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The Real Living Wage has increased, but is it actually benefitting employees?

Earlier this week it was announced that the Real Living Wage has been increased from £8.45 to £8.75 per hour across the UK and from £9.75 to £10.20 per hour in London. The changes have been driven largely by inflation, higher private rents and transport costs, and the new figures have been calculated to reflect the actual cost of living required in order to sustain a decent quality of life in the UK and London.

However, the Real Living Wage remains voluntary, unlike the mandatory National Living Wage put in place by the Government. Further, despite more than one thousand employers signing up to pay the Real Living Wage since Living Wage Week last year (including Google and Ikea), 5.5 million people across the UK (comprising 21% of the workforce) are still being paid less than the Real Living Wage. One of the criticisms of the Living Wage campaign was that it targeted sectors that do not tend to have significant numbers of low paid staff – as such, it may not, as yet, have had the desired impact for those who need it the most.

Further, there have been questions around how employers are offsetting the additional cost of meeting the Real Living Wage – some employers have cut overall pay packages to mitigate the costs of increased pay, for example stopping overtime rates and cutting back hours. As such, the overall benefit being passed to employees is, in some cases, questionable.

On a more positive note, the increase in the Real Living Wage will see more than 150,000 employees get a pay rise, as more than 3,600 employers have now signed up to pay the Real Living Wage since it was introduced. Among these is Heathrow, which is set to become the first Real Living Wage airport by the end of 2020.

The Real Living Wage has increased, but is it actually benefitting employees?

President of the Employment Tribunals announces increase in the Vento Bands

Following a recent consultation, the President of the Employment Tribunals has announced a rise in the compensation that employees can recover for 'injury to feelings', in the event that they suffer from discrimination in the workplace.
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President of the Employment Tribunals announces increase in the Vento Bands

Add 10 per cent to discrimination compensation awards?

From April 2013, as a result of the Court of Appeal case Simmons v. Castle, there was a 10 per cent increase in general damages for non-monetary losses. This was the Court of Appeal’s implementation of one of the Jackson reforms, namely the recommendation from Lord Justice Jackson that there should be such an uplift in order to help claimants meet the additional costs and risks as a result of his other recommendation to abolish recoverability of conditional fee agreement success fees and after-the-event insurance premiums.

Up until De Souza v. Vinci Construction (UK) Ltd it was not clear whether such an uplift should apply to employment tribunal cases, given that the rationale for the uplift does not apply in the Employment Tribunal. However, employers should take note that the Court of Appeal yesterday decided in De Souza that such an uplift should indeed apply in the Employment Tribunal. The Court noted that s124(6) of the Equality Act 2010 requires that compensation awarded in the County Court and the Tribunals should be consistent. Therefore, compensation for employment discrimination should be the same as that which could be awarded for a non-employment discrimination claim (e.g. discrimination in an educational context) in the County Court.

The Court of Appeal provided some guidance in De Souza as to how the uplift should be applied. Unfortunately it does not appear that it is always as simple as adding 10 per cent. Notably the court stated that in relation to psychiatric injury, the current Judicial College Guidelines already incorporate the 10 per cent uplift, so there would be no change in this regard. However, in relation to injury to feelings the position is more complicated. The Vento bands of compensation for injury to feelings could have a 10 per cent uplift applied to them. However, we will not have any certainty until new bands are published (the Court of Appeal suggested that the President of the Employment Appeal Tribunal publish guidance setting out new bands for clarity, given that the bands were recently updated to reflect inflationary changes).

Add 10 per cent to discrimination compensation awards?

Its all change in employment law in April…

April is a key month for employment law changes and this April is no different. 6 April is “D-Day” for a number of significant changes. By way of reminder:

1 April

  • National minimum wage – the National Living Wage (for workers aged 25 and over) increased from £7.20 to £7.50 and there were also changes in the other bands.

Weeks commencing after 2 April

  • Cap on a week’s pay  – the cap on a week’s pay (which is used in statutory redundancy pay calculations for example) increased from £479 to £489.

5 April and onwards

  • Gender pay gap reporting – employers with 250 employees should have collated their relevant data on the first annual “snapshot date” yesterday. Today the work on calculations can begin! Private employers have a 12 month window (4 April 2018) before calculations must be published on the employer’s website and the relevant government website. Remember that public sector employers have a earlier snapshot date (31 March), their calculations need to be published by 30 March 2018 and every four years thereafter.

From 6 April

  • Unfair dismissal compensatory award – the statutory cap increases from £78,962 to £80,541.  Don’t forget that the cap will be one year of the employee’s gross salary if lower.
  • Apprenticeship levy – UK employers in the public and private sectors with annual wage bills of £3 million or more have to pay their monthly levy payments;
  • Immigration skills charge – employers who sponsor workers under tier 2 will have to pay £1,000 per year, or £364 if they are a small employer or a charity;
  • IR35 – new rules apply to public authorities paying personal service companies or other intermediaries. The public authority will need to make tax and National Insurance deductions as appropriate;
  • Salary sacrifice – relief on benefits in kind provided via salary sacrifice arrangements is being scaled back for benefits entered into from today.
Its all change in employment law in April…

Increase in limits

This week new limits applying to certain awards of employment tribunals, and other amounts payable under employment legislation, have been increased.

The increases apply where the event giving rise to the entitlement to compensation or other payments occurred on or after 6 April 2017. Limits previously in force are preserved in relation to cases where the relevant event was before 6 April 2017.

Key new relevant limits are as follows:

  • Minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons: Old limit – £5,853; New limit – £5,970
  • Limit on amount of guarantee payment payable to an employee in respect of any day: Old limit – £26.00; New limit – £27.00
  • Limit on amount of compensatory award for unfair dismissal: Old limit – £78,962; New limit – £80,541
  • Maximum amount of “a week’s pay” for the purpose of calculating a redundancy payment or for various awards including the basic or additional award of compensation for unfair dismissal: Old limit – £479; New limit – £489
Increase in limits

Tribunal awards and statutory redundancy pay – annual increases

Where the event that gives rise to an award of compensation, e.g. an unfair dismissal or a redundancy, happens on or after 6 April 2016, new increased compensation or payment amounts will apply.

The limit on a week’s pay which is used to calculate statutory redundancy payments will increase from £475 to £479.

The maximum compensatory award for unfair dismissal will increase from £78,335 to £78,962. This remains subject to the cap on the compensatory award of 52 weeks’ pay.

Tribunal awards and statutory redundancy pay – annual increases