Need to Know…Employment law changes from April 2016

There are not many things in life that can be guaranteed but one thing employers can be sure of is that there will be employment law changes every April.  This forthcoming April is no different.   Set out below are some of the major changes that employers need to be aware of.

  • The introduction of the ‘National Living Wage’

A new National Living Wage will be introduced with effect from 1st April 2016 for workers aged 25 and over.  The rate will be £7.20 per hour.

The National Minimum Wage will continue to apply for those aged 16-24 and for apprentices.

  • National minimum wage compliance measures strengthened.

To improve compliance with the National Minimum Wage and National Living Wage enforcement measures have been strengthened.

With effect from this April the penalty for non-payment will double to 200% of the underpayment owed to each worker (up to the current maximum of £20,000 per worker) unless the arrears are paid within 14 days.

We will also see the introduction of a new penalty of disqualification from being a company director for up to 15 years for the non-payment of the National Minimum Wage and the National Living Wage.

  • Eradication of NIC for apprentices

To further the Government’s commitment to ensuring more people can access apprenticeships; from 6th April 2015 Employer National Insurance Contributions (NIC) will be abolished for apprentices under the age of 25.

This means that employers will no longer be expected to pay Class 1 National Insurance contributions on any earnings up to the upper earnings limit that is in place for apprentices who are under 25 years old.

  • Financial penalties for non-payment of tribunal awards

With effect from 6th April 2016 a financial penalty can be imposed against an organisation who fails to pay an employment tribunal award (or settlement award under a COT3 Agreement).

The penalty will be 50% of the unpaid relevant sum (subject to a minimum of £100 and a maximum of £5,000).  However if an organisation pays both the unpaid sum to the Claimant and the imposed penalty within 14 days of the penalty notice then the penalty will be subject to a reduction of 50%.

The new regime will exist alongside tribunals’ existing power to order losing employers to pay a financial penalty to the Secretary of State where they are found to have breached any of the worker’s rights to which the claim relates.

  • Increase in the statutory cap on compensation

Currently the maximum compensatory award that can be claimed for unfair dismissal is £78,335 (or 12 months net pay whichever is the lesser sum).  However this will increase to £78,962 for dismissals effective from 6th April 2016.

  • Increase in a week’s pay

On 6th April 2015 the maximum amount of a week’s pay for the purpose of calculating a statutory redundancy payment will increase from £475 to £479.  As such, the maximum statutory redundancy payment that can be claimed for redundancies after 6th April 2016 will increase to £14,370.

The increase in a week’s pay will also apply to calculating the basic award of compensation in an unfair dismissal claim for dismissals that are effective after 6th April 2016.

There will not be an increase in family related pay such as statutory maternity pay, paternity pay, adoption pay and shared parental pay (which all remain at £139.58 per week).  Nor will there be an increase in statutory sick pay which will remain at £88.45.

For further information or advice please contact Lisa Kemp on 0121 227 3888 or

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