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Hewett's Legal Corner #44 April 2016 Changes to Employment Law

Hewett’s Legal Corner – April 2016 #44



April 2016 Changes to Employment Law

There are several key changes to employment law coming into force in April 2016 and these are summarised below.

1st April 2016
National Living Wage
  • The new National Living Wage will apply to workers aged 25 and over at a rate of £7.20 an hour.

6th April 2016
Financial penalties for unpaid Employment Tribunal awards on settlements
  • A new scheme is being introduced which will penalise employers who fail to pay Employment Tribunal awards or settlement sums. If an employer fails to comply with a warning notice, an enforcement officer may issue a penalty notice requiring the employer to pay a financial penalty to the Secretary of State. The penalty will be 50% of the unpaid relevant sum subject to a maximum of £5000. The government’s aim is to use the financial penalty regime to deter non-payment of Tribunal awards and create a level playing field for compliant businesses.

Employment Tribunal Postponement Provisions

  • New rules will apply to claims issued on or after 6th April 2016. Each party in a case will only have the opportunity to apply for two postponements and there will be a new deadline for postponements of seven days before the hearing. Employment Tribunals will be required to consider making a costs order or a preparation time order against a party who makes a late application to postpone or adjourn the hearing.
  • The government intends these provisions to reduce delays in Tribunal proceedings caused by frequent and short-notice postponements and adjournments.

Abolition of contracting-out on salary related basis

  • Currently, the state pension consists of two elements: the basic pension and the state second pension (S2P). Since 6th April 1978, occupational pension schemes have been allowed to contract-out of S2P by providing alternative benefits outside the state pension that meet specified requirements. The intention was to ensure that individuals received broadly the same benefits as the state benefits that they had given up.
  • From 6th April 2016, S2P will no longer exist and will be replaced by a flat rate payment which will apply to retirements from that date.  The full rate of the new state pension payable from 6th April 2016 will be £155.65 per week.
  • The main issue facing employers associated with the end of contracting-out is the cost increase as the government National Insurance Contributions rebate for contracting-out will be removed and employers and employees will have to contribute in full.

Employment Tribunal Compensation Limits

  • The maximum compensatory award for unfair dismissal will rise from £78,335 to £78,962.
  • The maximum amount of a week’s pay, used to calculate statutory redundancy payments and various awards including the basic and additional awards for unfair dismissal, rises from £475 to £479.

If you would like to discuss any of the issues covered in this article, or have any employment law query, please contact Claire Cole Head of Employment at Hallmark Hulme at claire.cole@hallmarkhulme.co.uk or on (01905) 726600.


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