Employment law changes in April 2018

April is always a busy month for employment law. Make sure that you don’t miss any of the following developments taking place this month. If you would like a more detailed employment update, then please register here for one of our Round-up events taking place across the UK.

1 April 2018

National living wage and national minimum wage

The national living wage applies to workers aged 25 and over and will increase from £7.50 to £7.83 per hour while the national minimum wage will increase as follows:

• 21 to 24 year old rate from £7.05 to £7.38 per hour;
• 18 to 20 year old rate from £5.60 to £5.90 per hour;
• 16 to 17 year old rate from £4.05 to £4.20 per hour; and
• apprentice rate from £3.50 to £3.70 per hour.

Statutory payments

From 1 April, statutory maternity/paternity/adoption/shared parental pay will increase from £140.98 to £145.18 a week.

Statutory sick pay will increase from £89.35 to £92.05 per week on 6 April 2018.

Socio economic duty in Scotland

From 1 April 2018, the socio economic duty set out in the Equality Act 2010 will be imposed on specified public authorities in Scotland. This duty (which was never brought into force in England and Wales) requires the affected public authorities, when making decisions of a strategic nature about how to exercise their functions, to have due regard to the desirability of exercising them in a way that is designed to reduce the inequalities of outcome which result from socio economic disadvantage.

4 April 2018

Gender pay gap

Private and voluntary sector organisations with 250 or more employees must have published their first gender pay gap report by 4 April 2018. The Equalities and Human Rights Commission recently consulted on a draft enforcement policy regarding use of its powers against companies that fail to publish the relevant details as required.

6 April 2018

Tribunal compensation limits

The compensation limits on employment tribunal awards are set to increase from 6 April 2018. The new limits will only apply if the action or appropriate date for action is on or after this date.

The new limits include the following:

• the maximum limit on the compensatory award for unfair dismissal will increase from £80,541 to £83,682. The cap on the compensatory award is the lower of the maximum limit or 52 weeks’ pay. The cap does not apply where the reason for dismissal or redundancy selection is carrying out health and safety activities or making a protected disclosure (whistleblowing). (There is no limit on the amount of compensation where the dismissal arises from unlawful discrimination); and
• the maximum limit on a week’s pay for calculating the basic award and statutory redundancy payments will increase from £489 to £508.

Taxation of termination payments

The distinction between the tax and NICs treatment of a contractual and non-contractual payment in lieu of notice ("PILON") will be removed, making all PILONs taxable. The legislation setting out how “post employment notice pay” is calculated is complex, but broadly, basic pay paid in respect of a period of notice not worked will be subject to deductions for income tax and NICs. HMRC has indicated in its February bulletin that the new rules will apply where both the payment and termination of employment occurs on or after 6 April 2018.

Vento bands

The Vento bands, which are used by employment tribunals for calculating awards for injury to feelings, will be updated for all claims presented in England and Wales on or after 6 April 2018. The updated bands will be:

• a lower band of £900 to £8,600 (for less serious cases);
• a middle band of £8,600 to £25,700 (for cases that do not merit an award in the upper band); and
• an upper band of £25,700 to £42,900 (for the most serious cases).

In exceptional cases, the award may exceed £42,900. In respect of claims presented in Scotland, the employment tribunal may adjust the approach and the figures set out above as, broadly, they take into account a 10% uplift found to be applicable in a Court of Appeal decision which applies only in England and Wales.