The National Minimum Wage (Amendment) Regulations 2018 will increase the national minimum wage (NMW) and national living wage (NLW) rates from 1 April 2018.
- NLW for workers aged 25 or over will increase to £7.83 per hour
- NMW standard rate for workers aged 21 to 24 will increase to £7.38 per hour
- NMW development rate for workers aged 18 to 20 will increase to £5.90 per hour
- NMW young workers rate for workers aged 16 and 17 will increase to £4.20 per hour
- NMW apprentice rate will increase to £3.70 per hour
The Social Security Benefits Up-rating Order 2018 will increase the standard weekly rates of statutory maternity, adoption, paternity and shared parental pay from £140.98 to £145.18 from 1 April 2018 and it will also increase the weekly rate of statutory sick pay from £89.35 to £92.05 from 6 April 2018. The earnings threshold, below which employees are not entitled to these statutory payments, will increase from £113 to £116 per week from 6 April 2018.
The Employment Rights (Increase of Limits) Order 2018 will increase the maximum amount of a “week’s pay” from £489 to £508 from 6 April 2018. A week’s pay is used to calculate statutory redundancy payments, the unfair dismissal basic and additional awards and payments to employees in the event of insolvency. From 6 April 2018, the Order also increases the limit on the unfair dismissal compensatory award from £80,541 to £83,682 and it increases the limit on the daily amount of statutory guarantee pay from £27 to £28.
The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2018 freezes the earnings trigger, which determines when an eligible worker is entitled to be automatically enrolled into a workplace pension scheme, at £10,000 from 6 April 2018. It also continues to align the qualifying earnings band with national insurance contributions from 6 April 2018, so the lower limit of the band will increase from £5,876 to £6,032 and the upper limit will increase from £45,000 to £46,350. The qualifying earnings band is used to calculate contributions. In addition, the employer’s minimum contribution to a workplace pension scheme will increase from 1% to 2% from 6 April 2018 (and then to 3% from 6 April 2019) and the worker’s minimum contribution will increase from 1% to 3% from 6 April 2018 (and then to 5% from 6 April 2019).
The Finance (No. 2) Act 2017 will make all payments in lieu of notice (PILONs), including payments where there is no PILON clause in the employee’s employment contract, subject to Income Tax and Class 1 NICs. Effectively, employers will be required to tax as earnings that part of a termination payment which is equivalent to the amount of the employee’s basic pay if and to the extent that notice is not worked. The new rules apply only where both the payment and employment termination occurs on or after 6 April 2018.
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