Key increases to employment-related figures in April 2019: minimum wage, pension contributions and more
To correspond with the start of a new tax year, a number of employment-related minimum figures will increase in April 2019, including:
On 1 April 2019 the National Living Wage (for those aged 25 and over) will increase from £7.83 to £8.21 an hour. This is a compulsory minimum rate and is not to be confused with the “real Living Wage” set by the charity, Living Wage Foundation, which is a voluntary commitment to which employers may sign up – that rate is currently £9.00 an hour, or £10.55 in London.
The other minimum wages for those aged under 25 will also increase as follows:
For 21-24s, the National Minimum Wage will increase from £7.38 to £7.70 an hour;
For 18-20 year-olds, the rate will increase from £5.90 to £6.15;
For 16-17 year-olds, the rate will increase from £4.20 to £4.35; and
For apprentices (who are under 19 and in the first year of their apprenticeship), the rate will increase from £3.70 to £3.90.
The minimum contributions which employees and employers are required to pay into their pension schemes under the auto-enrolment regime will also increase.
From 6 April 2019, the total minimum contribution rate will increase from 5% to 8%. Of this, the employer will be required to contribute at least 3% (an increase from 2%), so that employees who wish to remain enrolled in a pension scheme will now be required to pay in at least 5% of their salary (up from 3%).
Under the auto-enrolment regime, employers are required to automatically enrol all eligible staff into a suitable pension scheme and ensure that the above minimum contributions are paid – unless the employee expressly “opts out” of the pension scheme in writing.
Statutory redundancy pay
The limit on the meaning of “a week’s pay” for the purposes of calculating statutory redundancy pay will increase from £508 to £525 on 6 April.
This will mean that the maximum amount of statutory redundancy pay an employee can receive if they are made redundant will increase from £15,240 to £15,750. However, this figure will only apply to those with at least 20 years’ service and who are aged 60+ at the time of being made redundant. This is because the calculation of statutory redundancy pay is based on an employee’s age and length of service at the date of termination, as well as their weekly pay.
Compensation for unfair dismissal
The maximum amount of compensation for those who are unfairly dismissed will increase from £83,682 to £86,444 (plus the value of their statutory redundancy pay). This will mean that those earning at least that amount per year will still only be able to recover that figure in compensation, even if they suffer a significantly higher loss of earnings.
For those whose annual salary is less than £86,444, their compensation will be capped at the value of a year’s gross salary.
These are maximum figures and it is rare for employees to recover as much as the statutory cap on compensation.
However, in cases involving discrimination or whistleblowing, the cap does not apply so it is possible for employees to recover a larger amount.