Key UK Employment Law Changes

The spring is a busy time of year for HR professionals, particularly for those with employees based in the UK, where April is a time when new employment legislation typically comes into force. Despite Brexit and the snap general election, 2017 has been no exception, with the introduction of gender pay gap reporting for larger employers, the introduction of apprenticeship levy for all employers and the usual updates in statutory rates and limits. 

Ciara Fulton, Partner at Jones Cassidy Brett Solicitors has summarised 10 of the key changes that employers and HR practitioners with employees in the UK should be aware of below. 

1. Gender Pay Gap Reporting

From 6 April 2107 all private and voluntary sector employers in England, Wales and Scotland with at least 250 employees are required to publish information annually about the differences in pay between men and women in their workforces. The information must be based on a ‘snapshot’ of their pay bill on 5 April 2017, and annually thereafter, and the first reports must be published by 4 April 2018.

Gender pay gap reporting rules for public authorities with 250 or more employees came in on 31 March 2017.  The rules are substantially the same as for private and voluntary sector employers, albeit that the snapshot date and the deadline for reporting are slightly earlier (i.e. 31 March 2017 and 30 March 2018 respectively).

Regulations on Gender pay Gap Reporting are due under the Northern Irish Employment Act 2016 by the end of June 2017. However, given the political situation in the Assembly there is no date yet for this. Unlike the rules for GB, the 2016 Act provides for fines of up to £5,000 for non-compliance, and includes a requirement for the pay band statistics to cover ethnicity and disability as well as gender.

2. Apprenticeship Levy

The apprenticeship levy came into force on 6 April 2017 and the first payments are due in May 2017. All public and private sector employers with an annual pay bill in the previous year of in excess of £3 million must pay the levy to offset against the cost of apprenticeship training, regardless of whether or not they employ any apprentices. The levy is set at a rate of 0.5% of the employer's gross pay bill (including wages, bonuses and commission) and is paid in monthly instalments via PAYE. It is an employer’s responsibility to notify HMRC each month whether they are required to pay the levy.

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. Immigration Skills Charge

Organisations which sponsor skilled workers under tier 2 of the immigration points-based system will have to pay a skills charge of £1,000 per sponsored worker per year (£364 for small employers and charities) from 6 April 2017. This change applies throughout the UK.

4. Salary-sacrifice Schemes

From 6 April, only employer pension contributions, childcare benefits, cycle to work schemes and ultra-low emission company cars can be provided through salary sacrifice arrangements, although schemes in place prior to this date can continue to benefit from the tax advantages they provide until April 2018. Accommodation, school fees and other company cars may be provided under salary sacrifice arrangements until April 2021. This change applies throughout the UK.

5. National Minimum Wage Increases

On 1 April 2017, the rates of the national minimum wage and National Living wage throughout the UK will increase as follows:

• Workers aged over 25 years (NLW): £7.50.
• Workers aged 21 to 24 years: £7.05.
• Workers aged 18 to 20 years: £5.60.
• Workers aged 16 to 17 years: £4.05.
• Apprentices (under 19 years, or in the first year): £3.50.

From 2017, changes to both the NLW and NMW rates will take place in April.

6. Statutory Family-related Pay and Sick Pay Rates Increase

The rate of statutory maternity, paternity, adoption and shared parental pay will increase to £140.98 per week from 2 April 2017.

The weekly rate of statutory sick pay will increase to £89.35 from 6 April 2017.

This change applies throughout the UK.

7. Compensation Limits

Tribunal compensation limits in GB increase from 6 April 2017. The new rates are:

• Limit on guaranteed payments – £27 (£25.90 in NI)
• Limit on a week’s pay – £489 (£500 in NI)
• Maximum basic award for unfair dismissal and statutory redundancy payment – £14,670 (£15,000 in NI)
• Minimum basic award for unfair dismissal – £5,970 (£6,000 in NI))
• Maximum compensatory award for unfair dismissal – £80,541 (£79,100 in NI)
• Minimum compensation for exclusion/expulsion from a trade union – £9,118 (£9,100 in NI)

8. Trade Union Balloting Changes: Important Public Services

The Trade Union Act 2016 which came into force from 1 March 2017 in Great Britain (not Northern Ireland), sets additional strike balloting requirements for those working in ‘important public services’. For strikes in those services to be lawful, not only must 50% of those eligible to vote participate in the ballot, but 40% must support the action proposed (as opposed to a simple majority of those voting, as required in other strike ballots).

The categories of public service workers covered by the additional 40% threshold are:

• Hospital services such as A&E, intensive care, psychiatric and emergency midwifery services
• Teachers of compulsory school age children, and those working in further education
• Fire-fighters, and fire and rescue service personnel organising emergency responses
• London bus, national rail, and tramway personnel, including maintenance workers, and air traffic control, airport and port security services
• Border control, sea patrol and border intelligence personnel.

Regulations on nuclear decommissioning services are to be produced at a later date.

9. Termination Payments: Taxation

The UK government plans to make changes to the taxation of termination payments from April 2018. Consultation on the issue closed in October 2016. The proposals include:

• removing the distinction between contractual and non-contractual PILONs (payments in lieu of notice) so that all PILONs are taxable and subject to Class 1 NICs
• ensuring that the first £30,000 of a termination payment remains exempt from income tax and that any payment paid to any employee that relates solely to the termination of the employment continues to have an unlimited employee NICs exemption
• aligning the rules for income tax and employer NICs so that employer NICs will be payable on payments above £30,000 (which are currently only subject to income tax)

Parliament was dissolved on 3 May in advance of the snap general election to be held on 8 June 2017. This had the effect of accelerating the timetable for the passing of certain pieces of legislation including the Finance Bill 2017. In an attempt to ensure that important provisions of the Bill were pushed through before the dissolution of Parliament the government dropped the changes in taxation to termination payments. If there is no change in government following the general election, it is anticipated that the taxation of termination payments will be revisited in another Finance Bill later this year.

10. Grandparental leave

In March 2016, the UK government confirmed its plans to extend shared parental leave and pay to working grandparents by 2018. However, to date, the consultations have delayed due to the Brexit vote in June 2016. This seems to be unlikely to be a priority issue in the foreseeable future, whatever the outcome of the election.

Conclusion

As is clear from the foregoing, employment law continues to evolve rapidly despite Brexit and the snap general election. Employers and HR practitioners with employees in the UK need to ensure that they keep are up to date with these developments and are aware of their practical implications so that they can consider how these changes will impact on their businesses.