The government has now published the National Minimum Wage (amendment) Regulations 2016. They confirm that the new national living wage (NLW) – which must be paid to all workers aged 25 and over – will officially come into force on 1st April 2016.
The new NLW is set at £7.20 p.h. but the intention is that it will rise to at least £9.00 p.h. by 2020. The other four minimum wage rates will continue to apply as normal to workers under 25. These all increased in October 2015 when the adult rate went up to £6.70 p.h. The new national living rate is mandatory, not optional.
Employment allowance
On 6th April 2014 the government introduced the employment allowance for the purpose of supporting businesses and charities to help them grow by cutting the cost of employment. This enabled businesses and charities to reduce their employer class 1 national insurance contributions by up to £2,000 per year. Fantastic news if you usually paid less than £2,000 a year. This was then continued into the 15/16 tax year which was great news for businesses, and even better this coming tax year (16/17) as the allowance is set to rise to £3,000. This rise has been greatly welcomed by most, however there are more exclusions for this coming year.
In the last two years, there were few exclusions, mainly that you can’t claim if you employ someone for personal, household or domestic work (nanny or a gardener), unless they are a care or support worker. Public bodies conducting more than half of their work in the public sector (local councils and NHS services) unless you were a charity, were also excluded. You can only claim for one PAYE scheme, and you can only claim against the class 1 NI that you’ve paid (it’s not a bursary or a grant).
However, this is set to change for the tax year 16/17. Whilst you can now claim up to £3,000 per year, single director companies will NOT be eligible to claim the allowance. This is estimated to affect around 150,000 limited companies with a single director and no other employees.
There are no other changes to the eligibility criteria and all other employers remain unaffected.
Employers in the care sector and “sleepover” rates
With the change in legislation for the living wage, this has also brought about a change for employers in the care sector. A difficult area to approach is ‘sleepovers’, when a carer stays the night and is on duty to provide care if necessary.
The first consideration is payment. Given that the carer is not self-employed or a volunteer, and lives elsewhere, he or she is likely to be entitled to the National Minimum Wage and National Living Wage (NMW) for this overnight stay – even if the ‘bulk’ of the job is during the day.
A ruling from the Employment Appeal Tribunal (EAT) has suggested that if a carer is required to be present through the night, and that there’s an agreement between parties that the carer would work in the night if needed, then this period counts as work time and should be paid for accordingly. This is true even if the carer is not physically needed and sleeps all night, because the job itself is to be present, according to the EAT.
Employers should also be aware of the rules around working hours, governed by the Working Time Regulations. For example, if planning shifts, the carer needs to have at least 11 hours’ consecutive rest in any 24-hour period, and one 20-minute rest break during work if the working day is longer than six hours.
The normal working hours of night workers are limited to an average of eight hours in any 24-hour period, and they are entitled to receive regular health assessments to make sure they are fit to work at night.
Government legislation states that working time does include time spent at work and under certain work-related responsibilities even when workers are allowed to sleep (whether or not a place to sleep is provided).
For more information and to find out how this might affect you and your business please contact our Payroll department on 01704 546000.
