Whilst Brexit is dominating the headlines this week, it is important to remember that this April sees a number of new important employment law changes coming into effect.
Mandatory gender pay reporting – are you ready?
New regulations require private sector employers with 250 plus “employees” (defined widely) to take a gender pay “snapshot” on 5 April 2017 and to publish a gender pay report by 4 April 2018. More details of headline requirements are here. Please contact your usual Osborne Clarke contact to discuss how we can assist you to comply with the new rules.
Minimum wage rates increase – are your wages compliant?
With the government continuing to crack down on minimum wage compliance, employers who pay at or near the national minimum wage (and national living wage) should take note of the new hourly rates which apply from 1 April 2017:
- £7.50 per hour for workers aged 25 and over;
- £7.05 per hour for workers aged between 21 and 24;
- £5.60 per hour for workers aged 18 to 20 year olds;
- £4.05 per hour for workers aged 16 and 17; and
- £3.50 per hour for apprentices.
And an increase in other statutory rates of pay
On 10 April 2017, the prescribed weekly statutory rate for maternity, paternity, adoption and shared parental leave pay will increase to £140.98 a week. Statutory sick pay will also increase from this date to £89.35.
A new “immigration skills” charge for employers engaging workers from outside the EU
A new immigrations skills charge is scheduled to come into force on 6 April 2017 – Tier 2 immigration applications will face an additional charge of £1,000 per sponsored employee per year of sponsorship (there is a reduced fee available for small/charitable employers and limited exemptions). It is intended to “incentivise employers to invest in training British staff”. Click here for more details.
In addition, from April, the minimum salary rate which must be paid to “experienced workers” within the Tier 2 (General) immigration category will rise to £30,000 per annum. The new minimum salary for most Tier 2 (Intra-Company Transfer) applicants is set at £41,500.
Do you operate salary sacrifice schemes? Check whether they are affected by 6 April changes
On 6 April 2017 beneficial tax treatment is being removed for certain benefits provided under salary sacrifice schemes. However, certain arrangements relating to pension contributions, pensions advice, childcare, cycle to work and ultralow emission cars will be exempt from these changes. There are limited transitional arrangements available for existing schemes, provided certain conditions are met. If you operate any salary sacrifice arrangements (or are proposing to vary or amend them) you are recommended to consider the impact of the tax changes if you have not already done so.
A new tax-free childcare scheme starts its roll-out
Whilst employers who operate childcare voucher schemes for existing members will be able to continue to do so, this April also sees the government begin the roll-out of its new tax-free childcare scheme with the aim of it being available to all eligible parents by the end of 2017. The scheme will provide “eligible parents” with assistance with childcare costs for children under 12 (or under 17 for disabled children). Under the scheme, eligible parents (which will include those who are self-employed) will be able to receive up to £2,000 per year per child towards the costs of childcare (or £4,000 for disabled children). Employees who are existing members of an employer operated voucher scheme will have to leave that scheme if they wish to benefit from this new scheme.
As has been widely publicised, from April 2017, funding of apprenticeships will change. Employers operating in the UK will have to pay a levy, calculated at 0.5% of an employer’s pay bill, although a ‘levy allowance’ of £15,000 per year will mean that in practice only employers with an employee pay bill of over £3 million will be caught. An employer’s levy payments will be paid into the government’s new Digital Apprenticeship Service, from which they will be able to access the funds (plus a government top-up) to fund approved apprenticeship training. With the levy funds available on a “use it or lose it” basis, employers should look carefully at how they can use these funds going forward. Click here for more details.
Termination costs – a rise to compensation payments
For dismissals where the effective date of termination is on or after 6 April 2017, any compensatory award for unfair dismissal will be capped at £80,541 (or 12 months’ pay if lower) and a week’s pay for calculating the unfair dismissal basic award and statutory redundancy pay will be capped at £489.
Changes to the taxation of termination payments are still due to come into force in April 2018. The latest draft of the legislation setting out the proposed changes – which broadly will make all notice pay taxable and require employers to pay employer’s national insurance contributions (NICs) on termination payments above £30,000 – is set out in the recently published Finance Bill 2017, which is currently making its way through Parliament.
Off-payroll working in the public sector
New rules also come into force on 6 April 2017 reforming the IR35 tax legislation and which will affect the way in which public authorities and their staffing suppliers pay personal service company (PSC) contractors. The changes will move responsibility for assessing IR35 status, and paying the correct tax and NICs, to the body paying the PSC. Where a PSC assignment falls within IR35, the person paying the fee to the PSC for the worker’s services will be treated as the employer for the purposes of tax, NICs and Employment Allowance. The changes will affect not only public authorities but also any staffing supplier and/or payment intermediary involved in the contractual chain supplying the PSC’s services. It will also affect consultancies (such as IT consultancies or management consultancies) who deal with the public sector on a cost plus or daily rate basis and whose teams include PSC contractors. Click here for more details.