MARCH EMPLOYMENT LAW BULLETIN
28th March 2017
- Nine Key Employment Law Changes for April 2017
- Regulatory References in the Financial Sector
- Employment Tribunal Awards Increase
Welcome to this month's Employment Law bulletin. This month we look at:
- Nine key employment law changes for April 2017
- Regulatory references in the financial sector
- Employment tribunal awards increase
If you have any questions about any of the topics covered or would like to meet with our Employment team please call Martin Stephen on 0141 248 3434 or email firstname.lastname@example.org
Nine Key Employment Law Changes for April 2017
1. Gender pay gap reporting rules come into force
Every year, larger employers (those with 250 or more employees) will have to report data about their gender pay gap, including bonus payments. They will also have to report on the proportion of male and female employees in different pay quartiles and those who receive bonuses. Employers in the private and voluntary sector must base their pay data on staff employed on a “snapshot” date of 5 April each year, starting from April 2017. Bonus information must be based on the preceding 12-month period.
Employers have 12 months to publish the information on their own website and to upload it to a Government website. Therefore, employers in scope need to make sure that they can capture the necessary data.
2. Apprenticeship levy is introduced
The apprenticeship levy to fund apprenticeship training is due to come into effect on 6 April 2017. Employers will pay the monthly levy via PAYE if they have a wage bill of more than £3 million. Employers in England that pay the levy will be able to access funding through a digital service. The new system of funding is expected to operate from 1 May 2017. Employers who do not pay the levy will also be able to access funding for apprenticeships. Different arrangements exist around how apprenticeship funding will work will apply in Scotland, Wales and Northern Ireland (although the levy applies across the UK).
3. There will be an immigration skills charge
Employers who 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). The levy will apply in relation to each worker under tier 2, although there are some exemptions. The immigration skills charge is due to come into force on 6 April 2017.
Other changes affecting employers who employ workers under tier 2 are as follows. From April 2017, the Government is planning to introduce a requirement for those workers coming to the UK under tier 2 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 10 years. The tier 2 (general) salary threshold will increase to £30,000 from 6 April 2017, for migrants who are “experienced workers”.
4. Reform to the intermediaries rules (IR35) in the public sector
The intermediaries rules (IR35) may apply where an individual supplies his or her services to a client via an intermediary, such as a personal service company. If the individual could be regarded as an employee if the intermediary did not exist, the rules apply and the intermediary must make deductions for income tax and national insurance contributions (NICs) on the salary and wages that it pays to the individual.
New rules are expected to apply in relation to payments made from 6 April 2017 by public authorities paying a personal service company or other intermediary. The public authority will have responsibility for establishing if the intermediaries rules apply and, if they do, making the tax and NIC deductions.
5. Tax advantages under salary-sacrifice arrangements to be limited
Benefits-in-kind attracting tax and NIC advantages when they are provided under a salary-sacrifice scheme, are to be limited. This change is expected to take effect from 6 April 2017, with some exemptions. Arrangements already in place are protected until April 2018, and until April 2021 for some benefits.
6. National minimum wage increases
On 1 April 2017, the rates of the national minimum wage will increase, despite an increase in most rates on 1 October 2016. This is so that the timing of the annual increase in the national living wage rate for workers aged 25 or over can align with the other national minimum wage rates. The rate for workers aged 25 and over (the national living wage) increases from £7.20 to £7.50. The rates within the other age bands also increase:
• The rate for workers aged 21 to 24 rises to £7.05 per hour
• The development rate (workers aged 18 to 20) rises to £5.60 per hour
• The young workers rate (non-apprentices aged under 18 but above compulsory school age) rises to £4.05 per hour
• The apprenticeship rate rises £3.50 per hour
• The accommodation offset limit rises to £6.40 per day
7. Pensions advice allowance is introduced
Members of defined-contribution and hybrid pension schemes will be able to take a tax-free amount of £500 from their scheme, to be redeemed against the expense of financial advice. The allowance is expected to take effect from 6 April 2017. The value of pensions advice provided by employers on which there is tax and NIC relief will increase from £150 to £500.
8. Statutory family-related pay and sick pay rates increase
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. The weekly rate of statutory sick pay will increase to £89.35 from 6 April 2017.
9. Statutory redundancy pay increases
New limits on employment statutory redundancy pay come into force on 6 April 2017. Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. From 6 April 2017, this is £489, increasing from £479.
Regulatory References in the Financial Sector
New FCA and PRA rules on regulatory references in the financial services sector came into force on 7 March 2017. This will affect firms and insurers who seek and provide references for candidates of certain roles. This is part of the wider package of reforms that aim to improve accountability within banks and insurers.
Employment Tribunal Awards Increase
The annual Employment Tribunal award limit changes will take effect on 6 April 2017. The main changes are :-
- an increase to the limit on compensation for unfair dismissal from £78,962 to £80,541
- the limit on a week’s pay for the purposes of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal, will increase from £479 to £489
- guarantee pay will increase from £26 to £27 per day
- the minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons will increase from £5,853 to £5,970.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at March 2017. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.