April has arrived, and once again, finance and accounting teams across the country will be working furiously to complete calculations, make submissions and understand new legislation for the 12 months ahead.
It’s already been a particularly busy period for employment law over the last 18 months or so, with important tribunal case results and a raft of new and upcoming legislative pieces for organisations to prepare for.
If you work in payroll or employment law-related areas, then here’s what you need to know right now.
Changes happening in April 2023
As with every April, there are a raft of new tax, national insurance and statutory rates for payroll teams to factor into their calculations.
Some of the headline changes include:
Tax rates for England, Wales & NI
Tax rates are frozen at the 20% basic rate for employees at £37,700. However, the 45% higher rate will now kick in from £125,140 instead of £150,000 in 2022.
Updates to Scottish tax banding
In Scotland, new top rates have been introduced, affecting anyone earning over £31,092. The former 41% higher rate has been replaced by a 42% rate covering anyone earning £31,119 to £125,140. Meanwhile, the 46% rate has been replaced by a 47% top rate that now affects earnings over £125,140 compared to £150,000 last year.
Student loan recovery
There have been some small increases in the earnings thresholds where repayments begin. For Plan 1 loans, the threshold has risen from £20,195 to £22,015. Plan 4 has also been increased from £25,375 to £27,660.
Plan 2 and postgraduate student loan recovery rates remain the same.
National Living Wage
The National Living Wage will see its biggest increase ever in response to rising inflation, with the level rising 9.7% to £10.42 an hour.
Statutory parental pay
Maternity, paternity and adoption pay is increasing from £156.66 a week to £172.48 or 90% of earnings – whichever is lower. Shared parental pay has also increased by and to the same amount.
Rates for bereavement pay have increased in line with statutory maternity pay, from £156.66 to £172.48 or 90% of earnings.
Sick pay has risen slightly from £99.35 to £109.40.
See all the relevant rates, including National Insurance thresholds and contributions, in our new and updated Tax Fact Card for 2023/24. This free resource is a clear and invaluable point of reference as you update your calculations for the year ahead.
Upcoming changes to be aware of
Don’t panic (Mr Mainwaring), but there are some big bills in the works right now which could have complicated ramifications for all organisations with employees.
Proposals are in the works to give employees the right to request flexible working from day one of employment. Currently, employees can only make a statutory request of this kind after 26 weeks. The government hopes this will enable more people to return to the workforce, and certain areas of the economy to catch-up with those that quickly adapted to the pandemic.
Clampdown on ‘fire and rehire’
Delayed until this year but expected soon, the new Acas Code of Practice on fire and rehire is expected to give tribunals more powers when it comes to awarding compensation if employers fail to comply with updated unfair dismissal guidance. As a result, compensation limits could rise by as much as 25%.
Minimum service levels
The ongoing strike action across sectors right now has seen some improved pay and conditions offered to workers… and it’s also pushed the government into attempting the introduction of new minimum service level legislation across all important public services, including transport, health and policing.
This is a major piece of legislation with far-reaching ramifications. So, even if votes start weighing in its favour over the coming months, it’s unlikely that any purposeful (or at least, actionable) change will be needed within organisations over the coming year to comply.
But, as we mentioned before, definitely one to keep an eye on as it develops.
The Employment Bill
A series of individual private member’s bills have been given government backing and could come into effect by this summer.
These include changes to the flexible working regime, meaning an employer can’t flatly deny a flexible working request without consultation. This is on top of every employee’s future potential right to request flexible work options on day one of employment.
There are also due to be new requirements for organisations to prevent sexual harassment in the workplace from customers or other third parties towards their own staff, focusing on prevention rather than reaction.
Redundancy protections could also be beefed up beyond parental leave and cover any period of pregnancy up to six months following a return to work.
Fair distribution of tips, neonatal leave and carer’s leave is also likely to come into effect over the coming months.
Sunsetting EU law
Saving the biggest until last; the Retained EU Law bill looks to sunset a raft of EU legislation at the end of this year. Rules and guidelines surrounding working time regulations, TUPE, agency workers, parental leave and a lot more could all either disappear or be changed to new UK-based laws.
This has the potential to be as confusing and far-reaching as Brexit was for businesses, and GDPR was for everyone. This could be the biggest shake-up of employment laws the UK has seen for a generation.
Remove the stress of payroll and employment law headaches
Changes to statutory payments, tax rates, national insurance thresholds AND a raft of new and upcoming employment law changes require a lot of time and knowledge to stay abreast of.
At Phase 3, we’re obsessed with all the new case law, tribunal results and upcoming bills and love to help our clients prepare for all eventualities.
However, many organisations don’t have the internal resources available to stay up to date with everything that’s going on, on top of day-to-day employee and payroll management responsibilities.
At Phase 3, we work with hundreds of companies across the UK as their outsourced expert partner, either through expert HR consultancy or by becoming their managed payroll team.
Our CIPP award-winning services enable businesses like yours to focus on growth and success, rather than worrying about changing payroll rates and employment law updates.
Find out if outsourcing your payroll could be of benefit to your organisation in this free guide on choosing the right payroll model.
Worried about how some of the upcoming employment law legislation changes could affect your organisation? Then see if our bitesized HR consultancy services could support you now and in the future.