Seven Important Employment Law Changes – April 2016

David Winnie, at solicitor at RFB, looks at important new legislation affecting employment rights and responsibilities due to come into force on 1 April 2016. For example, a national living wage is being introduced as well as a new state pension scheme. National Insurance Contributions (NIC's) are abolished for apprentices under 25 years old and regulations requiring higher earning public-sector employees to repay exit payments if they re-join the public sector within a year are expected to come into force in April 2016 or soon after. Furthermore, legislation allowing tribunal enforcement officers to impose a financial penalty on an employer that fails to pay a tribunal award is also expected to come into force in April 2016. Lastly, a minimum salary requirement is being introduced for tier 2 workers on 6 April 2016.

1. The national living wage is introduced

   Workers aged 25 and over will be entitled to the national living wage rate of £7.20 per hour from the first pay reference period beginning on or after 1 April 2016. The national living wage is a new top rate of the national minimum wage. Employers should check, in particular, that employees' pay is not brought below the new rate by salary-sacrifice arrangements.

   If 1 April 2016 falls part way through a payroll period, from which date does the employer have to start paying the national living wage?

   The national living wage is the new statutory minimum wage rate of £7.20 that must be paid to workers aged 25 and over. The national living wage applies to pay reference periods beginning on or after 1 April 2016.

   For example, if an employer's monthly payroll period begins on 10 April 2016, the national living wage rate will apply from that date, because this is the first pay reference period that begins on or after 1 April 2016. The employer does not have to pay workers the national living wage for the period of 1 April to 9 April 2016.

2. Penalties for non-payment of the national minimum wage are increased

   The penalty for employers found not to have paid the national minimum wage doubles from 1 April 2016. The enforcement regime is the same for non-payment of the national living wage.

   National minimum wage enforcement

   The law relating to the national minimum wage is governed by the National Minimum Wage Act 1998 and the National Minimum Wage Regulations 2015 (SI 2015/621). The Regulations, which came into force on 6 April 2015, replaced and consolidated the National Minimum Wage Regulations 1999 (SI 1999/584) and amending Regulations, which were revoked.

   The majority of workers aged 16 and over qualify to receive the national minimum wage. Exclusions from the right include au pairs, family members in the family business and voluntary workers.

   There are four rates of payment for the national minimum wage.

   Calculating whether an employee has been paid the national minimum wage can be very complicated. In essence, the employer should divide the number of hours worked by the amount of pay, but there are different rules relating to different types of work.

   Employers must keep records that show that they have paid their workers the national minimum wage for three years after the pay reference period following the pay period that the records cover.

   What are the consequences if an employer pays workers less than the national minimum wage?

   Where an underpayment of the national minimum wage is identified in an investigation by HM Revenue and Customs (HMRC) (including an underpayment of the national living wage from 1 April 2016), the compliance officer may issue a notice of underpayment requiring...