2017 looks to be a year of complete sea change in the world of HR and employment law. The beginning of the Brexit process, the approach of the EU General Data Protection Regulation and the elimination of various salary-sacrifice schemes mean that employers will have plenty on their plate in terms of new and ongoing legal obligations. Other legislative changes on the agenda include the rising National Living Wage, the introduction of the apprenticeship levy, and new gender pay gay reporting regulations for the private sector. Here’s a little more about the changes employers face, and how they should prepare for the new legislation.
Naturally, Brexit currently dominates discussion of how employment law will change in the coming years. In extricating ourselves from the European Union, the UK will no longer have to comply with a multitude of EU-related employment laws, including the Working Time Regulations which govern shift patterns for millions of workers.
However, this transition will not happen overnight. In fact, it’s expected that UK businesses will carry on as usual for some time, and employers are working on the basis that changes to workers’ rights and other regulations will take place in the next three to five years, rather than the next twelve months.
With the UK given two years to negotiate the terms of Brexit after triggering Article 50 (the date of which is still yet to be confirmed), businesses will still need to comply with one enormous new EU rule which will take effect in May 2018. The EU General Data Protection Regulation means that employers will need to carry out extensive audits of all personal data they collect on employees, to ensure it meets new conditions for employee consent.
As well as changing the way data is collected, this new regulation will demand that many companies amend their policies on privacy and subject access requests – no small feat for firms with hundreds of workers. Organisations which are not deemed compliant by May 2018 can risk enormous fines (4% of annual worldwide turnover, or €20 million), so it’s in the interests of all UK businesses to prepare for this regulation, even with Brexit on the horizon.
Private sector gender pay gap reporting
2017 will also see the introduction of gender pay gap reporting regulations in the private sector. All firms with more than 250 employees will be required to publish information on employee pay, bonus pay, as well as mean and media gender pay gap data. The first reports will cover April 2017 – April 2018, so companies will need to start collecting data very soon.
While there is nothing in the law which says companies must explain or address gender pay gaps among their workforce, companies do have an option to provide a narrative alongside their figures. This can clarify the reasons for the results, as well as demonstrating long-term plans to rectify any problems. While there won’t be any punishments for failing to address or explain the issues, refusing to do so could cause a public relations backlash.
Salary sacrifice schemes limited
Salary sacrifice schemes have long been used as a great way to bolster benefits packages for employees, offering tax savings on perks like pension savings, cars, gym memberships or mobile phones. While certain schemes have been protected (the Cycle to Work scheme, for example, as well as low-emission cars and pension contributions), schemes which include mobile phones, school fees, white goods, workplace parking and health screenings will no longer be eligible for tax perks.
For companies who use these arrangements as a way to attract top talent and offer generous benefits packages, 2017 will be time for a rethink. Any arrangements that are already in place will remain protected until April 2018, but this year companies must come up with appealing new ways to attract and retain talented candidates without salary sacrifice.
National minimum wage increases
In April 2017, the National Living Wage for working people aged 25 and over will rise from £7.20 to £7.50, with minimum wage rates for under-25s also rising incrementally. For full-time workers, this could be worth up to £500 per year, and employers should already be prepared for this change. It was unveiled by George Osborne in 2015 as a bid to get the minimum wage up to £9.00 by 2020. The new Chancellor of the Exchequer, Philip Hammond, looks set to continue with this plan, though experts still argue that the real ‘Living Wage’ should be £8.45 for the UK and £9.75 for London workers.
Introduction of the apprenticeship levy
Businesses with an annual payroll of more than £3m should also be fully prepared for the introduction of the apprenticeship levy, which comes into play on the 6th April 2017. These employers will now be legally required to pay a 0.5% levy on their pay bill, which will be used to fund apprenticeships over the next five years.
All employers will be able to benefit from the apprenticeship funding which will be generated as a result of the new scheme. Larger employers can access levied amounts for apprenticeships with a government top-up of 10%, while smaller employers will contribute just 10% towards the cost of running an apprenticeship scheme, with the government covering the rest.
Increased childcare for working parents
After pilot schemes in Portsmouth, Swindon, Wigan and York, a new system offering working parents of 3 and 4-year-olds 30 hours of free childcare per week will come into effect in 2017, doubling the 15 hours of free childcare currently available. This will allow more parents (especially mothers, who are usually primary caregivers) back into the workplace, as families are only eligible when both parents are working. With childcare also protected from any changes to salary sacrifice schemes, parents of young children will now have numerous options to take advantage of if they want to return to work.
2017: a year of preparation for larger changes
2017 may not be the year in which the UK leaves the European Union, but that doesn’t mean that employers shouldn’t start to prepare. Other large changes on the horizon, including the GDRP and gender pay gap reporting rules, mean that businesses have plenty of preparation to do in order to ensure they comply with legislation set to take effect over the medium-term.
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