New & Pending Legislation - April 2017
INSIGHT: Our new monthly magazine from HR Law Easy Answers
We provide Employment Law, HR and Health and Safety services to UK employers.
The way you manage your people, ensuring your company is legally compliant isn’t easy – that is why so many employers turn to HR Law Easy Answers for help and support.
Our new monthly magazine, INSIGHT gives you exactly that: an insight to up and coming legislation, and how it could affect your business.
HR Law Easy Answers will guide and protect you, finding commercial solutions and answers to your everyday Human Resources, Employment Law, Health and Safety issues , and these are a few of the current updates in legislation, that could affect you.
About the Government’s National Living Wage and the National Minimum Wage
In July 2015 the Chancellor of the Exchequer announced the UK Government would introduce a compulsory ‘National Living Wage’.
This new Government rate is a minimum wage premium rate for staff over 25 years old.
It was introduced in April 2016 and the rate is £7.20 per hour, then this amount per hour was raised to the sum of £7.50 on the 1st April 2017. That rate is separate to the Living Wage rate, because that item is calculated by the Living Wage Foundation.
The Government rate of payment is based on median earnings level, the Living Wage Foundation rate is calculated to reflect the Cost of Living.
National Minimum Wage and National Living Wage
National Minimum Wage
The National Minimum Wage (NMW), is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker’s age and if they are an apprentice.
National Living Wage
The Government’s National Living Wage was introduced on 1st April 2016 for all working people aged 25 and over, and was set at £7.20 per hour. In April 2017 it goes up to £7.50 per hour. The current National Minimum Wage for those under the age of 25 still applies, details of which are set out below:
Most workers over school leaving age will be entitled to receive the NMW.
The NMW/NLW rate is reviewed annually by the Low Pay commission
HM Revenue & Customs (HMRC) are the organisation which take employers to court for non payment of the NMW/NLW.
There are a number of exemptions to those persons who receive the NMW/NLW, these do not relate to the size of the business, its sector, jobs or regions.
The compulsory National Living Wage is the National Rate set for people over 25 and over.
Rates of pay
It is important to note that these rates, which came into force on 1st October 2016, apply to pay reference periods beginning on or after that date.
The rates from 1st October 2016 are:
£7.20 per hour – 25 years old and over
£6.95 per hour – 21-24 years old
£5.55 per hour – 18-20 years old
£4.00 per hour - 16-17 years old
£3.40 for apprentices under 19, or 19 or over who are in the first year of apprenticeship.
The rate will then change every April, starting April 2017. The rates will then be:
£7.50 per hour – 25 years old and over
£7.05 per hour – 21-24 years old
£5.60 per hour – 18-20 years old
£4.05 per hour – 16-17 years old
£3.50 for apprentices under 19, or 19 or over who are in the first year of an apprenticeship.
Breaking Employment Law News
HR Law Easy Answers advises on the new legislation on Trade Unions as it comes into force, on 1st March, 2017.
The Trade Union Act 2016
This Act came into effect from the 1st March 2017, and tightens up the law on protected industrial action, in a number of ways, with the key points being:
For a strike ballot to protect industrial action, as well as the ballot showing majority support, there needs to be a turnout of at least 50% of those entitled to vote. This has the effect that a high minority ‘no’ vote might actually validate a ballot for a strike by raising the turnout.
With important public services (e.g. transport, health, fire services, education under 17’s), there is an additional requirement that a ballot on industrial action must be supported by at least 40% of the eligible workers. (e.g. in a workforce of 100, instead of 26 voting in favour, with 24 against and 50 abstentions sufficing for the majority, there would need to be 40 in favour in the majority, with 10 to 30 against).
Unions will have to give employers 14 days’ notice of industrial action, up from 7 days.
Mandatory Gender Pay Gap
The final version of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has been published. The Regulations will come into force in April 2017, after which affected employers, will have up to 12 months to publish the information.
In summary, the Regulations will:
Apply to private and voluntary sector organisations with 250 employees or more.
Apply to England, Wales and Scotland. (not Northern Ireland)
Require employers to report specified information on their gender pay gaps by April 2018 on a company web site accessible by the public and on a yet-to-be-developed Government website.
Retain the data on websites for a period of three years.
Originally intended only to apply to private sector and voluntary sector employers, this new Regulation extends the gender pay gap reporting requirements to the public sector employers with over 250 employees as well.
