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Statutory payments for employees to rise from April 2022

Employers should be aware of various changes to employment law that will apply with effect from April 2022.  Such changes include increases in the National Living Wage, Maternity Pay, Paternity Pay, Statutory Sick Pay.  Compensation limits for certain tribunal awards and other statutory payments will also rise from 6 April 2022.

The Chancellor’s recent Spring Statement was also met with criticism by some employers who had been hoping for a delay to the increase in National Insurance Contributions, with the rise of 1.25% going ahead from today.

If your company is one of many UK businesses which struggled throughout the past two years, then these increased costs will not be welcome news.  When faced with increased costs of any kind it is always a good idea to review your overheads and make savings where possible.  You should ensure that your company receives value for money whilst balancing this with the need to retain valuable employees. 

Increases with effect from 1 April 2022

The Low Pay Commission’s recommendations on the National Living Wage (for those aged 23 and over) and National Minimum Wage rates were accepted in full by the Government.  The rates from 1 April 2022 are:

 

 

Current rate (April 2021 to March 2022) Increased rate from 1 April 2022
National Living Wage £8.91 £9.50
21-22 Year Old Rate £8.36 £9.18
18-20 Year Old Rate £6.56 £6.83
16-17 Year Old Rate £4.62 £4.81
Apprentice Rate £4.30 £4.81
Accommodation Offset £8.36 £8.70

Increases with effect from 3 April 2022

Maternity, paternity, adoption, shared parental and parental bereavement leave rates are all increasing from £151.97 to £156.66 per week, with effect from 3 April 2022. 

Increases with effect from 6 April 2022

Statutory sick pay (SSP) is increasing from £96.35 per week to £99.35 per week.  From the same date a new form of digital fit notes is being introduced that will remove the requirement for the fit note to be physically signed by the issuing doctor.

From the same date, national insurance contributions will increase by 1.25%.  Employers should note that HMRC has requested that payslips include a message stating that the “1.25% uplift in NICs funds NHS, health & social care.” This is in place between 6 April 2022 and 5 April 2023.

Also, with effect from 6 April 2022, compensation limits, statutory guarantee payments and the upper limit on weekly pay when calculating redundancy payments, and other awards, all increase from £544 a week to £571 a week.

What if your company will be unable to meet these costs?

Redundancy is appropriate only if the role itself is no longer needed.  Employers must follow a fair redundancy process, and this must include collectively consulting your staff if more than 20 are at risk of redundancy.

As soon as possible, you should communicate with employees.  Ideally, hold a meeting with all affected employees to explain why redundancies are sadly necessary, and outline what will happen next. 

If your business is closing down and you have instructed an Insolvency Practitioner to assist you with the process, they will attend and deal with any questions from employees.  This can make the process far less daunting for the business owners and will also provide clarity to the employees about the process and what they will be entitled to. 

How will the cost of redundancies be met?

Employees who meet the qualifying criteria for redundancy under the Employment Rights Act 1996 are entitled to receive statutory redundancy payments.  Where a company is insolvent, the Redundancy Payments Service (RPS) will pay claims direct to the redundant employees, up to certain limits, and will then take the employees place as a creditor in the insolvency.

This means that your employees receive their statutory entitlements as quickly as possible, even if the company does not have sufficient funds to meet the cost.  The various payments which an employee can submit a claim for include arrears of pay, holiday pay, notice pay, and redundancy pay.

Further information can be found here.

Help from a Licensed Insolvency Practitioner

Keywood Group is a Licensed Insolvency Practice with offices in Birmingham and London.  Our team is experienced in advising distressed businesses on their options and dealing with company closure.  We provide transparent advice on the options available and ensure that you fully understand the recommended process.

Our Insolvency Practitioner is fully licensed and regulated by The Insolvency Practitioners Association.  If you want further information, please contact us for a no obligation chat.

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