Member Article

How will Employment Law change over the next 12 months?

2017 is set to be a year for significant changes in employment law. There are two areas that will undoubtedly be high on the agenda for those who look after HR; data protection and gender pay gap reporting, both of which will require compliance projects to begin.

You can expect increased costs too; tax savings on employee benefits are set to decrease, apprenticeships levy’s are to be introduced and foreign worker sponsorship acquires additional fees.

But what else is changing? We have put together a list of the legal changes you can expect over the next 12 months and what they really mean.

Employing Foreign Workers

If your business sponsors foreign workers with a tier 2 visa, then you will be required to pay a further £1,000 for each worker – or £364 for small employers – from April 2017. This payment is called the immigration skills charge and is in addition to the fees that are currently in place for the visa application.

After April next year, there will also be an increase in the minimum salary threshold for experienced workers that are applying for a Tier 2 visa – to £30,000. However, until 2019 new entrants to the job market are exempt from the threshold, along with some education and health employees.

Salary Sacrifice

As previously touched upon, salary sacrifice schemes will be restricted significantly. As an employer, you may be required to reconsider your benefit offerings as the tax savings of popular salary sacrifice schemes will no longer be in place after April next year. These benefits include health benefits, gym access and cash alternatives with NI and Income Tax advantages.

Childcare schemes, pensions savings, ultra-low emission cars and cycle to work schemes are excluded from the cuts.

If you already have salary sacrifice schemes in place, they are protected until April 2018 whilst long term arrangements, such as accommodation and school fees are protected until 2021.

Gender Pay Gap Reporting

Private sector businesses with 250 or more employees are required to gather and publish their gender pay gap information, along with the private and voluntary sector.

The information that employers are obliged to publish to the government, as well as on their website includes employee and bonus pay, along with the number of both men and women in each quartile of the company’s pay distribution.

This information will appear in government league tables. The pay gap regulations relating to the private sector and voluntary sector are not yet confirmed – but we can expect the data from 2016/2017 to be reported in April 2018.

It is also predicted that there will be questions asked around the gaps between executive and worker pay, and this will be the next hurdle to overcome.

Luke Hutchings, employment solicitor and partner at Taylor Rose TTKW commented, “The gap in executive and worker pay is traditionally viewed as a political issue as well an issue of corporate governance and self-discipline. In times of stagnating real wages and price rises, news of executives being awarded significant increases in pay and bonuses is regularly picked up by media outlets and can cause severe reputational damage for the companies in question. From an economic standpoint, it is better for pay to increase across the board rather than increases to be limited to the managerial and director classes.”

Apprenticeship Levy

Those employers whose annual payroll amounts to over £3 million will be required to pay a levy of 0.5% on the total bill beginning in April 2017.

Large employers will have access to these levied amounts in order to fund apprenticeships; they will also have access to a government top up of 10%.

Those smaller businesses who are not liable to pay the levy are still able to access the available funding for accredited apprenticeships by contributing 10% of the cost. The government will pay the remaining 90%.

Trade Union Balloting

Many are waiting for the date of implementation for the new balloting requirements under the Trade Union Act 2016.

The legislation of the new act means that in order for strike action to occur, a majority vote and a minimum turnout of 50% must be achieved. With regards to important public services; for industrial action to occur there must be a minimum vote of 40%.

Employment minister Nick Boles said: “When strikes disrupt important public services that we all rely on day-in, day-out, it is important the public can have confidence strikes were backed by a reasonable proportion of union members.

“These new thresholds ensure the right to strike is fairly balanced with the right of people to be able to go about their daily lives and work.”

Data Protection

In May 2018, we will officially see the EU General Data Protection Regulation will apply.

The European Commission states, “The Regulation is an essential step to strengthen citizens’ fundamental rights in the digital age and facilitate business by simplifying rules for companies in the Digital Single Market. A single law will also do away with the current fragmentation and costly administrative burdens, leading to savings for businesses of around €2.3 billion a year. The Directive for the police and criminal justice sector protects citizens’ fundamental right to data protection whenever personal data is used by criminal law enforcement authorities. It will in particular ensure that the personal data of victims, witnesses, and suspects of crime are duly protected and will facilitate cross-border cooperation in the fight against crime and terrorism.”

In order to comply with these regulations, many businesses will be preparing in 2017. Businesses will need to undertake audits of the personal data they hold on employees and process it to ensure it meets the conditions of the new regulation.

The regulations set out new record keeping requirements, meaning that many businesses will need to create new policies or amend existing ones when it comes to their responses to data breaches, privacy notices and subject access requests.

Despite the Brexit decision, this regulation will still come into play as Britain will have not yet left the EU. The penalty for not being compliant? Fines of up to €20 million or 4% of annual global turnover.

Changes to National Wage

Next year we will see the alignment of the national minimum wage increase; this includes the national living wage. The next set of changes will take effect in April 2017; we will see the National Living wage increase to £7.50 per hour for those aged over 25.

The national living wage has been a hot topic of late, as employers are concerned that it will cause disruption to pay scales and present age discrimination claims.

This was posted in Bdaily's Members' News section by Rebecca Moore .