This new public sector Regulation, broadly reflects the private one, with one or two differences – e.g. the ‘snapshot date’ on which pay information will focus is March 31st – rather than April 5th for the private sector.
The public sector Regulations apply to England only, to allow for cross-border authorities and other authorities operating across Great Britain.
The Government has published a helpful tool called, ‘Find the Gender Pay Gap for your Job’, showing how the gender pay gaps operate in practice.
Here are some gaps highlighted:
71% of Office Manager jobs are held by women – yet they receive on average 14.7% less pay than men.
65% of Pharmacist jobs are held by women, yet they receive on average 6.5% less pay than men.
84% of Senior Care worker jobs are held by women, yet they receive on average 7.8% less pay than men.
What happens to IR35 System in 2017?
Government introduced IR35 in 2000 to stop ‘self-employed individuals’ who fundamentally share characteristics of an employee, working under limited company to benefit from the tax breaks.
In this spring budget the government took a step further and confirmed from 6th April 2017, in the public sector only, IR35 status will be determined by the client, not the contractor.
If a client decides that IR35 applies, the contractor business will be taxed at source, through the Real Time Information (RTI) system, exactly as if it were an employee. While the tax position would be the same as that of an employee, the benefits won’t as the contractor will not be entitled to sick or holiday pay, nor will they have the right to claim unfair dismissal.
How will new arrangements, after 6th April 2017, going to be structured?
IR35 rules are complex, there is always going to be some issue as to whether or not an engagement falls within IR35. As clients or agencies will become liable if the wrong determination is made so they are likely to be taking any risk applying to IR35 across the board.
Could public sector limited companies be taxed retrospectively?
HMRC has not ruled out investigating public sector contractors retrospectively.
The Government is set to introduce the apprenticeship levy on the 6th April 2017.
The new legislation will:
Impose a levy on all employers in all sectors with an annual payroll bill in excess of £3 million.
The levy will be set at 0.5% of the employer’s payroll bill
This will allow employers to use the levy to fund apprenticeships.
Payment of the levy will be to HMRC through employees PAYE process. Access to funding will be via a Service Account and employers will need to register in order to participate.
There is a helpful guide available for employers, who appear not to be prepared for the introduction of this levy in April, entitled, ‘Apprenticeship Funding – How it will work’.
A new guidance to help understand gig economy workers employment status rights
To help employers and the staff understand the many different types of employment arrangements that exists in the modern workplace and their legal entitlements.
The revised guidance is a review on modern workplaces and reflects changes to the way in which people will work, and in future, and recent legal cases about employment status.
Many businesses and their staff may not realise that a working person’s employment rights very much depends on their status. A person who is self-employed or defined as a worker is likely to have different legal rights to someone else who is considered to be an employee.
People often find this is a confusing area of the law and we have updated our advice to provide clarity on the different types that people can work and the employment rights that they are entitled to.
There are three main types of employment status:
Employee, worker, and self-employed.
Employment rights for workers include basic entitlements such as the national minimum wage, holiday pay and protection against unlawful discrimination. Employees have the same entitlements and receive more rights such as maternity or paternity leave, itemised pay slips and the right to request flexible working.
Guidance includes a focus on people who are self-employed and/or umbrella companies.
A person may be classed as self-employed or a contractor if they are:
Bid or provide quotes for work.
Decide when and how to work.
Are responsible for their own tax and National Insurance, and
Do not receive holiday or silk pay when they are available for work.
An umbrella company often acts as an employer to contractors usually through a recruitment agency. There is a three- way relationship between the worker, the umbrella company and the client.
Key features include:
The client will pay the umbrella company who then makes relevant deductions and then pay the workers.
An agency worker is hired in this arrangement is classed as a worker and is entitled to the same basic rights as the other workers, and,
The payment for work is agreed between the worker and the hirer and is then paid to the umbrella company for its income.
Public Sector Exit Payments: Expected 2017
Regulations capping Public Sector Exit Payments at £95,000 were originally published in November 2015. They are expected to come into force in early 2017. The cap will apply to lump sums, (including redundancy payments), the cost to the employer of funding early access to unreduced pensions, and other non-financial benefits, such as additional paid leave.
They do not apply to pay in lieu of holidays, bonuses or payments following a TUPE transfer.
There are also separate proposals to ‘claw-back’ termination payments to public sector executives returning to the same area of work within 12 months.
The Government has recently published its review of the introduction of Tribunal fees. It proposes only marginal amendments and not the abolishment of fees as many employees organisations had hoped.
