over 1 year ago by Mike Pye

Need to Know: 2017 Employment Law Changes

Agreement Application Business 893894

When the buck stops with you, keeping on top of employment law is essential and April is the time of year when many changes come into effect. This article outlines the key employment law changes you need to be aware of and what they mean for your business.

Salary Sacrifice

The Change

The government has reduced the number of benefits you can offer via salary sacrifice. The table below shows those benefits that continue to attract full tax savings and those that only attract employee National Insurance Contribution (NIC) savings.

What This Means for You

If you currently offer any of these benefits via salary sacrifice, your tax savings will be protected until April 2018 when you need to start paying your employer NIC contributions and remove the employee tax saving element. School fees, low emission company cars and accommodation are protected until April 2021. Don’t forget to communicate these changes to employees well ahead of time.

If you renegotiate existing benefit contracts or want to start offering any of the benefits in the right-hand column of the table for the first time, you need to apply the new tax rules immediately. Calculate the true cost to your business by adding 13.8% (your employer NIC) to the cost of providing the benefit.

The Apprenticeship Levy

The Change

The government wants to improve the quality of training and education for apprentices as part of a broader strategy to increase the UK’s productivity. If it works, this is good news for the economy and businesses but comes at a cost for those of you with larger pay bills.

What this means for you – if your pay bill is more than £3m

From April 2017, you need to pay 0.5% of your salary bill into a central apprentice training fund via the PAYE process. There’s an annual allowance of £15,000 per employer which will be offset against your contributions. The government will also add 10% to your pot and, from May, you’ll be able to access your monies via an online account. From May, you’ll be able to use this to select and pay for government-approved training providers and advertise your apprenticeship vacancies. Funds expire after 24 months so plan your apprentice recruitment and training to ensure you reap what you’ve sown.

What this means for you – if your pay bill is less than £3m

Your business doesn’t have to pay the levy because the government’s £15,000 allowance balances out any amount you would have paid (0.5% of £3m is £15k). You can’t use the new apprentice training service until 2018, although until then, you can co-invest alongside the government towards the cost of apprenticeship training and assessment.

Gender Pay Gap Reporting

The Change

If you employ more than 250 people you will be required to calculate and publish gender pay gap information to display differentials in pay between male and female employees.

What this means for you

You’ll need to establish all eligible employees and workers (such as freelancers or agency workers) and provide details of the:

  • mean gender pay gap

  • median gender pay gap

  • mean bonus gender pay gap

  • median bonus gender pay gap

  • proportion of males receiving a bonus payment and proportion of females receiving a bonus payment

  • proportion of males and females when divided into four groups ordered from lowest to highest pay

Full details of the process and reporting requirements can be found at ACAS

Your results need to be published by 4th April 2018 on a publicly accessible area of your website with a signed statement verifying the information is accurate. You also need to upload your results to the government’s reporting website.

You can choose to provide a narrative to sit alongside the findings to identify successes and challenges and what action you intend to take to address any gender pay gap or other issue that’s disclosed.

Employing Foreign Workers

The change

From April 2017, employers with a turnover greater than £10.2m or employing more than 50 people will be required to pay an immigration skills charge. This only applies when sponsoring new hires on a tier 2 visa from outside the European Economic Area. The charge is £1,000 per person per

year (£364 for small employers). The minimum salary threshold for experienced workers over the age of 26 will increase to £30,000.

What this means for you

To meet the new rules, you’ll need to amend your hiring process to reflect these changes. Alternatively, you could commit to finding a UK national to fill the role. Using a recruitment partner will help you quickly track down quality homegrown candidates.

Statutory Pay Levels

The change

The national minimum and living wage cycles have been aligned so that all pay changes take effect from 1st April each year. The maximum weekly amount payable for statutory redundancy pay also increases from 6th April for employees dismissed with two years’ service or more. The amount is based on the employee’s weekly pay, length of service and age, and the new weekly maximum in the table below is used to cap the maximum amount payable.

What this means for you

Your business needs to apply the following statutory minimum payments from 1st April 2017.

Tax Free Pensions Advice

The change

Members of defined-contribution and hybrid pension schemes can take £500 from their pension pots, tax free, in order to fund independent financial advice in relation to their retirement planning.

What this means for you

You will need to work with your pension scheme provider to ensure there is a process available for employees to do this and to communicate how they can take advantage of this benefit.

Tax Free Childcare Scheme

The change

The government is launching a tax-free childcare scheme from 28th April to take the place of existing employer childcare voucher schemes for new scheme joiners. Eligible families will pay into a childcare account and receive a 20% contribution from the government up to £2,000 per child or £4,000 for disabled children.

What this means for you

If you already operate a childcare voucher scheme, employees who are in this scheme can continue to use it until their child turns 15. There can be no new joiners to the scheme and as employees leave and their children get older, your company operated scheme will naturally end.

New parents, or those not in an existing scheme, will need to join the governments new plan. Unfortunately, there’s not a huge amount of information available at the moment. Use the following to prepare communications and fill in the blanks once details become available.

So far, this is what’s known:

  • As long as both parents are employed or self-employed and expect to earn at least £115 a week, they will be eligible to join.

  • Where one or both parents earn more than £100k, they will not be eligible.

  • There will be a gradual scheme roll out:

    • parents of children under two will be eligible to sign up towards the end of April.

    • y the end of 2017, those with children aged up to 12 (17 for disabled children) will be able to enrol.

  • Parents with more than one child can cover all children under 12 (or 17 for children with disability) as soon as the youngest child qualifies for the scheme.

  • Employees will be able to sign up online through the gov.uk website.

  • The online service is also likely to allow them to claim their 15 hours per week of free childcare for children aged three and four; this allowance increases to 30 hours in September 2017.

The government has given employers, particularly large employers, a lot to do this year. But staying legal is only one half of the battle. Keeping employees up to date about changes that impact them will maintain employee engagement too.

For more details about the information in this article please visit the following sources:

https://www.gov.uk/government/publications/income-tax-limitation-of-salary-sacrifice/income-tax-limitation-of-salary-sacrifice
http://www.personneltoday.com/hr/autumn-statement-next-salary-sacrifice/
https://www.gov.uk/government/publications/apprenticeship-levy-how-it-will-work/apprenticeship-levy-how-it-will-work
https://www.gov.uk/browse/employing-people
https://www.gov.uk/government/news/tax-free-childcare-10-things-parents-should-know
http://www.personneltoday.com/hr/employment-law-changes-2017-hr-priorities/

For support with your people management, contact Vanessa Jackson 0161 359 3789 or by email at vanessa@weareadam.com.