28 March 2017
Employment law changes taking place from April 2017
Employment law is a fast-changing area and employers need to stay up to date with developments to ensure that they are acting lawfully. The key changes are as follows:
National minimum wage and national living wage aligned
The review date for the national minimum wage has moved to 1 April 2017 instead of 1 October 2017. This means that the next round of changes to the national minimum wage and national living wage will take effect on 1 April 2017:
From this date:
- the national living wage for workers aged 25 and over will increase to £7.50;
- the national minimum wage for 21 to 24 year olds will increase to £7.05 an hour;
- the rate for 18 to 20 year olds will rise to £5.60 an hour;
- the rate for 16 and 17 year olds will rise to £4.05 an hour;
- the minimum hourly rate for apprentices will be £3.50 an hour; and
- the accommodation offset limit will be £6.40 an hour.
Employers should check that workers and employees are being paid the correct amounts, particularly those who have recently had a birthday that will take them from one hourly rate to another, for example someone who has just turned 18. There are penalties of a fine of up to £20,000 for getting the national minimum or living wage wrong, or it could mean losing an unlawful deduction from wages claim.
Statutory sick pay will be £89.35 per week from 6 April 2017.
Statutory maternity pay, maternity allowance, statutory paternity pay, statutory adoption pay and shared parental leave pay will be £140.98 per week from 2 April 2017.
Gender pay gap reporting
Employers with at least 250 employees operating in the private or not-for-profit sector will have to report on the difference in pay for men and women in their business from 6 April 2017. This information must be displayed on your website, which means that anyone who works for you will be able to see it and ask you to explain the reasons for any differences that exist.
If you identify a gender pay gap, you need to take steps to address this as soon as possible. If you believe the difference in pay is justified, you will need to ensure that you have sound arguments as to why one gender is paid more than the other.
From 6 April 2017, the maximum basic award in an unfair dismissal case will be £14,670 and the maximum compensatory award will be £80,541, or 52 weeks’ pay if this is a lesser sum.
The cap on a week’s pay, which is used to calculate statutory redundancy payments, will increase to £489. You need to take care to ensure that you use the new rates when calculating redundancy payments, basic awards and other sums based on a weeks’ pay.
Employment tribunal costs
There are no plans to change the amount of fees payable to bring an employment tribunal claim. However, the government is planning to put in place extended help with fee remission for those on lower incomes, which means that in future more claimants are likely to qualify for a fee remission.
Employing foreign workers
If you are sponsoring foreign workers with a tier 2 visa you will be required to pay an immigration skills charge of £1,000 per worker (£364 for small employers and charities) from 6 April 2017. This is on top of current fees for visa applications. As from 6 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, along with some health and education staff, will be exempt from the salary threshold until 2019. If you employ foreign workers, you may wish to review your requirements for sponsorship.
From 6 April 2017, businesses with annual pay bills of more than £3 million will be required to pay a levy equivalent to 0.5 per cent of their total annual salaries to help fund additional apprenticeships over the next five years. Employers paying the levy will receive an allowance of £15,000 to offset against their apprenticeship levy costs.
All organisations meeting the salary threshold will be required to contribute, whether or not they have apprentices. However, those businesses that do have apprenticeships will be able to put the amount owed into a digital apprenticeship service account and potentially claw back some of it for use in approved apprentice training. Employers will receive a government payment of ten pence for every £1 paid into the account.
Smaller businesses that do not have to pay the levy will also be entitled to receive funding for accredited apprenticeships by contributing 10 per cent towards the cost of an apprenticeship, with the government paying the remaining cost.
Data protection regulation compliance
The EU General Data Protection Regulation does not come into force until May 2018, but it is important for you to be aware of these now and to start preparing for them. You will need to carry out audits of any personal employee data that you collect and process to ensure that it meets the new conditions for employee consent. You will also need to create or amend your data protection policies and processes regarding privacy notices, data breach responses and data subject access requests. As the regulation will come into effect before the UK exits the EU, businesses that are not compliant by May 2018 risk fines of up to €20 million or four per cent of annual worldwide turnover, whichever is higher, so you need to take action early to ensure your practices are up to date.