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Impending Employment Law Changes for 2017

By Stephen Cowburn

As MDs think about the New Year or start planning for the next financial year there are a number of forthcoming employment law changes that may affect you and your business.

  1. Gender Pay Gap

True this applies only to large employers (employing over 250 employees) but it is likely to be cascaded down to the SME sector in coming years. So why do something about this now? Gender pay gap reporting applies both to bonuses and pay. If there are discrepancies between male and female workers on either score when employees are doing the same job, there are likely to be fines, the cost of immediate remedial action and potential claims for back pay equalisation going back 7 years.

The reporting requirement for large employers will be to publish:

  • the difference in mean pay between male and female employees;
  • the difference in median pay between male and female employees;
  • the difference in mean bonus pay between male and female employees;
  • the difference in median bonus pay between male and female employees;
  • the proportions of male and female employees who were paid bonus pay; and
  • the proportions of male and female employees in each quartile of their pay distribution.

This should be a relatively quick job for the SME to see if there are any discrepancies and, in any event, is good practice to check that there is no unconscious bias creeping into pay decisions. Unless there is objective performance criteria to explain the difference, MDs might well consider putting in place a remedial action plan where appropriate. Given that SMEs are unlikely to be affected for several years, it gives MDs the opportunity to manage any discrepancies over a number of pay rounds.

  1. Apprenticeship Levy

SMEs will be able to receive government funding towards the costs of apprenticeship training and assessment through co-investment, with the likely date of this new system of funding in England coming into effect from 1st May.

The Government will pay 90% of the price agreed with the training provider, up to the maximum allowed by the funding band for the relevant apprenticeship standard or framework.

Employers with fewer than 50 employees will not be required to pay a contribution to the cost of the apprenticeship where the apprentice is aged 16 to 18 inclusive, or aged 19 to 24 inclusive if he or she has previously been in care or has a local authority education, health and care plan. The Government will pay 100% of the training and assessment costs in these circumstances.

  1. Changes To Rules Employing Foreign Workers

From April 2017, an immigration skills charge will be introduced, so that SMEs that employ migrant workers under Tier 2 of the points-based system of immigration will be subject to a levy of £364 per certificate of sponsorship per year. The immigration skills charge will be in addition to current fees for visa applications.

In April 2017, the minimum salary threshold for “experienced workers” applying for a Tier 2 visa will increase to £30,000. New entrants to the job market, and some health and education staff will be exempted from the salary threshold until 2019.

  1. National Minimum Wage

Cycles for national minimum wage increases – including the National Living Wage – will be aligned, with the next round of changes taking effect on 1 April 2017.

From 1 April 2017, the rates payable will be as follows:

  • For workers aged 25 or over, the rate will be £7.50 per hour (the National Living Wage).
  • For workers aged at least 21 but under 25, the rate will be £7.05 per hour.
  • For workers aged at least 18 but under 21, the rate will be £5.60 per hour.
  • For workers aged under 18 who are no longer of compulsory school age, with apprentices excepted, the rate will be £4.05 per hour.
  • For apprentices aged under 19 and apprentices aged 19 or over but in the first year of their apprenticeship, the rate will be £3.50 per hour.
  1. Interns

Not a change but linked to the previous point about the national minimum wage, we often get asked about what an intern should be paid, if anything at all. Whether an intern qualifies for the national minimum wage depends on whether or not he or she satisfies the definition of a “worker”. Where, under an agreement with an organisation, the intern is obliged to work for it personally, the definition is likely to be satisfied and he or she will be entitled to the national minimum wage. However, if the intern is only observing or shadowing employees of the organisation, without undertaking any work him- or herself, he or she is unlikely to be a worker and will, therefore, not be entitled to the national minimum wage. If the latter applies we would recommend that you consider paying travel expenses and subsistence as a gesture of goodwill and a way of promoting your company for the future.

There are quite a range of employment law changes coming up this year. If any of these may affect you, then give us a call for a confidential discussion to talk these changes through. I can be contacted via stephen.cowburn@hcbusinessadvisors.co.uk or by phone on 07974 425361.

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