There is no doubt that 2016 was an extraordinary year, certainly from a political perspective.  The impact Brexit will have on UK commerce is yet to be fully seen.  What is clear is that as the business and political worlds converge we can expect to see a number of employment law developments over the coming years in an area which is already fast paced.

This article sets out some of the key changes that are being introduced in 2017 of which HR professionals and business owners need to be aware, and planning for, now.

General Data Protection Regulation (‘GDPR’)

Whilst the GDPR is EU legislation, even when we withdraw from the EU, the indications are that the UK will continue to be bound by this legislation which comes into force in May 2018.  We await further clarification as to what elements of the GDPR will be adopted by the UK but, until that is given by parliament, we have to work on the basis that we will be fully bound by the legislation.

Whilst many of the core principles outlined in current data protection legislation will remain, employers should start to get to grips with the new concepts the GDPR will introduce and begin preparing now as the new rules are likely to require organisation-wide changes for many businesses.

GDPR not only imposes new obligations on businesses but it will also create a new enforcement system which means that non-compliant organisations may risk fines of up to €20 million or 4% of their annual worldwide turnover, whichever is higher.

Gender pay gap reporting

Gender pay gap reporting legislation does not come into force until April this year. However, given how onerous the task will be, employers should already be gathering their pay data for analysis to determine their gender pay gap results.

In very simple terms, organisations with 250 or more employees will be legally required to publish their gender pay gap information.  The reporting obligations are wide and will include reporting on mean and median hourly rate of pay for both genders.  It also imposes a duty to publish employees’ mean and median bonus payments for each gender.

First reports are not due until April 2018 and must be published on the organisation’s website or, if they do not have one, in a publically accessible way, for a period of 3 years.

National Minimum Wage (NMW) increases

As a result of the introduction of the ‘Living Wage’ last April, the NMW cycle will be aligned from 2017 with changes to all age groups taking place in April instead of October.

The following increases will take effect on 1st April 2017:

  • The ‘living wage’ (for those aged 25 or over) will increase to £7.50 per hour.
  • The NMW (for those aged 21 to 24) will increase to £7.05 per hour.
  • The NMW (for those aged 18 to 20) will increase by 5p to £5.60 per hour.
  • For younger workers (those aged 16 and 17) the NMW will go up by 5p to £4.05 per hour
  • The wage for apprentices will increase to £3.50 per hour.

Introduction of an apprenticeship levy

In September my colleague Michelle Chamberlain reported on the introduction of this levy in her article “What does the apprenticeship levy mean for your business?”

With effect from 6th April, the levy will require all UK employers to pay 0.5% of their annual wage bill towards the cost of apprenticeship training.

Employers will have an Apprenticeship Levy allowance of £15,000 each year, which effectively means that only employers with a payroll in excess of £3 million will have to pay the levy.

The levy presents smaller organisations with a number of opportunities to take advantage of funding available.  Smaller organisations will also be able to receive funding or accredited apprenticeships by contributing 10% towards the cost of an apprentice, with the Government picking up the tab for the remaining cost.

Salary sacrifice benefits

Following plans set out in the Government’s 2016 Autumn Statement, there will be changes to the tax status of salary sacrifice benefits with effect from April this year, with many of these benefits becoming subject to the income tax.

The good news is that arrangements in place before April 2017 will be protected until April 2018 or April 2021 (depending on what the scheme covers).

Only a few salary sacrifice arrangements will continue to benefit from tax and NICs relief such as pension contributions, childcare, cycle to work schemes and ultra-low emission cars but most salary sacrifice arrangements will be affected in some way.

What can you do now?

For many businesses the lead up to the new tax year is a good time to carry out an MOT of its employment practices to ensure employment documents are compliant with current legislation as well as planning strategically in light of the changes on the horizon.

Thursfields can assist with reviews of your practices and pay data to help you plan ahead.

For advice and assistance on HR and employment law issues, contact Thursfields’ Employment Law Team on 01905 677041 or email LKemp@thursfields.co.uk

This article has been prepared for guidance and information purposes only and should not be substituted for legal advice.

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