New rates of minimum wage and statutory payments announced

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The government has provided early confirmation for the annual increases to minimum wage, set to take effect from April 2018. They have also released the proposed increases to statutory payments, including statutory maternity and sick pay.

In the November Budget, the Chancellor announced the minimum wage increases that will take place in April 2018. The National Living Wage, for workers aged 25 and over, will increase by 4.4% from £7.50 to £7.83 per hour. Over a year, this will give a full-time worker a £600 pay increase.

The Low Pay Commission’s recommendations for National Minimum Wage (NMW) increases were also accepted by the government. From April 2018, the following rates will apply:

  • For workers aged 21-24: NMW will increase from £7.05 to £7.38 per hour
  • For workers aged 18-20: NMW will increase from £5.60 to £5.90 per hour
  • For workers over compulsory school age but under 18: NMW will increase from £4.05 to £4.20 per hour
  • For apprentices aged under 19 or 19 and over but in the first year of their apprenticeship: NMW will increase from £3.50 to £3.70 per hour.

On the 8th December 2017, the government released their third ‘naming and shaming’ list of 2017. The list contained 260 employers who had underpaid minimum wage to over 16,000 workers; underpayments totalled £1.7 million and employers were also fined £1.3 million. The government has confirmed they will continue with targeted enforcement in this area, making it vital that employers are aware of the new rates so they are not underpaying any workers when the changes come in to effect.

A policy paper from the Department for Work and Pensions has outlined the proposed new rates for statutory payments. These rates are usually increased each April and, generally, the government will implement the proposed rates.

The paper proposes an increase to Statutory Maternity Pay (SMP) from £140.98 to £145.18 per week. In line with this, Statutory Paternity Pay (SPP), Statutory Adoption Pay (SAP), Statutory Shared Parental Pay (ShPP) and the Maternity Allowance (MA) will all increase from £140.98 to £145.18 per week. These increased rates are expected to take effect from 1 April 2018.

The amount employees are entitled to when on sick leave will also increase from next April. Statutory Sick Pay (SSP) is proposed to increase from £89.35 to £94.25 per week. The new rate usually takes effect from the 6th April.

Employees will have to earn a higher amount from next April to be entitled to these statutory payments. The lower earnings limit is set to increase from £113 per week to £116 per week.

Published on 12/12/2017.

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