April is typically a busy time of the year in the world of Employment Law, and 2017 is no exception.
The most significant development is the introduction of the new gender pay gap reporting duty for larger employers. Read on for more information about this and other notable changes affecting employers…
2017 Employment Law Changes
Gender Pay Gap Reporting
The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 will come into force on 6 April 2017, requiring employers with 250 or more employees to publish their gender pay gap data, including bonus payments. The first gender pay gap reports will be due by 4 April 2018.
In summary, there are six specified calculations that an employer must carry out based on its pay data on 5 April each year. The ‘snapshot’ date for public sector employers is 31 March. The results of those calculations must be published on the employer’s website and a government website within twelve months and must remain there for three years. An employer will have the opportunity to add narrative to the results, for example to provide reasons for any gaps and confirm intended steps to close any gaps.
Apprenticeship Levy
The apprenticeship levy is due to come into force on 6 April 2017. This requires all UK employers in both private and public sectors which have annual wage bills of £3million or over to pay 0.5% of their annual wage bill towards the cost of apprenticeship training through PAYE. This replaces the current system, enabling employers to choose and pay for the apprenticeship training that they want.
Employers will receive an allowance of £15,000 to offset against their levy payment. Employers in England that pay the levy will be able to access funding through a digital service which is expected to open from 1 May 2017.
Larger public sector employers will also be required to meet apprenticeship targets.
Salary Sacrifice
For salary sacrifice arrangements entered into, on or after 6 April 2017, the tax and National Insurance contribution (NIC) benefits are restricted to sacrifices in return for pension, childcare, cycle to work and ultra-low emission car benefits.
Existing arrangements will be protected until April 2018 (or April 2021 for cars, accommodation and school fees).
Immigration Skills Charge
As of 6 April 2017, employers that sponsor skilled workers under Tier 2 of the immigration points-based system will have to pay a levy of £1,000 per annum per certificate of sponsorship. This rate is reduced to £364 per annum for smaller employers and charities.
Also of significance, when employing overseas workers, employers must ensure that they carry out thorough right-to-work checks as of April 2017. Any employer subjected to a civil penalty for employing an illegal worker will be denied the NIC’s employment allowance for one year.
Intermediaries Rules
The intermediaries rules may apply where an individual supplies their services to a client via an intermediary, such as a personal service company. If the individual is regarded as an employee (if the intermediary did not exist), the rules apply and the intermediary must make tax and NI deductions from the salary that it pays to the individual.
New rules are expected to be introduced on 6 April 2017 in relation to payments made from that date by public authorities when paying a personal service company or intermediary. The onus will be on the public authority to establish whether the intermediaries rules apply and if so, to make the appropriate deductions.
Pensions Advice Allowance
From 6 April 2017, members of defined-contribution or hybrid pension schemes will be able to withdraw £500 tax-free from their scheme, to be redeemed against the expense of financial advice. The value of pensions advice provided by employers on which there is tax and NIC relief will increase from £150 to £500.
National Minimum Wage Increases
On 1 April 2017, the rates of the national minimum wage will increase, despite most of these having already been increased on 1 October 2016.
The new rates will be as follows:
- National Living Wage for those aged 25 and over – £7.50 per hour
- Standard Adult Rate for those aged 21 and over – £7.05 per hour
- Development Rate for those aged 18 to 20 – £5.60
- Young Worker Rate for those aged 16 to 17 – £4.05
- Apprentice Rate – £3.50
Family-related Pay and Sick Pay
On 2 April 2017, the weekly rate of statutory maternity, adoption, paternity and shared parental pay will increase to £140.98.
The weekly rate of statutory sick pay will rise to £89.35 from 6 April 2017.
Tribunal Awards and Gross Weekly Pay
From 6 April 2017, the Tribunal will have the power to make a compensatory award of up to £80,541 on a successful unfair dismissal claim. This is currently set at £78,962.
Also from this date, the maximum weekly pay limit will increase from £479 to £489. This will affect statutory redundancy payments and various awards, including basic and additional awards for unfair dismissal.
Please contact us to discuss how our Employment Law team can help you with your Employment Law needs.