Statutory rates of pay and employment law changes

In April each year statutory rates of pay are reviewed and usually increased; it is also the time of year when new employment legislation tends to be applied from.

Please find below a summary of the key changes which are effective from April 2020, starting with statutory pay rates and then looking at some employment law changes.

Some changes have come about through the Governments Good Work Plan (see https://harwood-hr.co.uk/the-governments-good-work-plan-key-points-for-employers/).

No changes are currently due to Brexit as the UK is still in its transition period and therefore still adhering to the EU Employment Directives, this may change next year depending on how far the UK Government deviate from current EU employment legislation. In Harwood HR’s opinion as the UK was fundamental in creating a lot of the EU legislation, we doubt we will see much change in areas such as; working time, family leave / pay and employment rights generally.

Maternity, Paternity, Adoption and Shared Parental Pay – effective from 5^th April 2020
The current rate of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Shared Parental Pay will increase from £148.68 per week to £151.20 per week. 

Redundancy Pay – effective from 6^th April 2020
The maximum amount of “a week’s pay” for the purpose of calculating Statutory Redundancy Pay or for various awards including basic or additional awards for compensation in respect of unfair dismissal is to increase from £525 per week to £538 per week. The maximum payment under the Statutory Redundancy Scheme will therefore increase from £15,750 to £16,140.

Compensatory Award for Unfair Dismissal – effective from 6^th April 2020
The limit on the amount of compensatory award for unfair dismissal will increase from £86,444 to £88,519 (statutory cap).

The maximum compensatory award is the lower of the statutory cap or 52 weeks’ pay.  This is 52 times one week’s actual gross pay for the employee at the time of dismissal, calculated in the usual way.  The limit on a week’s pay does not apply.

Statutory Guarantee Payments – effective from 6^th April 2020
During periods of lay-off or short-time working an employee may be entitled to a Statutory Guarantee Payment.  The current rate of £29.00 per day will increase to £30.00 per day (subject to a maximum of five days or £150 in any three months).

Statutory Sick Pay – effective from 6^th April 2020 
The rate of Statutory Sick Pay (SSP) will increase from £94.25 per week to £95.85 per week.  

The lower earnings threshold will increase from £118 per week to £120 per week. 

National Living Wage/National Minimum Wage 
The new rates for the National Living Wage and National Minimum Wage come into force from 1^st April 2020, see above table for details.

Auto enrolment pension contributions

From the 1st April 2020, Auto Enrolment Pension contributions are staying the same for both employees and employers.

All employees and casual workers should be automatically opted into the pension scheme if they earn the qualifying amount (£833 a month)

From the 1st April 2020 the contributions remain at:

Employer 3%

Employee 5%

Employment Law Changes

Holiday Pay calculation

Holiday calculation for variable hour staff – including those who receive paid overtime

(not zero hour workers who accrue holiday pay at 12.07%)

Where you calculate holiday pay for workers without fixed hours or pay or where a worker’s pay varies from week to week, the current reference period of 12 weeks for calculating holiday pay under the Working Time Regulations 1998 will be increasing to 52 weeks, or, the number of weeks for which the employee has been employed if this is less than 52 weeks.

The main reason for the change is the inconsistent payment of holiday pay and fluctuations in pay because of seasonal variations. Leave following a busy period could be paid at a higher rate than leave following a quieter period so the new change should even out any “peaks and troughs”.

You therefore need to ensure that your payroll records for the 52 weeks prior to 6 April 2020 are up to date and that you continue to accurately record such data. 

Statement of terms (Employment Contract)
As a result of its commitments set out in the Good Work Plan, the government will be extending the entitlement to a statement of ‘written particulars’ to include workers as well as employees.  Currently employers have up to two months to issue the statement to any employee working for them for more than a month and this has been the case for many years, but from 6 April 2020 the right to a statement of written particulars will become a day one right.

There have also been some changes to the wording content of written particulars (employment contracts) and Harwood HR has been actively reviewing the contract statements issued to clients to ensure continuing compliance post April 2020.  If you are not a current client and would like your employment contract reviewed please get in touch and we can advise.

Parental bereavement leave
The Parental Bereavement (Leave and Pay) Act (also known as Jack’s law) will be implemented on 6^th April 2020 and provides for at least 2 weeks’ leave for employees following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy. 

Employees with 26 weeks’ continuous service will be entitled to two weeks of paid leave at the statutory rate and other employees will be entitled to unpaid leave.

Statutory parental bereavement pay (SPBP), paid at the rate of £151.20 per week (for 2020/21), or 90% of average weekly earnings if this is lower.