Mar21

Changes to Employment Law

Categories // Business Operations, Finance

As the new tax year is approaching, there are a number of changes to employment law which you should be made aware of if you are not already.

Statutory Redundancy Changes

If you are unfortunately in the position where you may have to be making staff redundant, or if this could be a possibility in the future, then you need to be aware of the changes to statutory redundancy compensation this month.

The amount due to an employee facing redundancy depends on the age of the employee. For example, a staff member between the ages of 22 and 40 will receive one week’s full pay, a member of staff aged over 40 will receive one and half week’s redundancy pay.

The maximum rate of weekly pay determines the amount of redundancy pay owed to an employee. This has been raised from £430 to £450 from 1st February. All staff eligible for redundancy pay at the maximum amount are now entitled to this new rate.

What does this mean for an employer?

It means the cost of redundancy is going to be higher for businesses which have a number of staff with longer periods of service earning enough to claim the top rate. You will need to make new calculations about the amount owed to employees you are making redundant.

Reductions to Collective Redundancy Consultations

Larger companies looking to make more than 100 employees redundant may be affected by future proposals to decrease the length of time for collective redundancy consultations. For businesses in administration or in planning proposals for downsizing, the consultation period will reduce from 90 days to 45 days from 6 April.

However, this does not apply to employees on fixed-term contracts which are coming to an end anyway. ACAS should be releasing a code of practice for redundancy consultations in the coming months.

What does this mean for an employer?

For larger businesses this means working more quickly with administrators to calculate redundancy pay and make redundancy announcements. The old consultation period applies until 6 April.

Changes to Statutory Pay Rates

For the next tax year 2013/14 some changes to statutory pay rates will come into effect.

  • The standard weekly rate of maternity, paternity and adoption pay will increase to £136.78
  • The weekly rate of Statutory Sick Pay will increase from £85.85 to £86.70
  • The Lower Earnings Limit for calculating employees’ National Insurance contributions will increase to £109 per week from £107 currently.

How will this affect employers?

Changes to employees’ contracts for the next tax year will need to be re-evaluated. The law change will need to be built into any financial forecasts for the future. The increases are small, but if you have employees about to become parents or who are more susceptible to getting sick, then you need to be aware of the impact these changes could have on your business.

For further information and advice about employment laws and any updated changes, please see the ACAS website, www.acas.org.uk.

 

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