02 Mar Ready for the changes to the National Living Wage and Statutory Pay Rates?
The government has proposed new statutory pay rates for maternity, paternity, shared parental, adoption and sick leave, as well as increases to National Minimum Wage and Living Wage, to be implemented in April of this year. That doesn’t leave you long to get your business ready.
What are the proposed changes?
Currently, the weekly rate of statutory maternity pay is £148.68, or 90% of the employee’s average weekly earnings if this is less than the statutory rate. This is expected to rise to £151.20 from the first Sunday in April 2020, which falls on the 5th. This is also the proposed date that paternity, shared parental and adoption statutory pay will rise, again to £151.20 a week. The rule of paying 90% of an employee’s wage if it is lower than the statutory pay will remain the same.
A new National Living Wage is also to be introduced in 2020 which will see some workers earn nearly £1000 more a year. The new rate of pay will increase from £8.21 an hour to £8.72 an hour for workers over 25. That’s a 6.2% rise and an annual pay increase of £930. The new rate of pay will come into effect on 1st April of this year. Younger workers will get a pay rise too with the National Minimum Wage increasing from £7.70 an hour to £8.20 an hour.
The government is also proposing to increase the rate of statutory sick pay from £94.25 to £95.85 on 6th April.
Expert Debbie Cohen, owner of leading human resources consultancy Streetwise HR, said: “There was concern that the publication of these changes would have been delayed because of the general election and Brexit.
“However, they have been released well in advance of their implementation which gives businesses and HR professionals a chance to address the changes, such as planning their budgets for 2020/21 and making any necessary changes to their policies concerning family and sick pay. We recognise that these changes will raise several challenges for businesses, and they’ll need a solid HR strategy in place to deal with them successfully.”
What does this mean for businesses?
While welcoming a new baby into the world is undoubtably a very happy time for your employee, it can be a worry to business owners, especially those running smaller enterprises. While all organisations can usually claim back at least 92% of maternity, paternity, adoption and shared parental pay, some small businesses are actually able to claim back up to 103%. If you’re not taking advantage of this, we recommend speaking to an accountant.
In terms of the new National Living Wage and Minimum Wage, companies need to make sure they pay all workers that fall into these two categories accurately and carefully plan for this significant rise to their pay packet. Don’t forget, you will also be obliged to pay employees who are on long term sick leave £95.85 a week for up to 28 weeks from 6th April.