11 Mar 2020
From 6 April 2020, tribunal awards and redundancy rates will increase. We take a look at the new figures below.
6th April rates
The ones you know
Every April, the National Minimum Wage (NMW) changes. The latest rates are as follows:
- A 6.4% increase from £3.90 to £4.15 for apprentices
- A 4.6% increase from £4.35 to £4.55 for under-18s
- A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
- A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
- A 6.2% increase from £8.21 to £8.72 for 25-year-olds and over
If you’re familiar with employment law, you’ll already know these changes. If you’d like a more in-depth analysis of these rates, as well as changes to ‘family friendly’ leave pay, statutory sick pay, click here.
However, even the most on-the-ball employers might miss some of the other changes coming in on the 6th.
The ones you don’t
The government have announced new unfair dismissal rates that will come into effect next month. Now, the maximum amount of unfair dismissal compensation claimants will be able to get is £104,659. This could prove to be highly challenging for an employer if ever faced with this situation. Rates are outlined in full below:
- Basic award for unfair dismissal increases from a maximum of £15,750 to £16,140
- Compensatory award for unfair dismissal increases from a maximum of £86,444 to £88,519*
- Additional award for unfair dismissal increases from a maximum of £27,300 to £27,976
- Week’s pay for redundancy purposes increases from a maximum of £525 to £538
- The maximum for overall statutory redundancy pay increasing from £15,750 to £16,140
- Statutory guarantee pay is also to increase from £29 to £30.
* Claimants can receive this as a maximum if their annual earnings exceed this figure
These changes represent a relatively large increase in employment rates. You could face significant compensation pay-outs, to this end, avoid being in this situation as much as possible.
Rates increase annually to reflect inflation, but they show no sign of slowing down. Treat this as a warning.
What do these changes mean for me?
The rise in statutory guarantee pay is small. However, it’s likely to receive a lot of attention due to the ongoing coronavirus outbreak. It’s a possibility that organisations may face laying off staff due to business closure. Those with a lay-off clause in their contract would be able to provide this form of pay for the period for a maximum of five days for every three months the business is closed. In the absence of such a clause, any period of lay-off will need to be at full pay.
One more you might not know
Finally, an increase to the lower earnings (LEL) limit has been announced, from £118 to £120. Initially, news of this increase was delayed. Organisations will likely welcome this confirmation.
The LEL is the lowest weekly threshold for employees to qualify for state benefits. These include:
- Basic State Pension
- Additional State Pension
- New State Pension
- Maternity Allowance
- Bereavement Support Payment
Now you know…
Get the support you need to ensure you don’t fall foul of any rate increases. Naming and shaming is on the cards, as is a costly tribunal claim and fines. Don’t leave it until the rates go up, ensure you’re paying your employee correctly by calling 01455 858 132 and speaking to an employment law expert.
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