Employment Law - 1 October 2009 changes

From 1 October 2009, the following changes to employment law take effect:

National Minimum Wage (NMW)

Increases in the hourly rates

From 1 October 2009, new national minimum wage (NMW) rates will come into force. The NMW applies to nearly all workers and sets hourly rates below which you must not allow pay to fall.

For pay reference periods beginning on or after 1 October 2009, you will have to pay all eligible workers the following:

£5.80 an hour to workers aged 22 and above
£4.83 an hour to workers aged 18-21
£3.57 an hour to workers aged below 18 who are no longer of compulsory school age

The daily accommodation offset

You will be able to offset from the NMW an amount of £4.51 per day for each day that you provide a worker with living accommodation.

Removal of tips etc. from counting towards the NMW

You will not be able to include in a worker's national minimum wage pay service and cover charges, tips and gratuities that you pay them via the payroll.

The following will continue not to count towards NMW pay:

• tips given directly to a worker by a customer

tronc payments made directly to the worker from the tronc master.
Ineligibility for the NMW for those taking part in certain EC programmes

You will not have to pay the NMW to someone undertaking a work placement as part of the European Community Erasmus Programme or Comenius Programme in respect of work they do as part of either of the schemes.

Statutory Redundancy Pay

From 1 October 2009, the limit on a week's pay for the purposes of calculating a statutory redundancy payment will rise from £350 to £380.

This increase will also apply to a wide range of employment tribunal awards - calculated using a week's pay - that an employer might have to pay, such as:

• compensation for non-compliance with flexible working procedures
• the basic and additional awards for unfair dismissal
• compensation where an employer has failed to consult a trade union or elected employee representatives when it intends to make 20 or more employees redundant
• compensation for failure by an employer to allow an employee to be accompanied to a disciplinary or grievance hearing
• compensation for failure by an employer to give a statement of employment particulars
• compensation for an employer's failure to comply with its duty to notify an employee of either the date on which it intends to retire them or their right to make a request not to retire on that date

This amount is also used to calculate various payments made by the Secretary of State from the National Insurance Fund if an employer's business becomes insolvent.

Examples of such payments include:

• holiday pay
• arrears of pay
• redundancy pay
• pay in lieu of notice
• unpaid compensation for unfair dismissal

The limit normally changes on 1 February every year in line with the retail prices index.

As this change is taking place in October, on 1 February 2010 there will be no change to the limit on a week's pay for the purposes set out above.