2020 Statutory Payment Changes and Increase on Limits for Unfair Dismissal

Here are the key changes to statutory payments and limits for unfair dismissal, which are effective from April 2020.

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Written by: alcumus
12th March

It is fair to say that April tends to be a busy time in the employment law field, but April 2020 is gearing itself up to deal with more changes than normal… 

Please find below a summary of the key changes which are effective from April 2020. More details can be found below the table. 

Maternity, Paternity, Adoption and Shared Parental Pay – effective from 5th April 2020

The current rate of Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Shared Parental Pay will increase from £148.68 per week to £151.20 per week. 

Redundancy Pay – effective from 6th April 2020

The maximum amount of “a week’s pay” for the purpose of calculating Statutory Redundancy Pay or for various awards including basic or additional awards for compensation in respect of unfair dismissal is to increase from £525 per week to £538 per week. The maximum payment under the Statutory Redundancy Scheme will therefore increase from £15,750 to £16,140 (£538 x 30 weeks).

Compensatory Award for Unfair Dismissal - effective from 6th April 2020

The limit on the amount of compensatory award for unfair dismissal will increase from £86,444    to £88,519 (statutory cap).

The maximum compensatory award is the lower of the statutory cap or 52 weeks’ pay.  This is 52 times one week’s actual gross pay for the employee at the time of dismissal, calculated in the usual way.  The limit on a week’s pay does not apply.

Statutory Guarantee Payments - effective from 6th April 2020

During periods of lay-off or short-time working an employee may be entitled to a Statutory Guarantee Payment.  The current rate of £29.00 per day will increase to £30.00 per day (subject to a maximum of five days or £150 in any three months).

Statutory Sick Pay – effective from 6th April 2020

The rate of Statutory Sick Pay (SSP) will increase from £94.25 per week to £95.85 per week.  

The lower earnings threshold will increase from £118 per week to £120 per week. 

National Living Wage/National Minimum Wage 

The new rates for the National Living Wage and National Minimum Wage come into force from 1st April 2020:

All the above changes come into force in April 2020 and are reviewed annually.

Other changes

In addition to the above, we want to take this opportunity to remind you of the other employment legislation changes which will become effective in April 2020, some having come about due to the Good Work Plan.
 
This was published in December 2018 and has been described as the government’s “vision for the future of the UK labour market”.   
 
Firstly, in circumstances where you calculate holiday pay for workers without fixed hours or pay or where a worker’s pay varies from week to week, the current reference period of 12 weeks for calculating holiday pay under the Working Time Regulations 1998 will be increasing to 52 weeks, or, the number of weeks for which the employee has been employed if this is less than 52 weeks.
 
The main reason for the change is the inconsistent payment of holiday pay and fluctuations in pay because of seasonal variations. Leave following a busy period could be paid at a higher rate than leave following a quieter period so the new change should even out any “peaks and troughs”.
 
You therefore need to ensure that your payroll records for the 52 weeks prior to 6 April 2020 are up to date and that you continue to accurately record such data. 

Statement of terms

As a result of its commitments set out in the Good Work Plan, the government will be extending the entitlement to a statement of ‘written particulars’ to include workers as well as employees.  Currently employers have up to two months to issue the statement to any employee working for them for more than a month and this has been the case for many years, but from 6 April 2020 the right to a statement of written particulars will become a day one right.
 
There have also been some changes to the wording content and Alcumus PSM Ltd has been actively reviewing the contract statements issued to clients to ensure continuing compliance post April 2020.  If you have any specific concerns about this topic, please contact your HR Consultant who will be able to advise you.

Parental bereavement leave

In October 2017, the government confirmed its backing for a private members’ bill. The Bill, which became the Parental Bereavement (Leave and Pay) Act in September 2018, will be implemented on 6th April 2020 and provides for at least 2 weeks’ leave for employees following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy. 
 
Employees with 26 weeks' continuous service will be entitled to two weeks of paid leave at the statutory rate and other employees will be entitled to unpaid leave.

IR35 - changes postponed until April 2021

The IR35 rules were introduced in 2000 to ensure that someone working like an employee but via a Personal Services Company (PSC) would pay similar levels of tax to other employees, and the Government has now confirmed that IR35 will roll out to the private sector in April 2021.

Previously, it was up to contractors to determine if they fell inside IR35 rules but in 2017, the responsibility in the public sector at that time shifted to the organisation.  The rules have now been extended to the private sector and the burden of deciding whether a worker is IR35-compliant or not will be down to the organisation contracting the work, rather than the worker themselves.

Contact the Alcumus PSM HR team for more information and/or advice on any of the above by emailing [email protected] or call us on 01484 439930.

Alcumus PSM (People & Safety Management) specialises in human resources (HR)and health and safety (H&S) consulting for small and medium-sized enterprises.

Written by Sally Grundy, Senior HR Consultant