HR 2 February 2018

Statutory pay rates: Advice for employers ahead of April’s increases

New statutory pay rates will take effect from 1 April 2018

 Employment law expert and head of advisory at Peninsula, Kate Palmer, provides her advice for employers after the government announced various new rates of statutory pay that will come into force this April.

April is always a busy time for small businesses. For the majority it’s the start of the new financial year, as well as the beginning of the holiday year for staff, meaning administrative tasks and paperwork can start to pile up.

During this busy period, the new statutory pay rates come in to force. It’s important that employers remain aware of these to ensure they’re correctly meeting their employees’ statutory rights.

Each year, the Department for Work and Pensions carries out a review of the current statutory pay rates and makes proposals for the following financial year.

The government does not have to accept these proposals, however in most years, they accept them without making further changes.

The proposed statutory rates for April 2018 were published in a ministerial statement in November 2017, and the confirmed figures have now been included in the draft Social Security Benefits Up-rating Order 2018.
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Autumn Budget 2017: National Living Wage to rise in 2018

The UK’s National Living Wage will rise to £7.83 in 2018, the chancellor has confirmed, representing a pay increase of 4.4 per cent for low earners

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The Order confirms that weekly rates of statutory maternity pay (SMP), statutory adoption pay (SAP), statutory paternity pay (SPP) and statutory shared parental pay (ShPP) will all increase from £140.98 to £145.18.

These new pay rates will take effect from the 1 April 2018, giving greater pay to employees on family friendly leave. Employees who are absent from work due to sickness will also receive increased pay from April, as statutory sick pay (SSP) rises.

From 6 April 2018, SSP will be payable at £92.05 a week, up from £89.35 a week currently. In order to be eligible to receive these statutory payments, employees will have to earn the lower earnings limit (LEL) of £116 per week from 6 April – an increase from the current figure of £113 per week.

As well as being aware of the new statutory pay rates, employers should take note of the different dates when these pay increases come in to effect.

The family friendly pay rates are increasing at the beginning of April, whereas the sick pay increase takes effect from the beginning of the new tax year. It is crucial employers don’t get these dates mixed up, as this could lead to underpayment or unnecessary overpayment.

With increased statutory rates now confirmed, employers can carry out an internal review of their policies and procedures to ensure they are ready to start paying these.

All family friendly and sickness policies that contain statutory rates can be updated, ready to be rolled out to staff in April. Additionally, payroll systems should be checked to ensure these have the new statutory pay rates manually entered, if they don’t apply these automatically.

Alongside new statutory rates, employers will also need to be aware of the increases to National Minimum Wage and National Living Wage that will take effect from the beginning of April 2018.

National Living Wage, the statutory minimum for workers aged 25 and over, will rise by 4.4 per cent, from £7.50 per hour to £7.83 per hour. All other National Minimum Wage rates will also increase from 1 April 2018.

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