April 2017 Changes

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Minimum Wage 2017

The draft National Minimum Wage (Amendment) Regulations 2017 (‘the regulations’), have been published and they will come into effect from 1st April 2017:

  • The National Living Wage for 25-year-olds and over will increase by 30p from £7.20 for to £7.50.
  • The Adult rate (21-24) will increase to £7.05 an hour, which is 10p more than the current rate of £6.95.
  • The Youth Development rate which affects 18-20-year-olds will increase to £5.60 per hour, which is 5p more than the current rate of £5.55.
  • The under 18-years-old rate will also see an increase up to £4.05 per hour, which is 5p more than the current rate of £4.00.
  • The Apprentice rate will receive an increase to £3.50 per hour which is 10p more than the current rate of £3.40

The fact that the Living Wage has increased by more than inflation is probably significant in terms of Government policy.

It is worth noting that the increase used to take effect on 1st October, but this change in review date was announced in the Chancellor’s Autumn Statement.

What you must do:

  • If you have people employed on the NMW, review what you can do to limit the impact.
  • If you employ people on just above the living wage, then consider whether you will remain competitive in your reward strategy, and what you are going to do about it.
  • Do not consider trying to avoid payment, as the financial and PR consequences can be substantial.
  • If applicable, communicate with your staff the impact on their pay, and consult over ways to improve productivity.

From April 2017

Statutory Adoption, Maternity, Paternity and Shared Parental Leave Pay, and Maternity Allowance, will increase to £140.98 per week, from £139.58.

Statutory Sick Pay (SSP) will increase to £89.35 per week, from £88.45.

The Lower Earning Limit (LEL) will increase from £112.00 to £113.00 per week, i.e. £5,876.00 per annum.

The Upper Earning Limit (UEL) has also increased from £827.00 to £866.00 per week, i.e. £45,032.00 per annum

New Statutory Figures

The Government has not yet announced what will be happening to compensatory payments in relation to unfair dismissal and redundancy pay, and is unlikely to do so until mid March.

Salary Sacrifice

As widely predicted, the Government has confirmed that it is to limit the benefits that attract tax and national insurance advantages, when provided as part of a salary sacrifice arrangement.

This will affect types of salary sacrifice schemes differently. The benefits that can continue to benefit from tax and NI relief, if provided through salary sacrifice, will be:

  • Enhanced employer pension contributions to registered pension schemes (and pensions advice)
  • Childcare (employer-supported childcare and provision of workplace nurseries)
  • Cycle to Work and ultra-low emission cars will also be exemptSchemes such as gym membership, phones and insurance will no longer be tax free.

All arrangements in place before April 2017 will be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years, i.e. until April 2021.

 

Please feel free to ask any questions of our Consultants who would be pleased to advise on any element of this newsletter.