April is nearly upon us, and you need to act now to ensure you are compliant with the changes to the national minimum wage, the living wage and statutory payments to your employees.
As these increases happen on different days in early April, take care ensuring you are compliant.
Details of all the changes can be found below…
National Minimum Wage and National Living Wage (NMW/NLW)
|Age||Rate from 1 April 2021||Rate from 1 April 2022||Percentage increase|
|Workers aged 23 and over (NLW)||£8.91||£9.50||6.60%|
|Apprentices under 19, or over 19 and in the first year of the apprenticeship||£4.30||£4.81||11.90%|
HMRC has published a checklist of common causes of minimum wage underpayment:
- Making a wage deduction for something job-related, such as the provision of a staff uniform
- Making a wage deduction where the employer benefits, such as employer-provided transport
- Not paying for any additional time added on to a worker’s shift
- Not paying for travelling time
- Not paying for any time spent training
It is also essential to keep up to date with important anniversaries, such as birthdays and apprentices moving into their second year -16% of those ‘named and shamed’ by the government in December 2021 for failing to pay NMW/NLW gave the reason as failing to increase pay in line with entitlement.
When should you apply the increases?
The increase should be applied at the next “pay reference period” after the increase. This is the period within which pay is calculated. For example, if you pay employees monthly on the 15th, the old rate applies until the pay reference period beginning on 16 April. Therefore, your employees will get the old rate between April 1 and 15.
Statutory maternity, paternity payments
The current weekly rate of statutory maternity pay is £151.97, or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate.
The rate of statutory maternity pay will rise to £156.66 from 3 April 2022. Also, the rates of statutory paternity pay and statutory shared parental pay will go up from £151.97 to £156.66 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate), as will adoption pay.
The weekly rate of statutory parental bereavement pay, which is available to employees on parental bereavement leave, is also topped up from £151.97 to £156.66.
Statutory sick pay (SSP) and the lower earnings limit (LEL)
The LEL will increase for the first time in two years, rising from £120 per week to £123 per week from 6 April 2022. SSP will also increase from £96.35 to £99.35 per week.
National Insurance (NI)
There will be an increase to NI by 1.25% from April 2022. HMRC have asked employers to include the following on all payslips between 6 April 2022 and 5 April 2023: “1.25% uplift in NICs funds NHS, health and social care”, which will remind employees why this has happened.
Making staff aware in advance, that it has been mandated by the government, and its impact, will allow them to prepare. There is no obligation to cover the difference in net pay.
Ensure you are compliant and prepare now
Employers that fall foul and don’t pay at least the minimum rate must pay back what’s owed to their employees and may suffer a hefty government fine. This could be up to 200% of what’s owed to their employees up to £20,000 per employee. They could also be featured in the annual list of shame.
It is therefore essential that employers make sure they have accurately calculated and adjusted for this change before it takes effect. This includes making sure all work-related activities are included that count as working time. That means everything from employee training at work and traveling between appointments to shift overruns and working lunches.
Get in touch
Payroll year end can be stressful and time-consuming for many businesses, especially when so many changes are coming into force, PM+M’s payroll team can help.
For more information on the new legislations or any other payroll requirements you may have, please get in touch via email@example.com or call 01254 679131.