Statutory Rate Increases for 2022
As you are probably aware, any variations to statutory payments come into force in April each year. There are some increases this year (2022) and in this blog we will discuss the variations and what the implications are for employers.
There are imminent increases in the rates for statutory redundancy pay, statutory maternity pay and other associated rates.
These will directly affect employers, who will have to pay the costs. As you may be aware, there is also going to be a rise in the National Minimum Wage/National Living Wage.
The National Living Wage paid to workers aged 23 and over will rise from £8.91 per hour to £9.50 per hour from 1st April 2022. This represents an increase of 59 pence per hour and an extra £1,000 per year if you work full-time.
There are other increases that employers also need to know about.
Statutory Redundancy Pay
The new maximum weekly amount for 2022 will be £571; the current level is £544. This will be confirmed in the Employment Rights (Increase of Limits) Order 2022, which will be published this month (February 2022).
When calculating statutory redundancy pay, the employer needs to use the weekly pay amount and this figure has a cap which is adjusted each year in line with inflation. The changes come into effect on 6th April each year.
Statutory Maternity Pay
When an employee goes on maternity leave, for the first six weeks her Statutory Maternity Pay (SMP) is 90% of her average weekly earnings. For the next 33 weeks, it’s paid at the flat SMP rate, which is adjusted on the first Sunday in April; or 90% of her earnings, whichever is the lower amount. The rate will change on 3rd April 2022 to £156.66, an increase on the previous year’s rate of £151.97. Statutory Adoption Pay, Paternity Pay and Shared Parental Pay will also increase by the same amount.
An employer can usually reclaim 92% of employees’ Statutory Maternity (SMP), Paternity, Adoption, Parental Bereavement and Shared Parental Pay.
You can reclaim 103% if your business qualifies for Small Employers’ Relief. You are entitled to this if you paid £45,000 or less in Class 1 National Insurance (ignoring any reductions like Employment Allowance) in the last complete tax year before:
- the ‘qualifying week’ - the 15th week (Sunday to Saturday) before the week of the due date
- the ‘matching week’ - the week (Sunday to Saturday) your employee was told they had been matched with a child by the adoption agency
- the date on the official notification if your employee is adopting a child from another country
- the ‘qualifying week’ - the week (Sunday to Saturday) before the death of the child or stillbirth, for Statutory Parental Bereavement Pay
How to reclaim
Calculate how much you’ll get back using any payroll software. To reclaim the payments, include them in an Employer Payment Summary (EPS) to HM Revenue and Customs (HMRC).
You can write to the PAYE Employer Office to ask for a repayment if you cannot set off the payments against the current year’s liabilities. You cannot do this until the start of the next tax year on 6th April 2022.
National Insurance Contributions and Employers Office
HM Revenue and Customs
Statutory Sick Pay increases
This relates to the normal SSP (not the one associated with COVID-19, which will finish on 17th March 2022). When an employee is on sickness absence for four or more consecutive days, they become entitled to Statutory Sick Pay (SSP). This will last for up to 28 weeks for any one period of sickness; that means the employee is incapable of working. The rate of SSP will rise on 6th April 2022 from £96.35 to £99.35.
Monitoring the rises in these rates can be a complex task for many hard-pressed employers, but the consequences of paying the wrong rate can be significant. Make sure you get accurate and current legal advice on what you need to do.