What do the upcoming regulation changes in Employment law mean for HR?
As parliament has now passed the Brexit bill it is widely anticipated that Prime Minister Theresa May will trigger article 50 of the Lisbon Treaty before the end of March, adding to a number of other regulation changes coming into practice this coming April.
What regulations are changing by this April?
- Companies must report their gender pay gap.
- Increases in statutory maternity, paternity, adoption and shared parental pay.
- Increases in statutory sick pay and family related leave.
- The limit on a week’s pay (used for calculating redundancy and unfair dismissal basic awards).
- Cap on compensation for unfair dismissal.
- Rise in the National living wage.
- Apprenticeship levy introduction.
- Immigration skills charge.
- Pension advice allowance is introduced.
As you can see there are many changes to factor in to the decision making process. In order to adapt and prepare for these changes, businesses simply must use planning tools, techniques and analytics to ensure it is as smooth a transition as possible. In the years to come HR professionals will play a crucial role in this planning and executing of change programmes. Read on to learn more about the key changes and for some suggestions on how you can potentially combat them;
Gender pay reporting – This change only effects companies with 250 staff or more, so larger companies should take note. They will be required to report data on their gender pay gap (difference in pay between men and women in the same role), this includes bonus payments.
Also requiring report is the proportion of males to females in roles, so it can be monitored if women are taking up senior roles or if it is typically still mainly male dominated at boardroom level. Employers in the private and voluntary sector must base their pay data on staff employed on a “snapshot” date of 5 April each year, starting from April 2017. Organisations in the public sector must use 31 March as their snapshot date. Employers have exactly one year to publish the information in their report to their company website and upload it to the government website. Employers must make sure that they can capture the necessary data to do this.
Statutory family-related pay and sick pay rates increase – The weekly rate of statutory maternity, paternity, adoption and shared parental pay will increase to £140.98 for pay weeks starting on or after 2 April 2017. The weekly rate of statutory sick pay will increase to £89.35 from 6 April 2017. As well as the basic pay rates, a new tax-free childcare scheme will come into force this April. Employers must make sure that they are aware of all these requirements by checking on the UK government website.
Statutory redundancy pay increases – New limits on employment statutory redundancy pay come into force on 6 April 2017. Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. From 6 April 2017, this is £489, increasing from £479.
Rise in national minimum wage – The most drastic increase is the rate for workers 25+ goes from £7.20 to £7.50, there are also other raises further down the board although only in the range of 5p-10p.
Apprenticeship levy is introduction – This comes into effect on the 6th of April and can fund apprenticeships for employers, via PAYE (online system government use to receive pay) providing they have a pay bill over £3 million. Employers that do not pay the levy will also be able to access some form of apprenticeship funding. Applying for this service is different in various regions, in England it is a digital service, funding is expected to start coming in on May 1st 2017.
Immigration skills charge – Starting this April companies employing skilled workers from abroad will need to pay £1,000 – £364 depending on the size of their business, per sponsorship. Migrants pay threshold is also increased meaning they need to be on more money to be considered a Tier 2 experienced employee. Workers coming to the UK for posts in education, healthcare and social care must also obtain the necessary criminal records certificates from the countries that they have lived in over the last 10 years.
Pension advice allowance – Members of defined-contribution and hybrid pension schemes can take a tax free amount of £500 from their scheme, to be paid back against the expense of ‘financial advice’. The value of pensions advice provided by employers on which there is tax and NIC relief will increase from £150 to £500.