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April brings with it a myriad of financial changes relevant to employers and other businesses

Written by Brabners LLP

This month, we have already seen increases in employment tribunal compensation limits, the National Living Wage and other National Minimum Wage amounts. Read the two next sections for further details and to make sure you are in the know!

Employment Tribunal Compensation Limits

Compensation limits used in Employment Tribunals have now increased. The changes, introduced by the Employment Rights (Increase of Limits) Order 2018 (the “Order”) on 10 February 2018, came into force on 6 April 2018. Here are a few of the most important changes introduced by the Order:

  • The maximum compensatory award for unfair dismissal has increased by 3.9% from £80,541 to £83,682;
  • The minimum basic award for an unfair dismissal resulting from certain matters (for example, being an employee representative, trade union or occupational pension trustee) has increased by 3.9% from £5,970 to £6,203;
  • The maximum limit of a ‘week’s pay’ – used for the purposes of calculating the basic award for statutory redundancy payments and unfair dismissal claims, amongst other matters, has increased by 3.9% from £489 to £508; and
  • Guaranteed pay during lay-off or short-term working has risen from £27 per day to £28 per day.

The new limits will not apply to ‘relevant events’ (the event giving rise to the entitlement to compensation) that occurred before 6 April 2018 (for example, unfair dismissals before that date) – in such circumstances, the old limit will still apply.

National Minimum and Living Wage

On top of the increases mentioned above, worker-friendly increases to the National Minimum and Living Wage rates have also been brought into effect this month. The new minimum rates came into force on 1 April. The National Living Wage (“NLW”), a mandatory minimum wage payable to UK workers aged 25+, has been increased by 4.4% from £7.50 per hour to £7.83 per hour. This is a significant increase and workers aged 25+ will be £0.33 better off per hour of work. The National Minimum Wage (“NMW”) changes comprise of the largest wage increase in ten years for 18-24-year-old workers. Workers aged 21-24 will now receive £7.38 per hour (instead of the previous £7.05), which amounts to a 4.7% rise. In addition, there are a number of other changes. Please see the table below for an illustration of all of the changes: The changes, recommended by the Low Pay Commission (“LPC”) were fully accepted in the Government’s Autumn Budget and do not look to have been affected by Brexit – the minimum wage rates continue to grow in line with projections.  

Disclaimer: This bulletin is for general guidance purposes only and should not be used for any other purpose. This article is written by Brabners and reproduced with their permission. Brabners is a Limited Liability Partnership.