Further to our previous article on the 2023 employment law changes, we now provide a full round up of all the April 2023 rate changes.
April 2023 Rate Changes
The recent announcement in relation to the new Vento bands means that all of the April 2023 rate changes have now published.
1st April 2023
The new rates in relation to the National Minimum Wage and the National Living Wage will take effect on the 1st April 2023.
The increases in the National Minimum Wage and the National Living Wage were announced in the 2022 Autumn Statement on the 17th November 2022. The new rates are as follows:-
- For workers aged 23 and over (i.e. the National Living Wage), the rate will increase by 9.7% from £9.50 per hour to £10.42 per hour
- For workers aged 21-22 inclusive, the rate will increase by 10.9% from £9.18 per hour to £10.18 per hour
- For workers aged 18-20 inclusive, the rate will increase by 9.7% from £6.83 per hour to £7.49 per hour
- For workers aged 16-17 inclusive, the rate will increase by 9.7% from £4.81 per hour to £5.28 per hour
- The apprentice rate will increase by 9.7% from £4.81 per hour to £5.28 per hour
- The daily rate for the accommodation offset will increase by 4.6% from £8.70 to £9.10
2nd April 2023
The rate changes in relation to family friendly payments will take effect on the 2nd April 2023. The increases will be as follows:
- Statutory maternity pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly pay per week, subject to a maximum of £172.48 per week (up from £156.66 per week) after the first 6 weeks.
- Statutory Paternity Pay – the smaller of £172.48 per week (up from £156.66 per week) or 90 per cent of their average weekly earnings per week
- Statutory Shared Parental Pay – the smaller of £172.48 per week (up from £156.66 per week) or 90 per cent of their average weekly earnings per week
- Statutory Adoption Pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly pay per week, subject to a maximum of £172.48 per week (up from £156.66 per week) after the first 6 weeks.
- Statutory Parental Bereavement Pay – the smaller of £172.48 per week (up from £156.66 per week) or 90 per cent of their average weekly earnings per week
The average gross weekly earnings required to qualify for all of these benefits will remain at £123.00 or more.
Maternity Allowance will also increase from the 2nd April 2023. Where an employee earns less than £123.00 per week on average, but was employed for 26 of the 66 previous weeks earning at least £30 per week (averaged over any 13 week period during the said 66 weeks), then they will be entitled to Maternity Allowance for 39 weeks of the smaller of £172.48 or 90 per cent of their average gross weekly earnings per week (up from the smaller of £156.66 or 90 per cent of their average gross weekly earnings per week).
6th April 2023
Statutory Sick Pay (SSP) will increase from £99.35 to £109.40 per week on the 6th April 2023. The average gross weekly earnings required to qualify for SSP will remain at £123.00 or more.
The statutory cap on a weeks pay for the purposes of calculating the basic award and statutory redundancy pay will also increase on the 6th April 2023, from £571.00 to £643.00. The increase was announced via the release of The Employment Rights (Increase of Limits) Order 2023. Hence, the unfair dismissal basic award in employment tribunal cases will increase, and the maximum is now £19,290.00 (i.e. 20 x £643.00 x 1.5).
The maximum amount that can be awarded for the unfair dismissal compensatory award will also increase from £93,878.00 to £105,707.00 on the 6th April 2023.
As the statutory cap also applies when calculating statutory redundancy pay, the maximum is now £19,290.00 (i.e. 20 x £643.00 x 1.5). Hence, from the 6th April 2023, the amount of statutory redundancy pay an employee is entitled to is the number of weeks which can be taken into account multiplied by the lower of either their average weekly wage or £643.00.
The number of weeks which can be taken into consideration depends on how long the employee has been continuously employed by their employer for and how their years of continuous service relate to certain age bands. For each complete year of continuous service under the age of 22, they will receive half a week’s pay. For each complete year of continuous service between the ages of 22 and 40, they will receive one week’s pay. For each complete year of continuous service between the ages of 41 and above, they will receive 1½ weeks’ pay. The maximum number of years which can be taken into account is 20.
Finally, following the latest annual re-evaluation, the increases in the Vento bands will also take effect from the 6th April 2023.
The new rate for the top band of the Vento bands is £56,200.00 plus for exceptionally serious cases. For cases presented before the 6th April 2023, the band is £49,300.00 plus. In relation to the upper band, the band increases to £33,700.00 to £56,200.00 for serious cases. As regards cases presented before the 6th April 2023, the band is £29,600.00 – £49,300.00. The middle band will increase to £11,200.00 to £33,700.00. In relation to cases presented before the 6th April 2023, the band is £9,900.00 – £29,600.00. In terms of the lower band, it will increase to £1,100.00 to £11,200.00 for less serious and one-off cases. For cases presented before the 6th April 2023, the band is £990.00 – £9,900.00.
The Court in Vento stated that awards for less than the lower band should be avoided, and that remains the guidance.
Health And Social Care Levy
It was originally intended that with effect from the 6th April 2023, there would be further changes as regards the Health and Social Care Levy which had come into force on the 6th April 2022.
When the levy was introduced back in April 2022, it involved a 1.25% increase in national insurance contributions (NICs), with dividend tax rates increasing by the same percentage rate. It was payable by both employers and employees who are subject to Class 1 NICs, and by the self-employed who pay Class 4 NICs.
The levy was ultimately intended to be a new tax, separate from NICs. However, as it takes time for HMRC to set up on their IT systems, the tax was initially raised through an increase in NICs. Nevertheless, once HMRC had updated their IT systems, then the intention was that from the 6th April 2023, the new tax in the form of a 1.25% surcharge, would replace the NICs increase.
Nevertheless, when Liz Truss took over as Prime Minister, the health and social care levy was scrapped, with the 1.25% rise in National Insurance reversed with effect from the 6th November 2022.
