Increased statutory rates are set to take effect in April 2023, which could have a huge impact on employers’ outgoings.
As such, it is important to be prepared for them coming into effect.
Kate Palmer, HR Advice and Consultancy Director at Peninsula, looks at the upcoming changes.
As the cost-of-living crisis continues, many workers will be pleased to know that their basic pay rate will go up, in line with increases to all pay rates in the national minimum wage structure.
From 1 April 2023, those aged 23 and above will be entitled to £10.42 per hour (the national living wage); 21-22-year-olds will receive £10.18 per hour; 18-20-year-olds will receive £7.49 per hour; and 16-17-year-olds will get £5.28 per hour.
Apprentices who are aged under 19 or are 19+ but in the first year of their apprenticeship, will be entitled to £5.28 per hour.
When do the changes have to be implemented by?
Despite the increased rate taking effect on 1 April, employers do not have to implement it until the start of the next pay reference period. This means if employees usually get paid on the 15th of each month, the old rate will apply until the pay reference period beginning on 16 April.
The same applies to employees whose birthday knocks them into the next banding on the minimum wage structure. The employee will not automatically get a higher rate of pay from their birthday. Instead, it will apply from the next pay reference period after their birthday.
Statutory family-related payments, including maternity, paternity, adoption, shared parental and parental bereavement pay will also increase to £172.48 from 2 April 2023.
Statutory sick pay will rise to £109.40 on 6 April 2023
However, the Lower Earnings Limit, which is the minimum weekly pay employees must earn to qualify for such payments, will stay the same at £123.
As such, with increased minimum wage rates, more employees may fall within the scope to receive statutory payments. Employers should prepare to manage increased requests and outgoings, in line with more employees being eligible for these payments.
From 6 April 2023, the rate of statutory guarantee pay, which applies in lay off situations, will increase to £35 per day for a maximum of 5 days within a 13 week period. On the same date, the cap on weekly pay for statutory redundancy payments will increase to £643.
Employers who plan to dismiss as redundant any employee with 2+ years’ service should plan for increases to their termination payments. The £643 weekly pay cap also applies to unfair dismissal basic award.
We will also see an increase to the Vento banding rates from 6 April. These rates set out the compensation for injury to feelings awards for discrimination claims. The lower Vento banding will be £1,100-£11,200; the middle band will be £11,200-£33,700; and the upper band will be £33,700-£56,200.
What about those who sponsor foreign national’s work visa?
Employers who sponsor foreign national’s work visa should keep in mind that the minimum salary thresholds will rise on 12 April 2023. Any certificate of sponsorship issued to a new employee on or after 12 April will therefore be subject to a higher rate of pay.
Organisations should ensure their HR and payroll teams are aware of these changes and understand how to implement them. It’s also useful to update employees, so they know the impact the increases will have on their take-home pay.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
