5 employment law issues you need to know

In 2017, a number of key employment law changes are being introduced that will impact UK companies. Here's what to look out for.

In 2017, a number of key employment law changes are being introduced that will impact UK companies. With many of the changes coming into force in April 2017, XpertHR Group’s Joanna Stubbs says the time to start preparing for them is now.  Here are her top five employment issues that employers must not ignore.

General Data Protection Regulation is on the horizon

The General Data Protection Regulation (GDPR) is the new governing legislation for collecting and processing personal data in the EU. Although it does not come into force until May 2018, the scope of the changes under the Regulation means that preparing for it will be a high priority for UK employers in 2017.

In addition to changes to how employers collate and handle data, the Regulation creates a new enforcement system, with significantly higher maximum penalties than under the current Data Protection Act.

Organisations that are not compliant by May 2018 risk fines of up to €20 million or 4per cent of annual worldwide turnover, whichever is higher.

Gender pay gap reporting requirements introduced

For the first time, organisations with 250 or more employees will be required to publish their gender pay gap information. This includes their mean and median gender pay and gender bonus-pay gaps, as well as information on the proportion of men and women receiving a bonus payment.

Employers need to base their first report on the pay period in which 5 April 2017 falls, while the required bonus information should take into account the 12 months leading up to this date.

The report must be published in English, by April 2018, on a company website that is accessible to employees and the public. There must be a written statement signed by a director vouching that the report is accurate, and it must remain on the website for three years.

National minimum wage increase cycle changed

The national minimum wage cycle is being aligned from 2017, so that increases for all age groups take place in April rather than October.

This is in line with the introduction of the national living wage – the minimum wage rate for workers aged 25 and over – in April 2016. While the rates for the lower age groups have traditionally increased on 1 October each year, this will now change to 1 April. The alignment will mean a further increase on 1 April 2017 for workers below the age of 25, on top of their October 2016 increase.

Apprenticeship levy introduced

Employers with an annual pay bill of more than £3 million will be required to pay a 0.5 per cent levy on this starting on 6 April 2017.

Large employers will be able to access levied amounts, plus a government top-up of 10 per cent, to fund apprenticeships from accredited training providers.

Smaller organisations that are not required to pay the levy will also be able to receive funding for accredited apprenticeships by contributing 10 per cent towards the cost of an apprenticeship, with the Government paying the remaining cost.

Changes to rules for employing foreign workers

A new “skills charge” of £1,000 per worker is set to be introduced in April 2017 for employers sponsoring foreign workers with a tier 2 visa.

The intention behind the new charge – which will be in addition to the current fees for visa applications – is to encourage businesses to recruit and train UK employees and reduce their reliance on migrant workers. The minimum salary threshold for “experienced workers” applying for a tier 2 visa is also expected to increase to £30,000.

According to Stubbs, the large compliance projects for data protection and gender gap reporting will dominate the HR agenda, and companies must start preparing for these now ahead of April. Failure to comply with these regulations could lead to legal penalties and fines.

“Employers also need to be mindful that their costs are likely to increase when the apprenticeship levy and the additional fees for sponsoring foreign workers are introduced and ensure they budget for this.”

Praseeda Nair

Praseeda Nair

Praseeda was Editor for GrowthBusiness.co.uk from 2016 to 2018.