Some important changes in Employment law to be aware of

April sees increase to the standard statutory rates including statutory maternity pay, statutory paternity pay and statutory adoption pay increases from £124.88 to £128.73 per week. The rate of statutory sick pay will increase from £79.15 to £81.60 per week.

Additional paternity leave & pay comes into force. This will allow employees who are fathers, (or spouses or partners of mothers,) to take additional paternity leave of up to 26 weeks in the first year of their child’s life. They may also be entitled to additional paternity pay.

The same rules will apply to employees who have been matched for adoption and are spouses or partners of the person taking adoption leave, and these will apply for the first year after the child’s placement for adoption.

With the default retirement age to be abolished from 1 October 2011, this means that from 6 April 2011 employers will be prohibited from issuing new notifications of retirement using the default retirement age. If a notification of retirement has already been issued before 6 April 2011 and the employee will retire before 1 October 2011, then this will be lawful.

The positive action provisions of the Equality Act come into force so that employers are permitted to treat individuals with a protected characteristic more favourably than others in connection with recruitment or promotion. This applies only to candidates of equal merit and the more favourable treatment must enable or encourage an individual to overcome or minimise a disadvantage or participate in an activity where he or she is under-represented in that activity.

Some payroll changes to be aware of :

Any business operating a PAYE scheme will need to ensure that when they start processing payroll, from week 1 of the new tax year (6th April 2011), they are using the correct tax bands, rates and codes, and National Insurance thresholds , rates etc.

The new emergency tax code will be 747L, which means that the new threshold (starting point) for PAYE is £144 per week (£623 per month).

Basic Rate tax of 20% is payable from £1 to £35,000
Higher Rate tax of 40% is payable from £35,001 to £150,000 Additional Rate of 50% is payable from £150,001 and above

Class 1 NIC deductions should not be made on earnings below the Lower Earnings Limit of £102 per week, £442 per month and £5304 per year.

The Earnings Threshold has been replaced with the Secondary Threshold (for employers NIC) and the Primary Threshold (for employees NIC).

Employers will pay 13.8% Class 1 NIC on earnings from £136 per week, £589 per month and £7072 per year.

Employees will pay 12% Class 1 NIC on earnings from £139 per week, £602 per month and £7225 per year, to the Upper Earnings Limit.

From The Upper Earnings Limit of £817 per week, £3540 per month and £42,475 per year, employees will pay 2% Class 1 NIC.

The above relates to employees who fall under NIC Category A. Other Categories, thresholds and rates can be found at www.hmrc.gov.uk/paye/rates-thresholds.htm

The amount that a small employer can claim back on Statutory Maternity, Paternity and Adoption Pay has also changed. If your annual liability for class 1 NICs is £45,000 or less you are entitled to claim back 100% of the Statutory pay and an additional amount of 3% as compensation for the NICs that you pay.

The amount of available tax relief on childcare vouchers will reduce for certain employees joining an employer supported childcare scheme on or after the 6 April 2011. These changes will affect those employees in the higher or additional rate tax bands. The new exemption amounts per week will be £55 for Basic rate tax payers, £28 for higher rate tax payers and £22 for additional rate tax payers.

As such an employee’s basic earnings assessment will need to be carried out on an annual basis at the beginning of every tax year. This does not affect employees already enrolled into an employer supported childcare scheme before the 5 April 2011.