| HR & EMPLOYMENT LAW
Jackie Le Poidevin, Editor-in-Chief, HR Adviser |
Discover the New Employment Limits and Statutory Rates
In our last Ask the Experts Update, Sarah Bradford set out the new national living wage and national minimum wage rates coming into effect in early April. Here are 4 other statutory rates and employment limits that are changing next month, with this year’s increases significantly larger than usual due to high inflation.
1.The Limit on a Statutory Week’s Pay
From 6 April 2023, this will increase from £571 to £643 in England and Wales. This is the amount at which a week’s pay is capped for the purposes of calculating statutory redundancy payments and unfair dismissal awards. As a result, the maximum statutory redundancy payment and unfair dismissal basic award will be £20,070. The maximum unfair dismissal compensatory award will be £105,707 (up more than 12% from £93,878 in 2022).
You’ll need to factor these new rates in if you’re considering making redundancies this financial year in response to the difficult economic conditions the UK is facing. You should also take them into account if unfair dismissal claims are a risk (for example, if you may need to dismiss employees and re-engage them on new terms) and during any settlement discussions.
2. Injury-to-feelings Award Limits
The so-called Vento bands are also increasing on 6 April. These are named after a landmark 2003 case in which the Court of Appeal set out guidelines for the tribunals and courts to follow when making awards for injury to feelings in discrimination cases.
The updated guidelines are as follows:
- Lower band (for the least serious cases, such as a one-off act of discrimination): £1,100 to £11,200.
- Middle band (for more serious cases): £11,200 to £33,700.
- Upper band (for the most serious cases, such as when there has been a lengthy campaign of harassment which has had a profound effect on the claimant): £33,700 to £56,200.
The maximum was previously £49,400, so this is quite a jump – plus, in exceptional cases, amounts above £56,200 can be awarded. It’s also important to note that injury to feelings is only one component of a discrimination award and there’s no cap on overall compensation. So the total award may be far in excess of these guidelines.
The guidelines also apply to other types of claims in which awards for injury to feelings are made, including where you’ve subjected an employee who has blown the whistle to detrimental treatment.
3. Maternity and Other Family Leave Pay
Statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase from 10 April from £156.66 to £172.48 a week. The minimum weekly amount an employee must earn to be entitled to these payments (the ‘lower earnings limit’) will remain unchanged at £123.
You can recover all, or most of, these payments from HMRC.
4. Statutory Sick Pay (SSP)
SSP is increasing from 10 April from £99.35 to £109.40 per week. Again, individuals must earn at least £123 a week to be eligible for SSP.
Anything Else?
If you’re required to report on your gender pay gap, you need to submit your data for the 2022-23 reporting year to the government’s portal by 4 April if you’re a company. Public sector employers had to publish their data by 30 March. You need to report if you have 250 or more employees.
| PAYROLL
Sarah Bradford, Editor-in-Chief, Pay & Benefits Adviser |
Bring in the 2022/23 Tax Year to a Close: Run Your Payroll Year End
The 2022/23 tax year comes to an end on 5 April 2023. The end of one tax year and the start of the next is a busy time for payroll departments. When you pay your employees for the final time in the 2022/23 tax year, you must tell HMRC that you are making your final submission for the tax year. Depending on your payroll software, you may be able to do this as part of the final FPS submission, or you may need to do this by sending an EPS.
When you pay directors for the last time in 2022/23, if you have used the alternative arrangements for National Insurance to calculate their NIC on their earnings for the pay period as for other employees, you will need to indicate that you are making the final payment for the 2022/23 tax year so that the liability can be recalculated on an annual basis.
Directors have an annual earnings period for National Insurance regardless of their actual pay interval. Due to the in-year changes to the NIC rates and primary thresholds, for 2022/23, an annual primary threshold of £11,908, a main primary rate of 12.73%, and additional primary rate of 2.73% and a secondary rate of 14.73% are used to calculate directors’ NICs on an annual basis.
Once you have run your final payroll for 2022/23, you will be able to run your payroll year end, to bring the 2022/23 tax year to a close and to generate your employees’ P60s.
You must give all employees who were on your payroll on 5 April 2023 a certificate of their pay and deductions (form P60) for 2022/23 by 31 May 2023.
You will also need to ensure that you have paid all the PAYE and NIC that you owe for 2022/23 by 22 April 2023 if you make your payments electronically, and by 19 April 2023 if you pay by cheque.
Benefits in Kind
If you provide taxable benefits that you wish to payroll for the first time in 2023/24, you must register to do so by 5 April 2023. The same deadline applies to deregister any benefit that you no longer want to payroll. If you miss this deadline, you will need to wait until 2024/25 to change the benefits that you payroll, as HMRC do not accept in-year changes. They are no longer allowing informal payrolling either.
Where you provided employees with payrolled benefits in 2022/23, you must give your employees details of their payrolled benefits before 1 June 2023.
Non-payrolled benefits must be reported to HMRC on form P11D by 6 July 2023; form P11D(b) must be submitted by the same date. These must be filed online, using either PAYE Online or commercial software as HMRC are not accepting paper forms for 2022/23. You must also provide employees with a copy of their P11D or details of their taxable benefits for 2022/23 by 6 July 2023.
Update Your Software for 2023/24
Before paying your employees for the first time in 2023/24 (but after you have run your 2022/23 payroll year end), remember to update your payroll software for 2023/24. This is essential to ensure that calculations are performed using the 2023/24 rates and thresholds.
You will also need to check your employees’ tax codes and NIC category letters and update where necessary.