Here’s a reminder of what’s changing for employers from next month.

April is a busy month for most businesses, with the start of a new financial year creating accounting and reporting requirements for most.

Alongside this, key developments in employment law will take effect from the start of the month. 

Deadline for gender pay gap reports

While this issue has been in the spotlight for many months, the first deadline for publishing gender pay gap reports for private companies is 4 April 2018.

Once the deadline has passed, large companies shouldn’t forget about this issue, as it is an annual requirement; the next ‘snapshot date’ for private companies to collect pay data is 5 April 2018.

Additionally, the publicity on gender pay gaps is unlikely to wane, and employers may find their employees are raising more questions or complaints about their pay, and the pay of others around them.

Changes to taxation of termination payments

In a move to simplify the tax treatment of termination payments, the tax distinction drawn between contractual and non-contractual pay in lieu of notice (PILON) payments will be removed.

From 6 April, all PILON payments will be subject to normal deductions, eg income tax and employee class 1 national insurance contributions, regardless of whether there is a contractual PILON clause.

Employers who pay termination payments will have to carry out a calculation to split the payment into post-employment notice pay (PENP) and the remaining balance. PENP will be taxable while the remaining balance is tax-free up to the £30,000 threshold.

Minimum wage increases

Hot on the heels of nearly 180 employers being ‘named and shamed’ for underpaying staff, the increases to minimum pay rates will take effect from 1 April.

The national living wage, the minimum rate applied to workers aged 25 and over, will increase by 4.4 per cent, to £7.83 per hour. All other national minimum wages will rise from the same date, with those on the apprenticeship rate receiving a record 5.7 per cent increase from £3.50 to £3.70 per hour.

Employers need to be aware of these rate increases, as the failure to apply them correctly could lead to enforcement action.

Automatic enrolment contributions on the rise

Alongside wages, employers will be responsible for increasing the minimum automatic enrolment contributions that they pay towards workers’ pensions. From 6 April, employers will have to contribute 2 per cent (up from 1 per cent), and employees will have to contribute a minimum of 3 per cent (also up from 1 per cent). The minimum contributions will increase again from April 2019.

These increases are a legal requirement; a failure to increase contributions appropriately could lead to a fine and being publicly named for non-compliance. 

Tribunal awards to become more expensive

Employers who lose claims at a tribunal will have to pay more in compensation from April, as the maximum limits on tribunal awards receive an annual update. These increases come at a time when employment tribunal claims are on the increase, with claims up by 90 per cent during October to December 2017 when compared with Q4 of the previous year.

From 6 April, the maximum award for an unfair dismissal, totalling the maximum basic and compensatory award, will amount to £98,922; a significant amount of money for any business.

About the author

Alan Price is employment law director at Peninsula.

See also

The Pensions Regulator: Employer duties and defining the workforce (PDF)