Employers need to prepare for new proposed statutory rates

Kate Palmer from HR expert Peninsula outlines the new statutory payment rates proposed for 2020/21 which will come in in April.

Pregnant adult businesswoman working at her working place in office.

As has become the norm in recent years, the month of April will see the introduction of increases to weekly rates of statutory payments, such as statutory sick pay (SSP), statutory maternity pay (SMP) and statutory paternity pay (SPP). As the government have recently submitted these proposals, employers must be familiar with these changes and have the right procedures in place to ensure compliance.

We expect the increases to family-friendly leave rates to become effective on 5th April, in line with the first Sunday of the month. From this date onwards, employees undertaking a period of maternity leave will be entitled to receive £151.20 per week after the first six weeks, up from £148.68 the previous year.

The qualifying criteria will remain the same, meaning those whose weekly earnings are less than this statutory rate will be entitled to 90% of their average weekly earnings instead. Statutory paternity and adoption pay rates will also rise to £151.20 from this date as a way of maintaining existing levels of consistency.

Statutory sick pay is scheduled to rise a day later to coincide with the first Monday of the new tax year. Therefore, from 6th April 2020 eligible employees who are off work sick for a period of four or more consecutive days will be entitled to £95.85 per week, up from £94.25 previously. Individuals will only qualify for these payments if their weekly earnings are equal to, or above, the lower earnings limit. Although a new lower earnings limit has yet to be published, employers can expect nothing more than a slight increase on last year’s £118 per week.

Ahead of their introduction, employers should work to prepare for these statutory increases. After all, a failure to pay staff correctly runs the risk of costly tribunal proceedings. Although the increase may appear minor, these amounts can quickly mount up throughout the year, especially for larger organisations with a substantial workforce. Therefore, employers are encouraged to factor these increases into any budget calculations for the year ahead.

Suitable amendments may be required to existing policies around family-friendly and sick leave. At the same time, special consideration should also go to those who may be partly through a period of statutory leave when these new rates are introduced. Employers must ensure all existing payments are reviewed and increased accordingly, thereby guaranteeing staff in these situations are paid correctly.

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