The beginning of April has likely been a hectic time for many employers, with usual accounting and financial deadlines sandwiched in between important updates to employment law rates and payments.
Here, we outline the increases in the National Minimum Wage, National Living Wage and other statutory payments, all business owners need to abide by from April 2018.
National Minimum Wage and National Living Wage increase
As of 1st April 2018, the statutory minimum pay for all UK workers has increased. Those aged 25 and over, and therefore eligible for the National Living Wage, will benefit from a pay increase of 4.4% with the new minimum hourly rate now set at £7.83.
Minimum hourly rates will also increase for those who are eligible for National Minimum Wage rates as follows:
- 21-24 years old – £7.38 per hour
- 18-20 years old- £5.90 per hour
- Over compulsory school age but not 18 – £4.20 per hour
- Relevant apprentices – £3.70 per hour
These increases are set to provide welcome relief for workers earning minimum wage who are most at risk to suffer from the rising inflation and cost of living in the UK.
The government are seeking to provide improved financial security to staff and these efforts align with ongoing attempts to better define the rights and protections of those in the contentious gig economy.
By this point, employers should have already taken the appropriate measures, by working with their HR and payroll departments, to ensure employee pay rates have been reflected accordingly.
Employees are likely to be more aware of their wage entitlements given the recent efforts by the Department for Business, Energy and Industrial Strategy (BEIS) to name and punish organisations found to be breaking minimum wage rules. Therefore, those who have failed to account for the new rates in April’s pay packets should address this error as a matter of urgency to avoid future enforcement activity.
The increase in rates will naturally impact employers’ operating expenses, therefore budgets and targets may need to be altered accordingly to account for this change.
Employers who pay staff above minimum rates as part of a competitive incentive plan may also wish to consider incrementally increasing salaries to ensure a competitive edge when it comes to recruiting and retaining talent.
Family friendly rates
April 1st 2018 will also see the weekly rates of statutory maternity pay (SMP), statutory adoption pay (SAP), statutory paternity pay (SPP) and shared parental pay (ShPP) increase from £140.98 to £145.18 (or 90% of the employees average weekly earnings if this is less than the statutory rate).
Employees will have to earn £116 per week from April 2018 to be eligible for these statutory payments.
Employers would be wise to pay close attention to existing family friendly policies, ensuring these are up to date and fit for purpose. Those who offer their staff incentivised rates of pay for these periods of leave should consider increasing these accordingly so that the policies retain their appeal.
It is likely that changes to ShPP will receive a considerable amount of interest following the government’s efforts to promote the scheme through their ‘Share the Joy’ campaign.
Despite being introduced in 2015 the number of working parents choosing to take up their entitlement to shared parental leave has been considerably less than anticipated; many point to confusion surrounding eligibility requirements.
Shared Parental Leave and Pay is seen as an important tool in increasing equality, allowing both parents the opportunity to share their entitlement to time off work for childcare commitments.
Employers who wish to encourage staff to make use of this scheme could help employees by providing in-depth guidance on this topic, as well as introducing an internal policy to communicate the process employees have to undertake to opt in to the leave.
Statutory Sick Pay
The amount of money employees can receive through Statutory Sick Pay (SSP) has increased as of 6th April 2018.
Having previously been described as “manifestly inadequate” in a report conducted by the European Committee of Social Rights (ECSR), eligible employees will now receive £92.05 a week, as opposed to the previous £89.25. The lower earnings limit, which an individual must reach to be eligible for SSP, is also increasing from £113 to £116 per week.
This increase in SSP will provide greater financial protection for sick employees. Increased protection is particularly important given the frequency of work-related ill health, with research showing that 12.5 million working days were lost in the UK due to stress, depression or anxiety in 2017.
Improved rates of SSP could also help efforts to reduce workplace presenteeism, as the practice of employees attending work whilst they were feeling unwell cost UK employers an estimated £77 billion in lost productivity during 2017. Improvements to SSP means individuals are more likely to take the necessary time off work to bring them up to full health; reducing the impact their illness has on the business and their colleagues around them.
Employers should make efforts to inform their employees of these changes as SSP has so far received considerably less public attention than April’s other increases. Those who offer occupational sick pay over the rate of SSP should consider amending their workplace policies accordingly to ensure this incentive retains its appeal.
Employers that have not already taken the appropriate measures to address the changes mentioned above should do so immediately.
Those that have already acted should consider the importance of communication and may benefit considerably from taking time to brief staff on these changes to ensure clarity and avoid any unwarranted scepticism.
About the author
This guide has been written exclusively for ByteStart by Peter Done, Managing Director of Peninsula Business Services – the UK’s leading specialist Employment Law, HR and Health & Safety service. Peter has written a series of employment guides for ByteStart, which include;
- 7 Common HR Mistakes small businesses need to avoid making
- What employers need to know about hiring staff from overseas
- A Practical guide to flexible working rights for small businesses
- Making staff redundant – how to do it and stay on the right side of the law
- A small business guide to carrying out effective staff appraisals
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- A Guide to the National Living Wage for small business owners