With the arrival of April comes a reminder of employment updates that you need to aware of. As an employer, by law, these changes require implementation. So what are these and how can you ensure your company avoids negative publicity and hefty fines for non-compliance? Here, we share the changes you need to know about, in order to avoid huge fines and public shaming like some of these companies…
The start of April is when businesses are required by law to adhere to the new employment law changes. One area in particular where HMRC is taking a firm stance, is the national minimum wage, coming down hard on firms who refuse to adhere to it.
This has resulted in a series of high-profile court cases against some big name firms including Iceland, Wagamama, and Sports Direct, damaging both their reputations and bank balances in the process.
Getting clear on ‘working’ time
One common pitfall faced by many firms is failing to recognise what constitutes as working time. Not only should this include time at work, but also time spent travelling to and from different places of work, or time spent waiting to start or finish a shift.
A prime example is a recent retailer, which was fined because factory staff were spending extra time queuing to clock out after the shift, for which they were not being paid for.
Uniforms and equipment
Another common issue many employers have been penalised for is failure to note any elements which might reduce a worker’s overall gross pay, which therefore pushes their income under the National Minimum Wage threshold.
For example, if staff members are required to wear certain clothing or purchase items as part of a uniform, employers may be required to compensate low paid workers.
Beware of salary sacrifice schemes
Iceland recently made headlines for running a Christmas Club savings scheme for staff, which was intended as an optional benefit, as deductions were taken directly from employees’ pay. This meant that the salary of some staff members fell below the current NMW.
Failing to adhere to new rates changes could result in additional payments to the individual, while penalties of up to 200% of the value of the discrepancy (which is capped at £20,000 per worker) can be charged by HMRC. Furthermore, public naming and shaming for non-compliance will undoubtedly damage a brand’s image.
Don’t make the mistakes of these companies. Ensure you are clued in on employment law changes to avoid hefty fines and naming for non-compliance:
1. Changes to pensions auto-enrolment
From 6th April 2019, changes will come into place for pensions. The minimum level of employer contribution will increase from 2% to 3%, with an increase to the employee contribution from 3% to 5%. The total minimum contribution therefore increases from 5% to 8%.
2. Changes to the national minimum wage
From the 1st of April, the national living wage for workers aged 25 and over will increase from £7.83 to £8.21 per hour.
Other national minimum wage rates also increase with hourly rates rising as follows:
- £7.70 for workers aged 21 to 24
- £6.15 for workers aged 18 to 20
- £4.20 for workers aged 16 to 17
- The apprentice rate will increase to £3.90 per hour
By law, workers are required to be paid at least the national minimum wage rate that applies to them. Furthermore, adequate records of all payments should be kept in order to prove you are complying with the national minimum wage rules.
3. Increase in statutory family-related pay and statutory sick pay
From 7th April 2019, the weekly rate of statutory maternity, paternity, adoption and shared parental pay increases to £148.68.
From 6th April 2019, the weekly rate of statutory sick pay increases to £94.25.
Staff on maternity, paternity, adoption, shared parental leave and on sick leave are required by law to be paid these statutory minimum rates.
A review of policies and documents that mention the rates, such as their maternity policies and sickness absence procedures, is required.
4. Income tax
From 6th April 2019, the personal allowance increases from £11,850 to £12,500 and the higher rate threshold from £46,350 to £50,000.
5. Adjust your organisation’s statutory redundancy pay calculations
New limits on employment statutory redundancy pay come into force on 6th April 2019.
An employee with a minimum of 2 year’s service who has their employment ended due to redundancy will be entitled to a redundancy payment. The cap for redundancy pay will increase to £547 per week effective from 6th April 2019.
If you need further information or guidance on any of the above, please do not hesitate to get in touch today. Email: email@example.com or call: 07858089006.