April 2017: Changes to Employment Law

As usual, this April sees a number of changes to employment legislation.

For larger employers, the most significant development is the introduction of the gender pay gap reporting duty but there are also a number of other key changes which will affect all employers, regardless of their size.

1. Gender pay gap reporting

Despite the best efforts of equal pay legislation (introduced in 1970), the pay gap between men and women in the UK still sits at 19.4%. The requirement for employers employing 250 or more people to collect and publish their payroll information is intended to highlight where pay gaps exist and is a starting point from which companies can begin to take constructive action to address problem areas.

As of April 2017, larger employers (defined as those with 250 or more employees) will have to report data about their gender pay gap, including bonus payments. Employers will also have to report on the proportion of male and female employees in different pay quartiles and those who receive bonuses. Bonus information must be based on the preceding 12-month period.

Employers in the private and voluntary sector must base their pay data on staff employed on a “snapshot” date of 5 April each year.

Employers have 12 months to publish the information on their own website and to upload it to a Government website.

2. Apprenticeship Levy is introduced

On 6 April 2017, the Apprenticeship Levy to fund apprenticeship training comes into effect. Employers will pay the monthly levy via PAYE if they have a pay bill of more than £3 million.

Employers in England that pay the levy will be able to access funding through a digital service. The new system of funding is expected to operate from 1 May 2017.

Employers that do not pay the levy will also be able to access funding for apprenticeships.

Different arrangements around apprenticeship funding will apply in Scotland, Wales and Northern Ireland, although the levy applies across the UK.

3. National Minimum Wage increase

On 1 April 2017, the rates of the National Minimum Wage will increase in order to align the timing of the annual increase in the National Living Wage rate for workers aged 25 or over with the other National Minimum Wage (NMW) rates. The rate for workers aged 25 and over (the National Living Wage) increases from £7.20 to £7.50. The NMW rates within the other age bands also increase as follows:

• Workers aged 21 to 24 - £7.05 from £6.95
• Workers aged 18 to 20 - £5.60 from £5.55
• Workers aged over compulsory school age under 18 - £4.05 from £4.00
• Apprentices - £3.50 from £3.40

4. Statutory Maternity, Paternity, Adoption and Shared Parental Pay rates increase

The weekly rate of statutory Maternity, Paternity, Adoption and Shared Parental Pay will increase to £140.98 for pay weeks commencing on or after 2 April 2017.

5. Increase in Statutory Sick Pay

The weekly rate of Statutory Sick Pay will increase to £89.35 from 6 April 2017.

6. Increase in compensatory awards and the amount of a week’s pay

The maximum compensatory award for unfair dismissals taking effect from 6 April increases to £80,541.

As of that date, a week’s pay (used to calculate statutory redundancy payments and the basic award in unfair dismissal claims) increases to £489.

7. Immigration Skills Charge

Employers that sponsor skilled workers under tier 2 of the immigration points-based system (for workers coming from outside the European Economic Area) will have to pay a levy of £1,000 per certificate of sponsorship per year (£364 for small employers and charities).

The levy will apply in relation to each worker under tier 2, although there are some exemptions.

The Immigration Skills Charge is due to come into force on 6 April 2017.

The introduction of the Immigration Skills Charge is intended to encourage employers to focus on 'home grown' talent, and to invest in training British workers to fulfil specialist roles that migrant workers would otherwise fill.

8. Salary Sacrifice Schemes

Tax and national insurance contributions savings will be removed for all tangible benefits under a Salary Sacrifice arrangement with the exception of those relating to pensions, childcare, cycle to work and ultra-low emission cars.