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Employment law changes - April 2017

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30th Mar 2017
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Significant employment law changes are anticipated for 2017, alongside ongoing uncertainty around the Brexit process. Toni Trevett, Director of CompleteHR, runs through some of the key changes which have come into effect.

Statutory rate changes

From 1 April 2017 minimum wage rates will increase as below:

25 and over - £7.50 (up from £7.20)

21 to 24 (inclusive) - £7.05 (up from £6.95)

18 to 20 (inclusive) - £5.60 (up from £5.55)

The weekly rate of statutory sick pay will increase to £89.35 from 6 April 2017.The weekly rate of statutory maternity, paternity, adoption and shared parental pay will increase to £140.98 for pay weeks commencing on or after 2 April 2017.Employers may be "named and shamed" by the government for underpaying.

Salary-sacrifice schemes significantly restricted

Tax savings through many salary-sacrifice schemes will be abolished from 6 April 2017. Schemes related to pension savings (including pensions advice), childcare, cycle-to-work and ultra-low emission cars will not be affected.

Schemes in place prior to April 2017 will be protected until April 2018, while arrangements related to cars, accommodation and school fees will be protected until April 2021.

Brexit

Watch this space! Whilst immediate changes are unlikely the government may take the opportunity to review aspects of employment law, for example to the Agency Workers Regulations, TUPE and holiday entitlement.

Firms should be identifying how many EU nationals they have and monitoring the situation with regard to their right to stay in the UK.

Changes to rules for employing foreign workers

Employers that sponsor skilled workers under tier 2 of the immigration points-based system will have to pay a levy of £1,000 per certificate of sponsorship per year (£364 for small employers and charities), with effect from 6 April 2017. The immigration skills charge will be in addition to current fees for visa applications.

Other changes affecting employers that employ workers under tier 2 are as follows:

  • From April 2017, the government plans to introduce a requirement for those workers coming to the UK for certain posts in the education, social care and health sectors, to obtain criminal records certificates from the countries that they have lived in over the last ten years.
  • The tier 2 (general) salary threshold will increase to £30,000 from 6 April 2017, for migrants who are “experienced workers”.

In April 2017, the minimum salary threshold for “experienced workers” applying for a tier 2 visa will also increase to £30,000. New entrants to the job market and some health and education staff will be exempted from the salary threshold until 2019.

Gender Pay Gap reporting

Private and voluntary sector organisations with 250+ employees (see definition below) will be required to publish gender pay gap information. The regulations will come into force on 6 April 2017, with the snapshot date to carry out the analysis 5 April 2017 (30 April 2017 for public sector organisations).

Guidance will be published by the government and ACAS.

The deadline for the first report is expected to be 4 April 2018, based on pay and bonus data from 2016/17.

Employers have 12 months to publish the information on their own website and to upload it to a government website.

Employers must calculate their gender pay gap based on an hourly rate of pay. The hourly pay calculation excludes those absent on leave where this means their pay drops below normal full pay i.e. statutory maternity pay.

The regulations state that the definition of "ordinary pay" for these purposes does not include "remuneration provided otherwise than in money".

Ordinary pay’ means basic pay; allowances; pay for piecework; pay for leave; and shift premium pay (and does not include overtime pay; interest free loans, season ticket loans, benefits in kind, redundancy pay; pay in lieu of leave, or non-monetary remuneration).

‘Bonus pay’ means pay in the form of money, vouchers, securities, securities options, or interests in securities; and pay that relates to profit sharing, productivity, performance, non-consolidated bonuses, incentive or commission.

Employers may explain differences, as well as the value of benefits provided including those provided under a salary-sacrifice, in a narrative accompanying its gender pay gap figures.

Employers are required to publish six metrics:

  • The mean and median gender pay gap;
  • The mean and median gender bonus gap;
  • Proportion of male and female relevant employees paid bonus pay; and
  • The proportions of male and female relevant employees in four quartile pay bands.

Companies within a group structure (each separate legal entity with at least 250 employees) must report their gender pay gap information separately.

The data must include all workers and not just employees. This could potentially cover many self-employed workers who are engaged directly by employers as consultants and independent contractors etc.

These workers will also count towards the 250 employee threshold. It may also make gathering together pay data more difficult as such individuals will not ordinarily be payrolled. If it is too difficult to obtain pay data for some workers who do not work fixed hours and are not paid through the payroll so there is a “reasonably practicable” defence.

Partners do not need to be included in the reporting, so the larger accountancy and law firms will not need to disclose the pay gap for their highest earners.

Apprenticeship Levy

The Apprenticeship Levy is essentially a new tax, and if applicable monthly levy payments should start from April 2017.

All UK employers (including public and private sector, charities and educational providers) who have total employee earnings subject to Class 1 secondary NICs above £3m a year will pay the Levy, which has been set at 0.5% of the pay bill.

Employers get a £15,000 fixed annual allowance to offset against the Levy payment (those operating multiple payrolls will only be able to claim one allowance).

Payments will be collected monthly by HMRC through PAYE, alongside tax and NI in the normal way.

Funds will be accessed via a new digital apprenticeship service (DAS) account, from which you will be able to pay for apprentice training, see training providers, chose appropriate apprenticeship training courses and find candidates for your programmes. Registration to create DAS accounts took place from January 2017.

In England, once you have registered your details (and the details of your apprentice) online, you will be able to see how much can be drawn down for each apprentice in the form of a voucher. You can then use these vouchers (each lasts 24 months) to spend on training with registered training organisations from late May 2017. Details are yet to be confirmed about access to levy funds outside England.

Funds can then only be used towards the costs of approved apprenticeship training for either existing staff or new recruits, as long as the training meets an approved standard or framework and the individual meets the apprentice eligibility criteria. There will be various funding caps put in place. They cannot be used on other associated costs such as apprentice wages, travel and subsidiary costs or the costs of setting up an apprenticeship programme.

By May 2017 employers should be able to draw down vouchers and use Levy payments.

Like the Gender Pay Gap this is a large area and there are many more details to consider than can be included in this summary.

Gig economy

The results of three inquiries are expected in 2017 following the exposure of working practices at Sports Direct, agency staff at ASOS, couriers at Hermes and growing questions around the status of those working in the on-demand economy.

In terms of case law a cycle courier working for the delivery firm CitySprint won the right earlier this year to paid holidays and minimum pay. Food delivery firm Deliveroo was told last year it must pay its workers the minimum wage unless they are ruled self-employed by a court or HMRC. Uber is also appealing the decision that drivers are workers, and we await that verdict.

Trade Union Act changes

The Trade Union Act 2016 came into force on 1 March 2017. 

The main provisions of the act are:

  • Changes to voting rules for union ballots
  • Introducing an additional requirement that 40% of all those entitled to vote in the ballot must vote in favour of industrial action in certain public services such as health, education, fire and transport.
  • Requiring a description of the trade dispute on the voting paper and providing information to union members about the results of the ballot.
  • Changes to picketing rules. 
  • Changes to the role of the certification officer
  • A 12-month transition period for the new members to opt into the political fund element of trade unions subscriptions. 
  • Increases to the amount of notice of a strike to be given to an employer to 14 days.
  • Restricting the mandate for industrial action post ballot to six months.

*This article was amended 31 March to correct a date in the Gender Pay Gap reporting section*

Replies (2)

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By tonyaustin
31st Mar 2017 11:21

I see public sector get away with not publishing gender pay gap - there are only 30 days in April! (Yes, I do know its a typo)

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Replying to tonyaustin:
Tom Herbert
By Tom Herbert
31st Mar 2017 12:10

Thanks tony - that rogue date has been corrected.

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