It’s one of the most important dates for UK businesses; and we’re just days away from Spring 2017’s Red Tape Day.
From the beginning of April – and in particular April 6 – firms of all sizes will be subject to new legislation around the way they operate, with penalties for those who don’t behave accordingly.
There are important legislative changes in store for businesses across the country from next month, most notably with regards to their employee responsibilities. While some introductions, such as the gender pay gap reporting, only affect larger businesses, there are others which must be adopted by all employers.
It is vital that firms are prepared for this new legislation – or face the legal consequences. Here are the key legal changes to take effect in April 2017.
1) Gender pay gap reporting
Much has been written about this new way of reporting, but the basic premise is that it aims to close the pay gap between men and women. Employers with 250 or more employees will have to submit annual reports showing how large the pay gap is between male and female employees, based on a snapshot date of April 5 (or March 31 for public sector organisations) each year. They then have 12 months to publish the data on both their company website and a government site.
Failure to comply with the Regulations will not lead to any new civil penalties. However, it will be considered an ‘unlawful act’, which falls within the existing enforcement powers of the Equality and Human Rights Commission.
2) National minimum wage rise
From April 1 2017, the national living wage which applies to all employees aged 25 and over, will rise from £7.20 to £7.50, while the new national minimum wage for each age bracket will be as follows:
- 21 to 24-year-olds – £7.05 per hour
- 18 to 20-year-olds – £5.60 per hour
- 16 to 17-year-olds – £4.05 per hour
- apprentices aged 19 or over in first year of apprenticeship, or apprentices under 19 to £3.50 per hour.
3) Statutory payments increases
As a result of the Employment Rights (Increase of Limits) Order 2017, a number of statutory payments will see a rise from April 2017. Statutory maternity pay, paternity pay, adoption pay and shared parental leave pay will all increase on April 2 from £139.58 or 90% of employees earnings if this is lower, to £140.98 or 90% of employees earnings if this is lower.
From April 6, a number of other changes in relation to statutory pay will come into effect.
Statutory sick pay will rise from £88.45 to £89.35. In addition, there will be an increase on the maximum amount of statutory redundancy pay, with the packages paid to employees with at least two years’ service being calculated on their length of service, age and weekly pay.
The maximum amount of weekly pay that can be taken into account when making the calculations both for statutory redundancy pay and for the basic award for unfair dismissal will rise from £479 to £489, resulting in an increased cap on any statutory redundancy rewards from £14,670 to £14,370.
The limit on the amount employment tribunals can award for unfair dismissal will also increase, rising from £78,962 to £80,541.
In addition, the maximum guarantee pay during lay-off or short-time working will rise from £26 to £27 per day.
4) Immigration skills charge
Employers wishing to sponsor skilled non EEA-workers under Tier 2 of the immigration points-based system will face a raft of costly legislative measures from April, including an Immigration Skills Charge of £364 for small employers or charities, or £1,000 for employers with more than 50 employees or with an annual turnover in excess of £10.2 million.
The charge has to be paid upfront to cover each year the applicant requires a visa for, so a large employer could face costs of £5,000 per applicant.
The Tier 2 (general) salary threshold for experienced migrant workers will also increase to £30,000, while workers moving to the UK under Tier 2 to work in certain sectors will have to provide criminal records certificates from any country in which they have lived for over 12 months in the previous 10 years.
Employers who employ migrant workers under Tier 2 are therefore advised to carry out an audit of their current work force to assess the potential cost of the immigration skills levy.
5) Apprenticeship levy
From April 6, legislation will take effect which will require all employers with an annual pay bill over £3 million to pay into an apprenticeship levy through PAYE.
Payments will start in May 1 2017, and will not affect the way employers fund training for apprentices who started an apprenticeship programme before that date.
Employers will be responsible for notifying HMRC as to whether or not they are eligible to pay, and will be able to access funding for apprenticeships through a new digital apprenticeship service account.
Whether you pay the levy or not, you should be aware of the principles that apprenticeship funding will operate onfrom May 1, as your business may also be able to access funding for apprenticeships.
The levy is UK-wide, but apprenticeship funding arrangements will differ in Scotland, Wales and Northern Ireland.
6) Reformation of intermediaries rules in the public sector
From April 6, 2017, it will be up to government bodies to determine whether contractors working for them through personal service companies (PSCs) should be subject to intermediaries rules (IR35). If the public sector organisation decides that the contractor should have PAYE or NICs deducted from their pay, then either that body, or the agency through which the contractor PSC is supplied, will have to withhold PAYE and NICs and then pay employers’ NICs on the payment.
7) Salary sacrifice tax break perks to be cut
School fees, gym memberships and mobile phones are just some of the salary sacrifice perks that will no longer be allowed from April 6 as the government attempts to claw back lost income tax and national insurance contributions.
Schemes put into place prior to April 6 will continue until April 2018, while other benefits including school fees, cars and accommodation will be protected until April 2021.
8) Introduction of pensions advice allowance payment
From April 6 2017, the government will remove one of the barriers to financial advice – cost – by introducing the Pensions Advice Allowance payment, which will allow members and beneficiaries of defined contribution pension and hybrid pension schemes to take up to £1,500 on three occasions from their scheme to redeem against the cost of retirement financial advice.
In addition, the value of tax and NIC-free pensions advice arranged by employers will rise from £150 to £500.
Lindsey Knowles is an employment law specialist at Kirwans.