The proposals – which are subject to consultation – include an extension of the rules on fee remission, which would mean those on low income would be exempt from the fees.
However, the Government has announced an immediate exemption from fees for these claims which seek repayment from the National Insurance Fund, typically involving recovery of redundancy payment from an insolvent employer.
Unison has a legal challenge to the introduction of these fees which will be heard by the Supreme Court and HR Law Easy Answers will be advising on the expected wave of such cases and will report on any developments in future INSIGHT magazine issues.
Annual Compensation Increase
BIS has made The Employment Rights (Increase of Limits) Order 2017, containing the annual increases in compensation payments, for unfair dismissal was before Parliament.
This is to increase the sums of compensation in Employment Tribunal Awards into 2017-2018.
It applies to Dismissals awards and is taken into account for other detriments, that is included in any decisions in an Employment Tribunal, which is occurring on or after 6th April 2017.
The main changes to the maximum compensatory award rises to over £80,000.00 and there are other potential additional sums, which may be awarded in addition to the dismissal compensation sum.
A week’s pay will become £489.00, and the current award figure is £479.00
A maximum compensatory award will become £80,541.00, and the award sum is currently £78,962.00.
Employment Tribunal – Judgements Online
For the first time, the Tribunal service has been publishing Tribunal Judgements online. Of course, there has always been the facility to check Appeal Tribunal Judgements on line, but with this new development, this will allow employees and employers to access first-stage decisions.
Of course, this would allow employers to ‘vet’ prospective employees who may have been subject to a previous claim, and vice versa with employees checking employers – but it will be interesting to see how this service will be used by both parties.
HR Law Easy Answers will certainly be interested and will advise on trends with this particular development in the field of employment law.
Taxation of Termination Payments: Expected April 2018
Employers may welcome the clarity which might follow from this amended law on termination payments. However, the proposals listed below, if implemented, may take away some of the benefits of the existing system, such as, giving an employee a Pay in Lieu of Notice (PILON) payment as gross, can often be viewed as a sweetener to assist the negotiation of an agreed settlement.
The proposals are as follows:
Presently, not all Pay in Lieu of Notice (PILON) payments are subject to Income Tax deductions. Currently tax is only charged for PILON payments if there is a specific clause in a contract of employment which permits the employer to make a PILON payment.
Under the draft legislation all PILON payments will qualify for Income Tax.
Settlement sums which exceed £30,000, will be subject to NI contributions….they are not at present.
Payments for injury to feelings will be subject to Income Tax – there are conflicting judgements on this point at present.
Your Guide to Health & Safety Legislation
2016 has seen significant changes to Health & Safety, especially to the changes to Sentencing Guidelines introduced in February of that year. The average number of Directors imprisoned for H & R breaches each year in the UK was five, that is until these new guidelines were introduced.
Yet this year alone there have been 27: a five-fold increase.
Obviously the consequences of a H & S breach for businesses and directors remains a very much under-appreciated risk for many organisations, and too many are unaware of legislation changes that could have an impact.
The Key Facts are:
£38.8million in total fines paid out in the UK in 2015/16 (double the previous year
27 Directors prosecuted in Feb-Dec 2016
1.3 million workers suffering from a work – related illness in 2015/16
Here is a round up of the latest H & S Legislation.
The Control of Electromagnetic Fields Work Regulations: 1st July 2016.
Minimal impact on the majority of businesses, as the majority of employers will not need to take any further action as:
The levels of EMFs in most work places are already at safe levels.
The levels and associated risks have already been assessed and managed.
The Nuclear Industries Security (Amendment) 21st August 2016
This legislation should have no impact on SME’s unless working directly with the Transport of Nuclear Materials.
The Dangerous Goods in Harbour Regulations: October 2016
These Regulations will have no impact on the majority of small businesses unless they are directly involved with the shipment of Dangerous Goods through Harbours and Ports.
ISO 45001: Due date: Late 2017
This is an international standard for the Management of Safety – there will be no impact on small businesses unless they have previously held OHSAS18001 or are required by their customer base to hold ISO certification for their Safety Management System.
Parental Bereavement Leave Bill
At present there is no entitlement to paid or unpaid bereavement leave in the UK, unless the contract of employment provides for it.
The private members bill, for this proposed legislation, had its second reading on 18th November 2016. If implemented, the bill will give parents, who have lost a child, the right to two week’s statutory bereavement leave, subject to payment of £139.58 per week, or 90% of a week’s earnings, which is the lower.
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