Employment Law Snapshots – Increase in Statutory Rates

National Minimum Wage/National Living Wage

The Chancellor, Philip Hammond, has announced the new increased rates of the National Living Wage (NLW) and the National Minimum Wage (NMW).These new NLW and NMW rates effective from 1 April 2019 have increased as such:

• NLW for workers aged 25 or over – from £7.83 to £8.21 per hour.
• NMW rates:
• Workers aged 21–24 – from £7.38 to £7.70 per hour
• Workers aged 18–20 – from £5.90 to £6.15 per hour
• Workers aged 16–18 – from £4.20 to £4.35 per hour
• Apprentice rate – from £3.70 to £3.90 per hour

Statutory family and sick pay rates

From 6 April 2019 statutory sick pay (SSP) will increase from 92.05 to £94.25 per week. Individuals are entitled to claim SSP from their employer if they satisfy the qualifying conditions.

From 7 April 2019 the weekly amount for statutory family pay rates will increase from £145.18 to £148.68 per week. The rate will apply to maternity pay, adoption pay, paternity pay, shared parental pay and maternity allowance.

Redundancy pay and other statutory compensation limits

Statutory redundancy pay and the statutory rates and limits which apply to other employment rights, such as the basic award for unfair dismissal and the maximum unfair dismissal compensatory award are set to increase.

The new limits (below) will apply to dismissals where the effective date of termination is on or after 6 April 2019. The new increased limits are as follows:

• £525 – the maximum amount of a week’s pay for calculating statutory redundancy pay, and the basic award for unfair dismissal.
• £15,750 – the maximum statutory redundancy payment and basic award for unfair dismissal.
• £86,444 – the maximum compensatory award for unfair dismissal.
• £102,194 – the combined basic and compensatory award above being the maximum potential award for unfair dismissal.

Please note that where the dismissal falls before 6 April 2019, the old rates will apply. In respect of the compensatory award, the cap of one year’s gross salary for unfair dismissal, if it is lower than the maximum compensatory award (above), will continue to apply.

It is important to factor in these new figures in calculating the costs of future redundancies/exit packages if you are proposing redundancies or negotiating exits where the effective date of termination will fall on or after 6 April 2019.

If you would like advice on how to calculate an employee’s redundancy award, other exit payment or to talk through any of the changes above and how they might impact your business, please do get in touch using the details below.

(Note: This article was written by our Employment Senior Associate Adish Parr and Paralegal Alex Caldwell. Nothing in this article constitutes as legal advice and the above is provided for informational purposes only.)