April 2018: A busy month for HR and Employment Law

Ian Barker 13.03.2018

In our latest update I asked Mike Tremeer, Senior Associate at Fladgate LLP, for his thoughts on the key changes for those with management and HR responsibilities.

April 2018 is going to be a busy month, here are the important dates you need to know:

1 April 2018 – National Minimum Wage

April Fool’s Day sees the annual increases to minimum wage rates that workers in the UK are entitled to receive. The new rates are:

Under 18 £4.05 £4.20
18 - 20 £5.60 £5.90
21 - 24 £7.05 £7.38
25 and over £7.50 £7.83

Whilst this may be cause for (minor) celebration for workers, employers should be careful not to fall foul of the new rates. Doing so could lead to HMRC investigating and awarding the workers backdated and underpaid wages, and the Department for Business, Innovation and Skills “naming and shaming” the employer on the gov.uk website. Large employers such as Marriott hotels, Karen Millen, Wagamamas and TGI Friday are among the latest companies on the receiving end of unwanted publicity after it was found they were not paying the national minimum wage.

To avoid all this, employers need to audit low paid workers such as cleaners, reception and security staff and those in back office support functions.

4 April 2018 – Gender Pay Gap Reporting

The Gender Pay Gap Regulations came into force on 6 April 2017. They require certain employers to compile and publish key details about their gender pay gap.

The first reporting date is 4 April 2018. On or before this date all private and voluntary sector employers with 250 or more employees as of 5 April 2017 (the first snapshot date) must publish the data on their own and a government website.

Many firms have already released their data, with some surprising revelations. If, like those of many employers in professional services, your figures show that male employees hold a disproportionately large number of senior roles (with correspondingly high pay), consider how you will explain that in the report, and what steps you will take to address it in the coming years.

6 April 2018 – PILONs and weekly pay

Payments in lieu of notice

The Government has taken steps to close, with effect from 6 April 2018, the legal loophole that allowed employers to make non-contractual payments in lieu of notice (PILONs) without
deducting income tax and national insurance contributions. All PILONs made on or after this date will be treated as earnings and so must be made after deduction of income tax and national insurance contributions – even if there is no right to make the PILON in the employee’s contract of employment.

Employers that have chosen not to include a PILON clause in their contracts of employment previously, so that they could offer such sums to employees “tax free” on termination, would be well-advised to reconsider this approach. Now the benefit has gone, having the option to terminate employment immediately without breaching the contract (which can mean post termination restrictions are not enforceable) is likely to be attractive.

Updating template contracts of employment would be wise. Consider also whether you need to update existing employee contracts, and if so how (e.g. at the same time as a salary increase or bonus).

Weekly pay increases

6 April 2018 also sees the annual increase in the capped weekly pay figure used to calculate statutory redundancy payments and unfair dismissal basic awards.

For dismissals made on or before 5 April 2018, weekly pay for this purpose is capped at £489. From 6 April 2018 this will increase to £508. The effect for employers is to increase the maximum statutory redundancy payment and unfair dismissal basic award from £14,670 to £15,240.

The maximum unfair dismissal compensatory award (intended to cover future losses suffered by an employee who is unfairly dismissed) will also increase on 6 April 2018 from £80,541 to £83,682. But note the cap of one year’s pay will still apply where this is less than £83,682.

If you have any queries regarding any of these matters, or you require any legal assistance, please feel free to contact Mike at mtremeer@fladgate.com or on 0203 036 7364.

Mike Tremeer

If you would like to get in touch with me or a member of our team about any positions within Professional Services, email me on ibarker@morganmckinley.co.uk or call 0207 092 0221.

Ian Barker's picture
UK Director - Professional Services (Taxation, Audit, Legal)