2017 will be a busy year from an employment law perspective.
Significant legislative developments and changes will govern the HR agenda amid the ongoing uncertainty resulting from the Brexit vote.
Compliance projects for data protection and gender pay gap reporting will result in a substantial amount of increased work for companies, costs will rise as the apprenticeship levy and foreign workers sponsorship fees are introduced, while tax savings for employee benefits are significantly reduced.
Employers will also continue to deal with the implementation of restraints to public-sector exit payments and new trade union balloting rules.
Calendar-wise, up first, and the biggest issue likely to occur in 2017, is the triggering of Article 50 of the Treaty on the European Union. Potentially it could be at the end of March, but current legal challenges could delay this and there will be some impact on UK employment legislation derived from Europe when that point comes around.
The free movement of people and the foreign labour market will be the biggest issues. Companies in the region reliant on workers from the EU will be especially keen to see how it pans out.
The final regulations for gender pay gap reporting have now been published, subject to parliamentary approval, and are expected to come into force in early April 2017.
For the first time, private sector, voluntary sector and public sector organisations with 250 employees or more will be required to publish gender pay gap information including hourly pay and bonus pay, plus information on the number of men and women in each section of the organisation’s pay distribution.
Although the regulations are still in draft form, the deadline for the first report is expected to be April 2018, based on 2016/17 pay and bonus data.
On 6 April, the new apprenticeship levy on large employers is introduced meaning employers with an annual payroll of more than £3 million will pay a 0.5% levy on their total pay bill.
Large employers will access levied amounts, plus a government top-up of 10%, to fund apprenticeships from accredited training providers.
Smaller organisations, not required to pay the levy, will receive funding for accredited apprenticeships by contributing 10% towards the cost of an apprenticeship, the Government paying the rest.
A strategy for employing apprentices and how best to use the funding, which has a 24-month expiry window, will be crucial.
The National Living Wage for employees aged 25 and over increases to £7.50 in April 2017, together with other increases to the National Minimum Wage rates. Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay and Statutory Sick Pay rates will also increase from April 2017.
April 2017 also sees the curtailment of salary sacrifice schemes. From then, the only benefits that will continue to get tax and NICs relief, if provided through a salary sacrifice arrangement, will be: enhanced employer contributions to a registered pension scheme; childcare benefits; cycles and cyclists safety equipment under the cycle to work scheme, and ultra-low emission cars.
Arrangements made before April 2017 will be protected for one year, or for cars, accommodation and school fees, until April 2021.
Significant changes to Data Protection legislation take effect in 2018 and companies must be ready well before this date, because the scope of changes is huge.
Employers will need to carry out audits of employee personal data they collect and process to ensure that it meets GDPR conditions for employee consent.
New governance and record-keeping requirements mean employers will have to create or amend policies and processes on privacy notices, data breach responses and subject access requests.
As the GDPR will come into effect before the UK exits the EU, organisations that are not compliant by May 2018 risk fines of up to €20 million or 4% of annual worldwide turnover, whichever is higher.
The penalties mean it will be vital for employers during 2016 to familiarise themselves with the requirements and appoint a Data Protection Officer to ensure that they can respond to changes.
Trade union balloting requirements are also expected to come into force in 2017.
Employers sponsoring foreign workers with a tier 2 visa will pay an immigration skills charge of £1,000 per worker (£364 for small employers and charities) from April. This is in addition to current visa application fees.
The minimum salary threshold for “experienced workers” applying for a tier 2 visa will also increase to £30,000. New job market entrants, and some health and education staff, will be exempt from the salary threshold until 2019.
We still await implementation dates for restrictions on public-sector exit payments. Exit payments will be capped at £95,000 when public-sector employees leave their roles, including as a result of redundancy or voluntary exit.
Employees earning over £80,000 will have to repay exit payments if they return to any public-sector role within 12 months.
Overall, the 2017 changes mean some major projects for employers.
For further advice contact Mark Serby at [email protected] or 0114 224 2048.
