From 6 April 2018 onwards, all payments made in lieu of notice will be subject to income tax and NIC. At the moment, the first £30,000 of a termination payment where there is no contractual right to make such a payment, is exempt from tax and NIC deductions. If an employee is not required to work their full notice (for whatever reason) HMRC will assume that an element of any termination payment includes notice pay and will classify it as 'post-employment notice pay' and treat it as earnings subject to tax and NIC deductions.
Employment Tribunal compensation
Compensation limits for some tribunal awards will increase from 6 April 2018:
- The compensatory award for unfair dismissal increases to £83,682 from £80,541 (or a year’s pay, whichever is lower)
- The statutory cap on a week's pay increases to £508 from £489.
Wage rates rise
From 1 April 2018, the National Minimum Wage will increase. The rates will be:
- £7.83 per hour (from £7.50) aged 25 and over
- £7.38 per hour (from £7.05) aged 21 – 24
- £5.90 per hour (from £5.60) aged 18 – 20
- £4.20 per hour (from £4.05) aged 16 -17
- The apprentice rate increases from £3.50 to £3.70 per hour.
From 2 April 2018, the rate of statutory maternity, paternity, adoption, and shared parental pay increases from £140.98 per week to £145.18 or 90% of the employee’s average weekly earnings, whichever is lower.
YEAR: your employment annual retainer
Reduce the time you spend dealing with HR matters, and make sure that you comply with an increasingly complex area of law, by joining our YEAR club. For more information please contact Tina Chander or see here.
Calculating holiday pay for part-time employees
A recent case highlighted the difficulty of working out the correct rate of holiday pay for someone who worked part-time, irregular hours. Mrs. Brazel, a part-time music teacher employed on a zero-hours contract, was required to take her statutory 5.6 weeks of holiday outside term time. In accordance with Acas guidance, her employer paid her 12.07% of her hours worked in three instalments. Mrs. Brazel, believing she was being underpaid, took her claim to tribunal which agreed with her employer’s calculations. She appealed and the EAT, agreeing with her, referred to the Employment Rights Act 1996 which ruled that employees with an irregular working pattern should have their holiday pay calculated according to the average pay they received in the 12 week period before the holiday is taken. This is yet another case that underlines the care that employers need to take when working out holiday pay for part-time workers and others receiving bonus, commission and overtime payments.
Be careful to avoid assumptions over voluntary hours worked
Mr Carreras returned to work, after suffering disabling injuries in a cycling accident, having agreed with his employer that he would work shorter hours. Over time, he gradually increased his hours (which was not queried by his employer). He bought a claim for bullying and threats of redundancy on the basis that his employer’s actions in not preventing him from working longer hours amounted to ‘provision, criterion, or practice’ (PCP). The EAT upheld his claim (which at the time, several commentators thought rather harsh on the basis that Mr. Carreras’ extended working hours were voluntary). His employer appealed and the Court of Appeal ruled last month that the EAT had been correct on the basis that the behaviour of Mr. Carreras’ employer amounted to an expectation or assumption (‘practice’) that he would work long hours even if there was no compulsion involved. In particular, the Court noted that UFPR did not ask Mr Carreras how he was doing, or remind him that he did not have to work the long hours he did. If UFPR had demonstrated concern and reiterated the agreement about shorter working hours, Mr, Carreras’ claim may have been more difficult to establish. In other words, employers need to take a proactive stance with disabled employees to ensure that a PCP does not arise and that if an employee continues to work long hours, that decision is theirs alone.
A final thought:
“If I waited for perfection, I would never write a word”. (Margaret Atwood, Novelist, 1939 - )