Since April this year, there have been a series of updates regarding the amounts to which employees are entitled from their employers. The key changes have seen an increase in minimum wages and family friendly payments.

There have also been important changes to various aspects of compensation limits for employment tribunals.

Here, Philip Richardson, Head of Employment Law at Stephensons, provides his guide to the key changes which all employers should be aware of.

How has the National Minimum Wage changed?

There has been increase in the National Minimum Wage from the last financial year. While the changes might only appear slight – amounting to around 30 pence per-hour across most bands – it is important that employers get their pay right.

The National Minimum Wage is not a guide. These are mandatory rates which need to be applied with effect to all relevant staff.

To employees, the changes for 2018 indicate a significant increase which could see a full time adult worker earn up to £643.50 more per year.

The table below shows a comparison between the old minimum wage structures and the new rates:

Age category of worker Minimum wage from 1 April 2018 Previous minimum wage New annual full-time wage for a year*
25 and over £7.83 per hour £7.50 per hour £15,268.50
21-24 £7.38 per hour £7.05 per hour £14,391.00
18-20 £5.90 per hour £5.60 per hour £11,505.00
16-17 £4.20 per hour £4.05 per hour £8,190.00
Apprentice £3.70 per hour £3.50 per hour £7,215.00

*based on a 37.5 working hour week

What about ‘Statutory Payments’?

Many employees will also benefit from the increased ‘statutory payments’. As these are not regular payments and only arise in specific situations, it would be easy for these to go unnoticed by employees and employers alike. It is therefore crucial to ensure your business is compliant with the law.

Family Friendly Payments: what if one of my employees is expecting?

There have been small changes in this area, with statutory maternity and adoption pay entitlement still at a maximum period of 39 weeks. Paternity leave remains the same at two weeks. There is however a minor increase in payments per week, amounting to a maximum of £145.18 per week, increasing from £140.98 in 2017.

What are employees entitled to if they become sick at work and have to take time off?

The weekly rate of statutory sick pay has increased from £89.35 to £92.05 – a minimal amount, as with family friendly payments. It is again important for employers to make sure that the statutory minimum rate is paid.

Employers should review their policies and documents that mention the rates, such as sickness absence procedures and maternity procedures.

As an employer, am I more at risk after the Supreme Court declaration that tribunal fees are unlawful?

The outlawing of fees for employment tribunals has seen a huge increase in the number of claims being brought by employees. The changes are therefore likely to benefit a large number of claimants, rather than respondents (the employer). The decision is an improvement for those with a genuine complaint, but consequently may increase the number of spurious claims, or claims which are designed to pressure employers into financial settlements.

Watch out for the discretion of the tribunal…

Employers should be aware that the ruling may not only open the floodgates for claims, but that the discretion of the tribunal has also been far reaching when it comes to claims that are ‘out of time’ – beyond the timescales set out by law.

The tribunal can use its discretion to allow claims to be brought by a claimant even if it is out of time, should the individual’s argument be that they could not afford to bring a claim at the time. In other words, an employee can argue that the only reason they did not bring the claim during the prescribed period was because of the tribunal fees – now deemed to be unlawful – that were in place at the time.

It is likely that employers and the tribunals themselves will be keeping a close eye on the statistics and any past claims being brought. At this time it is difficult to say how many of these claims may be allowed to be perused.

What changes to compensation limits should I be aware of?

There has been an increase in both compensation limits and ‘Vento bands’ – the guidelines which determine how much tribunals should award to claimants for ‘injury to feelings’. This has been the subject of some considerable interest.

The table below shows the difference in compensation limits in effect for claims to the employment tribunal as of 6 April 2018:

Complaint Maximum award from 6 April 2018 Previous maximum award
Discrimination Unlimited Unlimited
Unfair dismissal:

(Basic award)

(Compensatory award)

 

£15,240

£83,682

 

£14,670

£80,541

Week’s pay cap to calculate basic awards and statutory redundancy payments £508 £489
Statutory redundancy pay £15,240 £14,670
Dismissal for health and safety reasons:

Basic

Compensatory

 

£15,240 (min. £6,203)

No limit

 

£14,670 (min. £5,970)

No limit

Dismissal for making protected disclosure:

Basic

Compensatory

 

£15,240

No limit

 

£14,670

No limit

Contract claims £25,000 £25,000
Failure to conduct collective consultation 90 days’ gross pay** 90 days’ gross pay**
Failure to inform or consult: TUPE transfer 13 weeks’ gross pay** 13 weeks’ gross pay**
Breach of flexible working regulations 8 weeks’ pay (up to £4,046) 8 weeks’ pay (up to £3,912)
Failure to provide a written contract of employment £1,016 or £2,032 £978 or £1,956

** per employee

The key change we see in these figures is the updated cap in what constitutes a ‘weeks’ pay’. In 2017 we saw an increase of £10, from £479 to £489, and in 2016 there was only an increase of £4. This year the statutory cap has increased by £19.

Whilst the number of days/weeks an employee can claim for has remained the same, the cap increase means that there is potentially a considerably higher sum that could be awarded to an individual bringing the any of the above claims among others not listed.

However, this change will only truly benefit those earning over £25,000 gross annual pay (over £489 gross per week).

It is also important to note that the increase of the weeks’ pay cap may result in notable additional cost if an employer is undertaking a large-scale redundancy exercise.

What are the changes to compensation limits in discrimination cases?

The Vento bands are constantly changing – increasing twice in the last year alone. The presidents of the Employment Tribunal in England & Wales and Scotland have released new Vento bands relating to claims from 6 April 2018 onwards.

The table below highlights the difference between the old bands and the new bands:

Vento Band New Level Previous Level
Lower band (less serious) £900 to £8,600 £800 to £8,400
Middle band (not meriting upper band) £8,600 to £25,700 £8,400 to £25,200
Upper band (most serious) £25,700 to £42,900 £25,200 to £42,000

 

Ultimately, there is a continued focus on ensuring employees are treated fairly and remunerated to a level which reflects the current economic situation.

The changes to compensation and Vento levels reflect an emphasis on how breaches of employment law are treated as a very serious matter and should not be considered lightly from an employer’s perspective.