As the payroll profession returns from the festive period we start to focus on the new tax year, one of the important items on our payroll checklist should be statutory rates and thresholds. Getting them wrong is not an option and can have severe and unwanted effects for you and your business.
These rates are set out by the Department for Work and Pensions (DWP) and provided in their Benefit and pension rates 2023/24 document. These amounts are reviewed yearly and Mel Stride, Secretary of State for work and pensions, confirmed on 17 November 2022 that the rates would be uplifted by 10.1%. This is based on the Consumer Price Index (CPI) figure for inflation for the year up to September 2022.
New statutory payment rates
So, without further ado, what are the new statutory payment rates for 2023/24?
Statutory sick pay (SSP) will rise to £109.40 per week, up from £99.35.
Statutory maternity pay (SMP), statutory paternity pay (SPP), statutory shared parental pay (ShPP), statutory adoption pay (SAP) and parental bereavement leave pay (PBLP) will all rise from £156.66 per week to £172.48 apart from, of course, where 90% of average weekly earnings (AWE) apply.
It is important to remember that the lower earnings limit (LEL) will remain at £123 per week. Couple this with an increase in minimum wage rates and more low earners will be entitled to these payments than before. This is one of the few benefits we can see from frozen thresholds. In fact, someone earning the 2023/24 national living wage of £10.40 per hour will only need to work an average of 12 hours per week over the reference period to qualify.
Budget effectively
Now that these rates are known, employers can effectively budget and plan for the new tax year with more complete data. We encourage employers to remain aware of the reclaim rules for statutory payment, namely the small employers’ relief, where businesses can claim 103% of the statutory payment, rather than the usual 92%. This can make a huge difference to those smaller companies, so make sure you are doing your due diligence and checking if you fall under the £45,000 class 1 national insurance threshold.
While on the subject of budgeting, I am going to mention something that can fill many payroll professionals with dread: Alabaster. With rising minimum wage rates it is more likely that you will need to do some form of reassessment and amendment. If you have any employees currently on SMP, why not start planning now and budget for the additional cost?
An area that is often neglected in these sorts of discussions is the differences in Northern Ireland. Remember that PBLP also applies there now (as of April 2022). Even more complex, the Work and Families (Northern Ireland) Act 2015 provides additional stipulations. The act removes the qualifying period for adoption leave, the first six weeks are to be paid at 90% of AWE and primary adopters get paid time off for introductory meetings prior to placement.
Neonatal care
Looking to the future there is a new type of statutory payment in the pipeline, for those parents whose child requires neonatal care. The Neonatal Care (Leave and Pay) Bill is currently in the report stage, with its third reading expected in February.
Once introduced into law, this new type of leave will entitle eligible parents up to 12 weeks’ paid time off. This will be a day-one right and apply where babies are admitted to hospital up to the age of 28 days and when a continuous stay of seven days or more is required. It is also in addition to other statutory leave entitlements, giving fathers and partners additional scope to care for their newborn and partner during this time period. The associated pay will be subject to minimum levels of earnings and length of service as is usual for other statutory payments.
Considerate manner
The circumstances surrounding statutory payments can be stressful and difficult for the individual involved. We always recommend that situations be dealt with in a considerate manner, while remaining within the bounds of employment law and legal processes.
If you are one of the many companies that goes above and beyond the legal minimums, that’s great, but remember that there may still be a statutory element to these payments. Therefore, for family-related payments, ensure you are reclaiming the appropriate amount as this can reduce costs while supporting the affected individual.
As a final reminder, gov.uk is choc-full of useful guidance, examples and help to get statutory payment right. They even have guidance on how to deal with disagreements, if you don’t get it quite right – but I’m sure you will.