Apprenticeship Levy – A new initiative which will take effect in April 2017 is the new apprenticeship funding for 16-18 year olds and 19-24 year olds to encourage employers and young workers alike to increase job opportunities and production accordingly. A levy of 0.5 percent of an employers pay bill will be introduced on large employers (those with payrolls over £3million) to fund 3 million additional apprenticeships over the next five years. Each employer will receive £15,000 to offset against their levy payment. A full copy of the new structure can be downloaded from the Department of Education and employers can use the Skills Funding Agency tool to check whether they will be liable for the levy and if so, how much funding will be available. It is important to note that the levy will apply to all employers if their annual pay bill hits the criteria. The annual pay bill is all payments to employees that are subject to Class 1 secondary National Insurance Contributions, which includes all wages/pay, bonuses and commissions.
Gender Pay-Gap Reporting This new law requires employers with more than 250 employees in England, Wales and Scotland to publish mean and median gender pay gaps from April 2017. The first reports are due to be published in April 2018 for the period covering April 2017-April 2018. Information on any bonuses paid also needs to be published in April 2018 for the 12month period ending April 2017. Employers cannot ignore this. Companies should be gathering the data now to ensure that they comply with the reporting procedures ready for April 2017.
There is no obligation for companies to explain the gender pay gap nor any duty to address it if a company is complying with the Equality Act, neither is there any penalty for failing to publish (as of yet). That said, reputational penalties will be significant as there is no doubt the press will be waiting with baited breath to discover who has failed to produce their report and why and will be looking establish a gender pay gap in high profile organisations. Furthermore, the best candidates may not be attracted to working for companies with a big gender pay gap if they feel that their gender will adversely impact on their career prospects. The reason for this new piece of legislation is self-explanatory; research has demonstrated that despite huge equality progress, women are still being paid less than their male counterparts.
National Minimum Wage / National Living Wage – These are two areas which will continue to increase in 2017, with the next raise coming on 1st April taking the National Living Wage up to £7.50 per hour for those aged 25 and above. We are unlikely to see any changes when it comes to NMW/NLW following the triggering of Article 50 as this was very much a British idea and regulation is not required by European law. Furthermore, the UK National Minimum Wage is significantly higher than that in similar European systems and the government recently introduced the National Living Wage. The government introduced a ‘name and shame’ policy for employers who are found to be paying under the National Minimum Wage so it is important for businesses to take this seriously.
The National Minimum Wage rates will be as follows from 1st April:
Aged 21-24 – £7.05 (up from £6.95)
Aged 18-20 – £5.60 (up from £5.55)
Aged 16-17 – £4.05 (up from £4.00)
Apprentices – £3.50 (up from £3.40) **applicable to apprentices aged 16-18 and those aged 19 and over who are in their first year. All other apprentices are entitled to the NMW for their age
Modern Slavery – The Modern Slavery Act came into effect for any private organisation operating business in the UK with a turnover of £36 million or more (including subsidiaries) obliging them to either provide a statement showing the steps they have taken to ensure that slavery and human trafficking are not taking place in any part of their business or supply chain, or a statement that it has not taken any such steps. Such companies are advised to file the required statements as the Secretary of State can apply to the High Court for injunctions against them if not done and prison sentences can follow for directors. The purpose of the Act is to eradicate ‘modern slavery’, which includes forced labour, human trafficking and domestic servitude. Even if you are a smaller business with a lower turnover, you may still be asked for a statement or policy on Modern Slavery if you trade with a larger business – i.e. in order for the larger business to comply with their own obligations under the Act, they would need to ensure everyone in their supply chain also complies. Certain industries would be more at risk that others – especially those using raw materials such as cotton or cocoa, which they import from ‘at risk’ countries across the world.
Salary sacrifice schemes – As of 6 April 2017 the government will abolish tax savings through many salary-sacrifice schemes, aside from those related to pension savings, child care, cycle-to-work or ultra-low emission cars. Those which are in place prior to April 2017 will be protected until April 2018 while any arrangements related to cars, school fees or accommodation will be protected until April 2021. This would also affect employers who operate a ‘buying and selling annual leave’ scheme under salary sacrifice.
Data Protection Changes – The EU General Data Protection Regulation (GDRP) was passed in May 2016. While it doesn’t take effect until May 2018, the scale of the changes mean that preparing for GDRP should be a priority for employers in 2017. This regulation will take effect before the UK exits the EU so employers need to be prepared. Those who are not compliant risk fines of up to €20 million or 4 percent of their annual worldwide turnover, whichever is higher. It’s difficult to predict exactly how the Data Protection Act will be affected by Brexit however it’s unlikely that it would be repealed as to do so would cause public outrage.