Bosses brace for host of HR laws due this week

While the Employment Rights Bill (ERB) is currently under review in the House of Lords, significant changes are already set to take effect from tomorrow, April 1. This “once-in-a-generation” legislation will affect payroll, so it’s important to stay informed.

You can expect to see increases to minimum wage and employer National Insurance Contributions (NICs), as well as changes to parental leave and pay.

Below, we’ll outline the upcoming changes to help you prepare for the week ahead.

Minimum wage rise tomorrow (April 1)

Starting tomorrow, April 1st, there will be significant changes to the National Living Wage (NLW) and the National Minimum Wage (NMW).

The NLW, for employees over the age of 21, will increase to £12.21 per hour.

Meanwhile, the NMW will increase to £10 per hour for workers aged 18-20. For those under 18 and / or undertaking an apprenticeship, the rate will rise to £7.55 per hour.

Be sure to review your payroll run process in line with these changes to stay compliant.

Employer NICs increase (April 6)

Some businesses hoped that the Spring Forecast would halt plans to increase National Insurance Contributions, but the proposed plans will roll ahead on April 6.

As Chancellor Rachel Reeves announced in last October’s budget, employer NICs will rise from 13.8% to 15% as of April 6th. In addition to that, the secondary threshold at which employers must start paying NICs will drop from £9,100 to £5,000 until 2028.

To mitigate the impact of these changes, there are also changes to the employment allowance underway. This allows employers to reduce their overall NIC liability.

The allowance has previously helped employers save £5,000 per year, but from April 6, eligible employers can save up to £10,500. The £100,000 eligibility threshold for claiming the allowance will also be lifted, meaning more firms are set to benefit.

Changes to parental leave and pay (April 6)

Reforms to parental leave and statutory pay will also take effect this Sunday, April 6.

First, let’s examine the updates to pay. Statutory maternity, paternity, adoption, and shared parental pay will increase from £184.03 to £187.18 per week.

Additionally, the lower earnings limit — the weekly earnings threshold required to qualify for these payments — will rise from £123 to £125. However, the threshold for receiving maternity pay remains unchanged at £30 per week.

From April 6, parents with babies admitted to neonatal care can claim up to 12 weeks of paid leave. To be eligible, parents must be employed for a minimum of 26 weeks and earn at least £123 per week before claiming.

Statutory neonatal care pay will be paid at the same rate as other family leave payments, £187.18 per week. The additional pay and leave is in addition to any maternity, paternity, and shared parental pay that parents are entitled to.

The measure is expected to help 60,000 new parents support their families without having to worry about using annual leave.

Changes to statutory pay (April 6)

From April 6, there will also be changes to Statutory Sick Pay (SSP) and Statutory redundancy pay.

There will be a £2 increase to SSP from £116.75 to £118.75 per week. As with statutory parental pay, the lower earnings threshold for claiming sick pay will also rise to £125 per week.

There are additional changes to sick pay incoming. The proposed ERB may allow all employees to claim either 80% of their weekly earnings, or the flat rate, whichever is lower, regardless of their income, from the first day of sick leave.

Employers should take special note of the upcoming changes to statutory redundancy pay. In terms of redundancy pay, April 6 will see the cap on “a week’s pay” to calculate statutory redundancy pay rise from £700 to £719. This rate also applies to the additional award of compensation for unfair dismissal.

The change coincides with many businesses planning to make job cuts this year amid the tough economic climate. Those faced with making redundancies could also be met with increased costs, so should consider this when financial planning.

Limit on tribunal awards goes up (April 6)

The last of the changes coming into force this week relates to the limits on awards of employment tribunals.

From April 6, the maximum limit for compensatory awards for unfair dismissal will rise from £115,115 to £118,223.

Meanwhile, the minimum basic award for select unfair dismissals, including health and safety dismissals, will increase from £8,533 to £8,763.

Since these changes can be a lot to digest, businesses can get help with ensuring they remain compliant by outsourcing HR help from a third-party provider. It may be a wise move, with additional changes on the horizon as the full ERB comes into effect.