Increases in pay rates and compensation limits for 2022

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April 2022 saw an increase in several rates and limits that would be relevant to employers, including compensation for unfair dismissal, redundancy pay, statutory sick pay and the national minimum wage.

Details of the most notable changes are below:-

Family Friendly Rights

From 3 April 2022, the weekly rate of the maternity allowance as well as statutory maternity and paternity pay, statutory shared parental pay and statutory adoption was increased from £151.97 to £156.66 or 90% of the employee’s average weekly earnings, whichever is lower.

Sick pay

From 6 April 2022, the weekly rate of statutory sick pay went up from £96.35 to £99.35.

National Minimum Wage

From 1 April 2022, the national minimum wage rates increased from £8.36 to £9.18 an hour for those aged 21 to 22 and from £8.91 to £9.50 an hour for those over 23.

The increased minimum wage limits bring more workers and employers within the scope of complex legislation relating to those limits. Often, employers do not appreciate how their current payroll practices make them vulnerable to inadvertently breaching the rules.

Enforcement action arising out of breaches is increasing and because of this, employers are finding themselves in a place of increased financial and reputational risk. To mitigate this risk, employers should audit pay systems and workplace practices to identify potential compliance gaps.

Increased Compensation Limits

Every tax year, there is an increase to the core compensation limits for certain employment rights. This year the following increases became applicable from 6 April 2022:-

Weekly Basic Pay 

Basic awards, which are relevant to redundancy calculations,  have increased from £544 to £571.

Compensatory Award

The maximum compensatory award for an unfair dismissal claim increased from £89,493 to £93,878.

Increased Vento Bands

The Presidents of the Employment Tribunals in England and Wales and in Scotland recently issued a Fifth Addendum to the Presidential Guidance on Employment Tribunal awards for injury to feelings which, significantly, includes updated Vento bands.

The Vento bands take their name from the Court of Appeal decision in Vento v Chief Constable of West Yorkshire Police (2003) which set out clear guidelines for Courts and Tribunals to apply when assessing awards for injury to feelings in discrimination cases, for example.

The Court of Appeal in Vento set out 3 ‘bands’ for compensation for injury to feelings as follows:-

  • The lowest band for the least serious cases, such as where the discriminatory act is a one off;
  • The middle band for serious cases, but where an award in the highest band would not be appropriate; and
  • The highest band for the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment which has a profound effect on the victim.

The Fifth Addendum takes account of the Retail Price Index measure of inflation in updating the Vento bands which for claims presented from 6 April 2022 onwards, are as follows:-

  • A lower band of £990 to £9,900 for less serious cases;
  • A middle band of £9,900 to £29,600 for cases that do not merit an award in the upper band; and
  • An upper band of £29,600 to £49,300 for the most serious cases, with the most exceptional cases capable of exceeding £49,300.

Both employers and employees are potentially affected by this change and should be careful to seek proper legal advice when confronted with such issues. Feel free to contact us if you need assistance or further clarification from one of our solicitors.

 

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