National minimum wage
The national living wage is being introduced for workers aged 25 and over. It will initially be set at £7.20 per hour, rising to £9 by 2020. It is essentially a premium on top of the existing national minimum wage rates (which will continue to apply for younger workers).
There is already a living wage set annually by the Living Wage Foundation (£7.85 per hour, £9.15 in London). This is a voluntary wage, unlike the new national living wage which is compulsory.
The maximum financial penalty for employers who underpay the national minimum wage is increasing from 100% to 200% of each underpayment.
The maximum compensatory award for unfair dismissal will increase from £78,335 to £78,962.
The maximum amount of a week’s pay (used to calculate statutory redundancy pay and basic awards etc.) is rising from £475 to £479.
There is no proposal to increase the statutory rates this year. Therefore, statutory maternity, paternity, adoption and shared parental pay will remain at £139.58 per week and statutory sick pay at £88.45 per week.
New procedural rules will apply to tribunal claims brought on or after 6 April:
- There will be a limit of two postponements per party, per case, although further requests will be granted in ‘exceptional circumstances’.
- Any application for postponement presented less than seven days before a hearing or made at the hearing will only be granted in exceptional circumstances.
- Tribunals must consider an expenses order if a last minute postponement is granted, but expenses will not always be awarded.
- The new limits will not apply: (1) where both parties agree to a postponement and the tribunal believes it will facilitate settlement; and (2) where the tribunal considers that postponement is necessary due to an act or omission of the tribunal or another party.
- ‘Exceptional circumstances’ may include ill health relating to an existing long term health condition or disability.
Penalties for non-payment of tribunal/settlement awards
Financial penalties for employers who do not pay employment tribunal awards or settlement sums due under a COT3 are being introduced. The penalty will be 50% of the unpaid award, subject to a minimum of £100 and a maximum of £5,000. Employers will qualify for a reduction of 50% of the penalty if they pay the reduced penalty and the whole unpaid amount within 14 days.
Repayment of public sector exit payments
Public sector workers earning £80,000 or more will need to repay specified exit payments if they are re-employed in the public sector within 12 months. The amount of exit payment to be repaid will vary depending on the length of time between termination and re-engagement.
A new cap of £95,000 on the total aggregate value of most exit payments made to public sector workers is expected to come into force in October 2016. The government is also consulting on other reforms to public sector exit payments, including a maximum tariff for calculating payments of three weeks’ pay per year of service and a cap of 15 months’ salary for redundancy payments. Consultation closes in May 2016.
Employment agencies and businesses will be prohibited from recruiting solely from other European Economic Area countries without (before or at the same time) advertising the vacancy in English in Great Britain.
Please get in touch if you’d like more detail on any of the changes.
On March 22, 2016