Hello and welcome to Integra’s spring employment law update March 2017
Spring is always a busy time for employment lawyers and 2017 is no exception.
Here are some of the key issues employers need to be aware of this Spring.
National Minimum Wage and national living wage
Further increases to National Minimum Wage rates take effect from 1 April 2017. The National living wage rate for over 25s increases from £7.20 to £7.50 an hour.
The other changed Minimum Wage rates will be:
- Ages 21-25: £7.05 (from £6.95)
- 18-21: £5.60 (from £5.55)
- Under 18s: £4.04 (from £4.00)
- Apprentices: £3.50 (from £3.40)
Annual increase in compensation limits
The annual increases in compensation payments have recently been confirmed. These apply to dismissals or detriments occurring on or after 6 April 2016. The main changes are:
- The cap on a week’s pay increases to £489 (from £479). This is used for various purposes including calculating statutory redundancy pay and the basic award for unfair dismissal.
- The maximum compensatory award for unfair dismissal increases to £80,541 (from £78,962).
The Government’s new apprenticeship levy comes into effect on 6 April 2017 and online registrations for the scheme opened on 13 February. What is slightly alarming is that recent research by City and Guilds suggested that up to a third of eligible UK employers were unaware of its existence.
The idea behind the levy is that larger UK employers will pay towards the cost of apprenticeship training. A large employer for these purposes is an employer with an annual wage bill of £3 million or more.
Where applicable the employer is required to contribute 0.5% of their annual wage bill, in return for which it is possible to claim vouchers equivalent to 10% of the employer’s monthly levy contribution to spend on apprenticeship training.
Employment Tribunal judgments online
The Ministry of Justice has started publishing Employment Tribunal Judgments online at:
There are already several hundred 2016 and 2017 decisions posted on the www.gov.uk site.
Whilst this is a welcome development possible issues for employers include:
- Risks involved in using published decisions in the pre-employment vetting process. For example, employers who do this run the risk of successful victimisation claims if a candidate is rejected because they pursued a discrimination claim against a former employer.
- The PR consequences for employers of having adverse Tribunal decisions published online and featuring in internet searches.
Taxation of termination payments
Employers will be aware that the first £30,000 of termination payments can generally be paid free of tax and national insurance contributions.
Currently, whether payments made in lieu of notice fall within the £30,000 depends on whether the contract of employment of the employee in question features a provision giving the employer the discretion to make a payment in lieu of notice – a “PILON” clause. If there is a PILON clause the notice payment is subject to tax and NI.
Legislation is due to come into effect in April 2018 which:
- Makes all payments in lieu of notice taxable, whether or not there is a PILON clause in the contract.
- Requiring payment of employer NI contributions on sums over £30,000 (which are not currently payable).
- Ensuring payments for injury to feelings in discrimination cases which go over the £30,000 limit are subject to tax.
Reminder – gender pay gap reporting on its way
Larger employers are reminded that the first “snapshot” date of gender pay reporting is looming.
The rules which came into force in October last year require private sector businesses with more than 250 employees to carry out the required calculations regarding their gender pay gap as at 30 April 2017 and publish this information no later than April 2018. This process will then have to be repeated on an annual basis afterwards.
Employers affected by the new rules will be required to publish information relating to:
- Differences in mean pay between men and women
- Differences in median pay between men and women
- Differences in bonuses between men and women
- The proportions of men and women who receive bonuses
- The gender pay split broken down into quartile pay bands
Details will then be collated and published in Government league tables ranking companies by the size of their gender pay gap and differences in bonuses paid to male and female staff.
Whilst it is some time until figures have to be published, affected employers are well advised to start looking at the calculations now to identify the level of any gender pay gap in their organisation and devise a strategy for addressing this in the future.
To discuss these issues or any other employment law problem get in touch with Integra at email@example.com or 0115 987 6790 or 0203 478 1260.
*Image courtesy of James Barker at FreeDigitalPhotos.net