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Employment-related Increases April 2018

Andrea Corr

Andrea Corr, Solicitor in our Employment Law team, explains the employment-related increases in April 2018.

National Living Wage & National Minimum Wage

As of 1 April 2018 the National Living Wage (essentially the minimum wage that workers aged 25 and over are entitled to) increased by 4.4% from £7.50 per hour, to £7.83 per hour.

This means that full time workers on the National Living Wage will earn around £600 more per year thanks to the above-inflation rise, which is a total uplift of over £2,000 since the introduction of the National Living Wage in 2016.

The National Minimum Wage for most workers aged under 25 has also been increased. According to the independent body Low Pay Commission (LPC), this will be the largest wage rate rise for the past decade for 18-20, and 21-24 year olds.

New Wage rates for 2018

  • Aged over 25:                    £7.83
  • Aged 21-24:                        £7.38
  • Aged 18-20:                        £5.90
  • Aged under 18:                  £4.20
  • Apprentice (aged 19 or under or over 19 in the first year of their apprenticeship): £3.70

Tax and National Insurance Contributions (NIC)
Similarly, from 6 April 2018 the individual tax free personal allowance has increased to £11,850 per annum (for those earning less than £100,000) and the Lower Earnings Threshold for NIC to £116 per week.

Flat-Rate of Statutory Maternity Pay / Statutory Paternity Pay / Statutory Adoption Pay / Shared Parental Leave and Statutory Sick Pay
From 2 April 2018 the flat rate of the above allowances has increased to £145.18 per week and Statutory Sick Pay has increased to £92.05 per week.

Dismissals after 6 April 2017
From 6 April 2018 the cap for “a week’s pay” has increased to £508 (from £489) giving a maximum statutory redundancy payment (20 years’ service) of £15,240. The cap on the compensatory award for unfair dismissal has increased from £80,541 to £83,682 (for those who earn in excess of this figure).

Payments in lieu of notice from April 2018
It is important to note that from 6 April 2018, there is also a new regime regarding payments made in lieu of notice (PILON) upon termination of employment. The general purpose is to treat all PILONs as earnings, thereby attracting both tax and NIC deductions.

However the £30,000 tax free threshold for other termination payments remains in force.

For more information about any employment-related increases please contact Andrea Corr or a member of our Employment team.

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.