This blog discusses the revised statutory pay and limits which will be coming into force in April 2020. These changes are still occurring despite disruption caused by COVID-19, so it is important for people to have the new rates on their radar.
What are the statutory pay and limits coming into force on 1 April 2020?
Below sets out which statutory pay and limits are coming into force on 1 April and details the new rates set.
National Living Wage
The rise in the rate of pay follows the government’s promise to increase the National Living Wage to £10.50 an hour over the next five years “if economic conditions allow.” The government also wrote in their manifesto a pledge to see an individuals’ net earnings rise by £1,900 over five years.
The new increased National Living Wage rates were advocated by the Low Pay Commission, and will come into effect on 1 April 2020. It will see a 6.2% increase from £8.21 to £8.72.
National Minimum Wage
The National Minimum Wage is the rate of pay set for individuals who are either apprentices or not 25 and above. The National Living Minimum Wage will also see increases across all age groups as shown below:
- 6.5% increase from £7.70 to £8.20 for 21-24 year olds
- 4.9% increase from £6.15 to £6.45 for 18-20 year olds
- 4.6% increase from £4.35 to £4.55 for under 18s
- 6.4% increase from £3.90 to £4.15 for Apprentices
Statutory maternity pay, statutory adoption pay, statutory paternity pay, statutory shared parental pay
The government has published proposed rates for the above statutory payments, to be effective from 5 April 2020. The standard weekly rates will increase from £148.68 to £151.20.
The rate of statutory sick pay will increase from the current figure of £92.25 a week to £95.85 on 6 April. In the wake of the Coronavirus pandemic, the government has announced that statutory sick pay will be payable from the first day of sickness, rather than after waiting three days.
Lower earnings limit
The draft Social Security Benefits Up-Rating Order 2020 confirm that the lower earnings limit, below which employees are not entitled to statutory maternity pay, adoption pay, paternity pay, shared parental pay and sick pay will increase from £118 to £120 per week from 6 April 2020.
HR departments should monitor and review policies which refer to the above rates, and ensure that they are updated to reflect these changes if necessary. All businesses must also ensure they comply with the National Living wage and National Minimum Wages.
The maximum amount of a weeks’ pay which is used to calculate statutory redundancy payments will increase from £525 to £538 on 6 April 2020.
The maximum compensatory award for unfair dismissal increases from £86,444 to £88,519 on 6 April 2020. The upper limit remains the lower of a years’ salary or the maximum statutory limit.
This blog was co-written by Adam Wheal, trainee solicitor and Claire Merritt, partner.
If you would like further guidance in relation to this topic, please do contact a member of the Employment team.