Significant changes for employers from April 2016

 In General

“Nothing stands still for long” and in the area of employer responsibilities and employment legislation this phrase could not be more apt.

Alongside the announcement that the penalty exacted by HMRC for payment of a rate less than the National Minimum Wage is doubling from 100% of the underpayment to 200% from 1 April 2016, the same month sees the introduction for employees over 25 of the National Living Wage. Initially the new “top rate” of the NMW is £7.20 per hour.

Recent cases publicised by HMRC as a warning to employers show how easy it is to break the rules. A particular breach of the legislation can inadvertently happen with “salary sacrifice” schemes, recently popular in areas such as pensions and childcare provision. HMRC practise an “arm’s length” approach when employers engage in such arrangements with employees – but NOT when it takes the employee under the published rates.

Last April saw the abolition of Secondary (Employer) National Insurance Contributions (NICs). This year it is the turn of Employer NIC liability on payments to apprentices under 25 years old. The aim is to encourage employers to employ workers in these categories. The drive to encourage the engagement of apprentices is to be funded by the introduction of an Apprentice Levy on larger employers – but not until April 2017.

Contracted-out National Insurance Contributions have ended with the ending of contracted-out Pensions after April 5 2016. A new “Flat Rate” or single tier state pension commences from 6 April 2016. In practical terms, this means that employers with such schemes cease to receive a rebate on their employees’ National Insurance Contributions and employees of such schemes will pay more NICs out of their wages and salaries. Pro-active action in communicating this change to affected employees is a good idea before their first payslip reaches them in April 2016.

For the first time in living memory, rates of statutory payments made by employers – Statutory Sick Pay, Statutory Maternity Pay, Statutory Adoption Pay, Statutory Paternity Pay and Shared Parental Pay – are not changing this April. They are staying at the rates set for 2015/16.

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