Employment law and payroll changes in 2022

National Living and Minimum Wage

Every year there are rate increases for certain statutory pay entitlements in line with the Consumer Price Index. To help guide employers through the relevant changes, Price Bailey’s payroll and employment law team have produced a quick summary of the key statutory rates that are set to change.

National Minimum Wage

Statutory rates of pay

Compensation limits

Other important payroll changes to note

• National Insurance (NI) – NI will increase in 2022-23 to include the Health and Social Care Levy, which is going to be set at 1.25%. This will automatically be processed via the payroll under the employees usual National Insurance deductions, from 2023-24 it is proposed that it will be shown separately as an independent deduction.
• Working from Home Allowances – certain allowances have been paid to many employees since the beginning of lockdown, at a maximum of £26 a month. From April 2022 the rulings will revert back to what they were prior to March 2020 and are far more restrictive on who can claim. More guidance can be found on the Gov.uk website.
• Employment allowance designed for smaller businesses is increasing to provide tax relief on the first £5,000 of annual Class 1 National Insurance Contributions from April 2022. The eligibility remains the same as the previous couple of years, where employers can claim back on employer National Insurance (NI) each tax year, provided their employer NI bill for the previous year was below £100,000. However, there are other eligibility factors to consider such as linking companies, de minimis state aid thresholds among other factors. If you are unsure if you are eligible, please contact our payroll team using the form below.
• From 6th July, there will be an increase to the Primary Threshold, which will be aligned to the tax personal allowance of £12,570.

Important employment law changes in April 2022

1. Publish your gender pay gap report – Organisations with more than 250 UK employees are required to publicise their gender pay gap report this year. For public sector organisations, the deadline for this was 30 March 2022. Whereas, for private-sector and voluntary-sector employers, the deadline is 4th April 2022. Reports must be made public on websites and the gender pay gap reporting portal.
2. Comply with the national minimum wage and statutory pay changes set out above – Employers are encouraged to check existing pay rates against the new national minimums to ensure that they increase remuneration accordingly.
3. Review your organisation’s IR35 compliance – the 6th April 2022 marks a year since new rules saw the extension of IR35 rules to cover off-payroll working in the private sector. While it has been 12 months since this came into place, HMRC have announced that penalties for non-compliance (provided not evidently deliberate) will be fairly light touch while the industry adjusted. It is a good time, therefore, for business to review their compliance and make any necessary adjustments.
4. Right to work checks – don’t get caught out – during the pandemic, employers were able to carry out document checks remotely using the online Home Office right to work service, given the restrictions that meant meeting in person was impossible. This measure was due to expire later this month – however, following review this measure has now been extended to September 2022, to make allowances for travel restrictions in other countries outside of the UK. A digital identity service is being introduced to enable British and Irish citizens to evidence their identity remotely, as a long term measure. The legislation allowing this is due to come into place on 6th April 2022 – although, whether the technology will be rolled out then, is not yet confirmed. Therefore, for now, a full manual document check still needs to be carried out.

If you are an employer, this is the perfect time to do a bit of housekeeping and review the rates that are in place at your Company or institution. This time of year is an opportunity to make any necessary contract and policy updates to make sure that everything is in line with the current national requirements.

This article was written by Claire Berry, an employment solicitor at Price Bailey. Should you need any help or guidance, please contact our teams using the form below.