April traditionally sees an annual increase in a number of statutory rates and limits relevant to employers and employees alike.
The changes relate to the setting of minimum rates such as those for the National Minimum Wage and to statutory benefits like Statutory Sick Pay and the various statutory family friendly payments. They also feed into the calculations used to value a number of different employment claims if successfully upheld by an Employment Tribunal.
We have set out below some of the main changes to note.
National Minimum Wage and National Living Wage
From 1 April 2022 to 31 March 2023, the following minimum rates of pay will apply:
The value of a number of employment related claims are calculated by reference to a statutory ‘week’s pay’. The weekly pay is subject to a cap, which is set by the Secretary of State. The annual increase takes into account inflation measured by the Retail Price Index (RPI).
The cap on the weekly pay will increase to £571.00 from 6 April 2022. It is used in calculating claims such as the failure to give particulars of employment or breaching the right to be accompanied at a disciplinary/grievance hearing, but features in many more claims.
Compensation for unfair dismissal & Redundancy
Probably the most commonly known claims to which the statutory week’s pay relates to is unfair dismissal and statutory redundancy pay claims.
Compensation for unfair dismissal claims is split into ‘basic’ and a ‘compensatory’ awards.
The basic award is calculated in the same way as statutory redundancy pay is, using a formula based on the employee’s age, length of service and a week’s pay capped at the prevailing statutory week’s pay. Whereas the compensatory award is calculated by reference to the claimant’s loss of earnings, subject to the annual statutory cap.
The calculation date is taken from the effective date of termination (EDT) of the contract of employment falling on or after 6 April 2022.
Statutory family related pay
Statutory Maternity Pay (SMP) & Statutory Adoption Pay (SAP)
Both of these benefits are calculated and paid on a similar basis. Payment is payable in two parts, being the:
- Earnings rate – which is paid at 90% of the employee’s normal weekly pay
- Prescribed rate – the lower of either the current benefit rate (see – table below) or the earnings related rate (e.g. 90% of the employee’s normal weekly earnings)
It is the prescribed rate that changes annually. The rate change is effective from 3 April 2022.
Statutory Paternity Pay (SPP), Maternity Allowance (MA) & Shared Parental Pay (ShPP)
All of these benefits are calculated and paid on a similar basis. Payment is again based on using the two parts – the earnings rate and prescribed rate.
For all, payment is determined on receiving the lower of either the:
- Earnings rate – (e.g. 90% of the employee’s normal weekly pay), or
- Prescribed rate – the benefit rate (see – table below)
Again it is the prescribed rate that changes annually. The rate change is effective from 3 April 2022.
For any further guidance on this issue or any other employment related matter please contact a member of the Employment Team at The Wilkes Partnership LLP. Alternatively, email us at [email protected]