April 12, 2017

Are you aware of the latest Employment Law changes?

April is, of course, a busy time of year in terms of HR legislation. There are several new pieces of employment legislation coming into force this month, including two biggies – gender pay gap reporting and the apprenticeship levy.

We have set out all the new legislation below and outlined the key bits of information every HR professional needs to know.

Gender pay gap reporting
All large employers (those with 250 employees or more) will be required to report on their gender pay gap, including any bonus payments. They will also be required to report on the proportion of male and female employees in different pay quartile bands: lower, lower middle, upper middle and upper. And again, they need to report on the proportion of those men and women who receive bonuses.

There are two dates to be aware of. Private and voluntary sector employers must base their pay data on staff employed on the ‘snapshot’ date of 5 April. Public sector organisations have 31 March as their ‘snapshot’ date.

Employers have a 12 month window to publish the data on their website and to also upload it to a designated Government website.

The apprenticeship levy
The Government’s new apprenticeship levy came into force on 6 April. We have covered what this legislation means in a couple of posts recently but here’s a quick recap. Under the new levy, employers with an annual wage bill of more than £3 million are liable to pay the new monthly levy. The levy is at a rate of 0.5% of the organisation’s wage bill.

All organisations are eligble for an offset allowance of £15,000, equivalent to 0.5% on a payroll of £3 million. This allowance will be paid in monthly installments of £1,250.

All employers that will be liable for the levy are required to declare themselves to HMRC by 22 May 2017.

The principles that govern apprenticeship funding will come into force on 1 May 2017, whether employers are liable to pay the levy or not. Employers in England will be able to access funding through a digital service. Although the levy applies across the UK, it is a devolved policy, meaning that Scotland, Wales and Northern Ireland manage their apprenticeship programmes differently.

National minimum wage increases
National minimum wage rates have gone up, after increasing in the last round of legislation updates in October 2016. With the new rate, workers aged 25 and over (the national living wage) are due £7.50 an hour, up from the previous rate of £7.20. Other age band rates also increase: the national minimum wage for 21-24 year olds has gone from £6.95 to £7.05 an hour, 18-20 year olds from £5.55 to £5.60 an hour, 16 to 17 year olds up to £4.05 and the new apprentice rate from £3.40 to £3.50 an hour.

Immigration skills charge
Employers that sponsor skilled workers under tier 2 of the immigration points-based system will now have to pay an annual levy. That levy will be £1,000 per certificate of sponsorship per year (£364 for small employers and charities). The salary threshold for migrants that are ‘experienced workers’ has increased to £30,000.

Workers coming to the UK under tier 2 to hold certain posts in education, health and social care will be required to provide criminal records certificates from the countries that they have lived in the preceding 10 years.

IR35 reform
The government has made changes to the public sector intermediaries rules (IR35). The IR35 system relates to those individuals that supply services to a client via an intermediary – such as a personal service company. Now, if an individual could be regarded as an employee if that intermediary did not exist, the new IR35 rules with apply. Under these new rules, public sector employers will now have to deduct tax and NICs from contractors’ pay at source, rather than the previous system of allowing them to defer and claim expenses.

What are the implications of the new rules for those contractors? They could lose a significant portion of their take home pay. The rules apply to public sector organisations, including central and local government, the armed forces, the police, the NHS and Transport for London. There is the possibility that the rules will be broaden out to other sectors in the future.
Pensions advice allowance
There are new rules governing pensions advice allowance. Under the new rules, members of defined-contribution and hybrid pension schemes are able to take a tax-free amount of £500 from their scheme. The intention is for this figure to be redeemed against the expense of financial advice.

Also, the value of pensions advice provided by employers where there is tax and NIC relief will increase up to £500 from £150.

Limited tax advantages under salary-sacrifice arrangements
Employees have been using salary sacrifice agreements to pay for everything, including white goods and gym membership. Those benefits-in-kind, that yielded tax and NIC advantages under salary-sacrifice agreements, have now been limited. Many of them will now be taxed through payroll, including company cars, parking, private health schemes and health screening checks, gym membership, mobile phone contracts, computers, accommodation and school fees.

Pensions contributions and advice, childcare, cycle to work schemes and ultra-low emission vehicles remain exempt from tax.

Some transitional arrangements that were already agreed and in place before the new legislation came into effect are protected until April 2018 or as long as April 2021 in certain cases.

Increase in statutory family-related pay and sick pay rates
The weekly rates of statutory maternity, paternity, adoption and shared parental pay has increased to £140.98.

The weekly rate of statutory sick pay has increased to £89.35. Employees with average earnings that are equal to or greater than the lower earnings limit (a figure that has risen to £113) are eligible for these payments.

Increase in statutory redundancy pay
There have also been changes to statutory redundancy pay. Now, when an employer makes an employee redundant, they must pay those with two years’ service an amount that is based on the employee’s weekly pay, their length of service and age. The weekly pay has increased and is subject to a maximum amount – it has gone up by £10, from £479 to £489.

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