Following on from the Autumn Budget, the Government has announced that there will be no increase to a variety of statutory pay rates in 2016.
The affected statutory rates include maternity and paternity pay, shared parental pay, adoption pay and sick pay. A complete list of the Government’s statutory pay rates for 2016 can be found here.
After the first six weeks of maternity leave, which are paid for at 90% of the employee’s average weekly earnings, employees are entitled to 33 weeks of statutory maternity pay. This is paid at the rate set by the Government. The current rate for statutory maternity and other parental pay is 90% of an employee’s weekly earnings, up to a maximum of £139.58 a week.
There is no statutory requirement for the government to increase these rates every year. Any increase is normally in line with the consumer price index (CPI) which fell by 0.1% in the year to September, leading to the freeze.
The rate of statutory sick pay is also frozen at the current rate of £88.45 per week.
In order to be entitled to claim these statutory payments an employee’s average earnings must be equal to or greater than the lower earnings limit. This will also be frozen at £112 per week.
Greg Guilford, CEO of HR Solutions said: “The cost of living is continuing to rise, hence why George Osbourne is re-branding the national minimum wage as the National Living Wage from April.”
“Employees planning to take any kind of parental leave over the next year may find this to be a real financial blow but, as the CPI has actually declined, you could argue that we are lucky to not be seeing a reduction in statutory pay instead.”