Statutory payments

Minimum Wage

There are three rates of National Minimum Wage (NMW), which apply to nearly all workers and are the lowest hourly rates which must be paid. They are based on recommendations of an independent body, the Low Pay Commission.

Rates from 01 October 2011:

Statutory Sick Pay

The standard rate of statutory sick pay from 06 April 2012 is £85.85 per week. The rate of Statutory Sick Pay is worked out according to the employee’s normal weekly earnings, if they are above the Lower Earnings Limit of £107 per week. This is the level that NI contributions become payable. .  Average weekly earnings are calculated over the eight weeks before the period of sickness began.

See booklet CA30 or CA35 or http://www.hmrc.gov.uk/calcs/ssp.htm

SSP is not payable for the first 3 qualifying days of the illness, but is payable thereafter up to 28 weeks. After that time an employee will have to claim state sickness benefit.

If an employee does not qualify for statutory sick pay they may still qualify for sickness benefit from the DSS. Statutory sick pay will be paid by the employer and reclaimed from the state.

Statutory Maternity Pay (SMP) Paternity Pay (SPP) and Adoption Pay (SAP)

The standard rate of SMP, SPP and SAP from 04 April 2012 is £135.45 per week.

SPP is paid for two weeks at the standard rate or 90% of average weekly earnings if this is a lower amount. SMP is a weekly payment made by the employer who can claim it back and can recover money in advance of making SMP payments. Small employers can recover 100% of payments plus an element of compensation.

A woman is eligible if she has been employed for 26 weeks up to 15th week before the due date and her average earnings are above the qualifying threshold (LEL), currently £107.

SMP can be paid for up to 39 weeks. The first 6 weeks are paid at 90% of the woman’s average weekly earnings with no upper limit. The remaining 33 weeks are paid the lower amount of either 90% of weekly earnings or £135.45.

The planned extension of SMP from 39 to 52 weeks has been postponed indefinitely.

Redundancy payments

The amount of a statutory redundancy payment depends on the employee’s age, length of service, and the amount of a week’s pay. For each year of continuous service:

Up to age 21 Half a week’s pay
Age 22-40 One week’s pay
Aged over 40 One and a half week’s pay

The maximum payment is 30 weeks’ pay, and the maximum amount of a week’s pay that may be used to calculate a payment is £430.
The limit may change annually in line with the Retail Prices Index (up or down) as appropriate. An employee must be at least 20 years of age because one qualification for a redundancy payment is at least two years continuous service since the age of 18.
Further information is available on http://www.businesslink.gov.uk/bdotg/action/layer?r.l1=1073858787&topicId=1073876974&r.lc=en&r.s=tl

Unfair Dismissal

Maximum basic award for unfair dismissal: 30 weeks’ pay (£12,900).

The maximum amount of a week’s pay for the purpose of calculating basic or additional awards of compensation for unfair dismissal is £430.
The maximum compensatory award for unfair dismissal is £72,300 from 01 Feb 2012, (plus up to 30 x £430, giving a total of £85,200) but there is no limit where the employee is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or public interest disclosure (‘whistleblowing’).

Holidays

The statutory holiday entitlement From 1 April 09 is a minimum of 5.6 weeks (28 days for a person working 5 or more days per week).