2017 is shaping up to be a dynamic year for Employment Law. Even if we leave aside any crystal ball gazing about the potential impact of BREXIT and the consequences of the Great Repeal Bill (What will change? What will stay the same?) there are plenty of changes coming up. We’re also awaiting decisions in a number of important cases covering workers’ rights,whistleblowing, indirect discrimination and religious discrimination. We’ll kick off with details of some of the legislative and regulatory changes that will have an impact in the employment law arena in 2017.
Gender Pay Gap Reporting
Despite the best efforts of equal pay legislation (first introduced in 1970), the pay gap between men and women in the UK sits at 19.4%. The requirement for employers employing 250 or more people to collect and publish their payroll information is intended to highlight where pay gaps exist and should serve as a platform from which organisations can begin to take constructive action to address problem areas. The information required is not particularly onerous, and the first report doesn’t have to be submitted until April 2018. However, pay details are based on a snapshot date of 5th April 2017 (and thereafter on the 5th April every year) and bonus information based on the year preceding 5th April 2017. The key risk for employers is the possibility of negative PR that may arise if the figures published show a significant pay gap with no plan in place to address it. There will also be longer term benefits for organisations that demonstrate a commitment to equal pay – increased employee retention and a more positive image as an employer.
Salary Sacrifice Changes
April 2017 sees the beginning of the end for the tax advantages of salary sacrifice schemes – although transition arrangements for pre-existing schemes will see most schemes continuing until April 2018, and some, covering accommodation, cars and school fees will continue until 2021. It’s also important to note that salary sacrifice schemes that support wider Government policy objectives – for example those covering pension contributions and pensions advice, childcare, cycling to work and ultra-low emission cars will continue to attract tax & National Insurance advantages. Although these schemes will no longer attract tax benefits, there may still be some advantages for employees if the schemes are retained – for example, employees will continue to be exempt from National Insurance even though the tax advantages are removed (note that employers will have to pay National Insurance); schemes whereby the employer provides the opportunity for an employee to pay for items in this way may still be more favourable compared with the employee using a credit card, for example. The key action for employers to take is to establish whether the schemes will continue to offer value for money given that the they will no longer be able to make National Insurance savings on these schemes.
Immigration Skills Charge & minimum salary requirement
Coming into effect in April, employers who sponsor tier 2 visas (for workers coming from outside the European Economic Area) will have to pay an annual Immigration Skills Charge of £1,000 a year in addition to visa costs. The charge won’t apply to PhD level roles, nor to International students who have studied in the UK and are converting their student visa into a working visa. The minimum salary requirement for ‘experienced workers’ will increase to £30,000 – although education and healthcare sectors are exempt until 2019. The introduction of the Immigration Skills Charge is intended to encourage employers to focus on ‘home grown’ talent, and to invest in training British workers to fulfil specialist roles that migrant workers would otherwise fill. The question of migration has become even more highly charged since the Referendum result in 2016 – with one Government minister suggesting the Immigration Skills Charge should be introduced for EU workers as well as those from outside the EEA. On the other hand, the CBI has called for a more nuanced approach to migration to avoid the UK falling into a skills gap crisis. No doubt the introduction of the charge will make employers think more carefully about employing workers from outside the EEA – but if the skills aren’t available within the UK (or the EU), they will have little option but to pay the charge in the short term.
The Apprenticeship Levy will take effect for employers with a pay roll of over £3 million. Employers have been advised to prepare for the introduction of changes to Data Protection rules that will come into force in 2018 under the EU’s General Data Protection Regulation, designed to harmonise data protection compliance across the EU. Whatever comes next with Article 50, the UK will still be a member of the EU when the regulations, alongside increased penalties for non-compliance, come into force. Employers should make sure their processes and procedures are updated to reflect changes to the rules regarding consent by employees to processing of their data, data requests, the new ‘right to be forgotten’ and the ‘right to rectification’ allowing employees to insist, in certain circumstances, on making changes to their personal information. April sees a raft of smaller changes – increases to the rates of the National Living Wage and National Minimum Wage, and statutory pay increases for the first time since April 2015. Statutory Maternity Pay, Paternity Pay, Shared Parental Pay and Adoption Pay will increase by £1.40 per week, to £140.98 per week, although if the employee’s earnings are lower than the statutory rate, they will receive 90% of their earnings. Statutory Sick Pay increases to £89.35 per week. Against the backdrop of Brexit, 2017 is looking like it’s going to be an interesting and busy year for employers as they accommodate these changes and prepare for more to come. If you’d like to talk through how any of these new measures will impact your business, and address any steps you need to take as a result, we’ll be happy to help!