoption pay will all increase from £140.98 to £145.18 per week. 

Whilst the rise in statutory payments represents a potential increase in expenditure for employers, the minimum amount an employee must earn to qualify for these payments is also set to rise. It will go up from £113 to £116 per week, granting a slight degree of added protection for businesses.

It is important that employers plan appropriately for the changes that will come into effect in April. Recent figures on minimum wage whistleblowing show that employees are becoming increasingly aware about their statutory payment rights, so employers who fail to comply with the necessary regulations run the risk of reputational damage and financial penalties.

Peter Done is managing director of law firm Peninsula