Employment law 2017 - what can retailers expect?
2017 looks set to be a busy year in employment law in light of mandatory gender pay gap reporting, the apprenticeship levy and Brexit issues. Here are the main developments and upcoming legislation that retail employers should watch out for.
1. Gender pay gap reporting
Readers will no doubt be aware of the impending requirement for certain employers to publish details of their gender pay gaps. The Equality Act 2010 (Gender Pay Gap Information) Regulations (the Regulations) have now been published in final form and are due to come into force on 6 April 2017.
The Regulations will require all private sector organisations with at least 250 employees to publish details of their gender pay gap, based on a snapshot of pay data as at 5 April 2017. Data will need to be published no later than 4 April 2018, with employers being required to publish their pay gap figures annually after that. The Regulations extend not only to basic pay but also require employers to take steps to calculate and publish details of bonus pay gaps.
While the retail sector is by no means the worst performer in pay gap statistics, the sector is already being targeted with equal pay claims as evidenced by the several thousand equal pay claims against Asda.
While having a pay gap will not necessarily mean an employer has an equal pay issue, the requirement to publish pay gap data may provoke further equal pay claims against employers in the sector and careful consideration will need to be given to the explanatory narrative to accompany the raw pay gap data.
The Prime Minister has announced that she intends to trigger Article 50 of the Treaty on the European Union before the end of March 2017, thereby beginning the formal process of the UK leaving the EU. This will not result in immediate changes from an employment law perspective.
Although many UK employment rights are derived from EU law, leaving the EU will not bring about any changes to those rights however the potential implications for the future of employment rights are clearly significant. In any event, it remains to be seen whether the Prime Minister will have the freedom to trigger Article 50 as she plans.
The Government’s appeal against the High Court decision that Article 50 could not be triggered without Parliamentary approval was heard by the Supreme Court in December 2016. The decision is expected in January 2017.
3. Apprenticeship levy
The funding of apprenticeships will be changing in April 2017 as a result of the introduction of the new apprenticeship levy (part of the Government’s initiative to fund three million new apprenticeships by 2020). UK employers whose annual pay bill exceeds £3 million will be required to pay 0.5% of their pay bill via PAYE by way of levy sums.
Employers will benefit from a £15,000 allowance to offset against the levy. English employers will access their levy sums through an account with the Digital Apprenticeship Service, with the Government adding an additional 10% top up to the levy sum each month. Separate arrangements will be put in place for Scotland, Wales and Northern Ireland.
Employers who pay the levy can use their levy sums to cover the cost of apprentice training, assessment and certification from approved providers. The new rules also affect employers who will not be subject to the levy; they will be able to benefit from the new funding system from May 2017, with 90% of their training costs being funded by the Government.
4. Minimum wage changes
Increases to the national minimum wage and the national living wage will be aligned from April 2017, with changes to both taking effect on the same date. On 1 April, the national living wage will rise to £7.50 per hour and the adult rate of the national minimum wage will be £7.05 per hour.
5. Immigration skills charge
Employers who sponsor foreign workers with a tier 2 visa will have to pay an annual charge of £1,000 per worker (£364 for small employers and charities) from April 2017.
6. Tax-free childcare scheme
The Government’s new tax-free childcare scheme is expected to be launched in early 2017. The scheme allows working families to claim 20% of childcare costs for children under 12 (or children with disabilities under 17) from the Government.
The costs that can be claimed will be capped at £2,000 per year and there are certain eligibility requirements in terms of minimum and maximum income levels.
Existing employer-supported childcare voucher schemes will remain open to new entrants until April 2018 and existing members of such schemes will be able to continue to access childcare vouchers (and the associated tax and NICs benefits) for so long as their employer maintains the scheme.
However, after the launch of the new tax-free childcare scheme, employers will no longer be able to offer childcare vouchers to new employees on a tax-exempt basis. In addition, we expect free childcare to be extended in September 2017.
7. Salary sacrifice schemes
The Government will make changes to the tax status of salary sacrifice benefits with effect from April 2017, with most salary sacrifice schemes becoming subject to the same tax as income. The changes follow the plans set out in the Government’s 2016 Autumn Statement.
Arrangements in place before April 2017 will be protected until April 2018 or April 2021, depending on what they cover. The change will affect different salary sacrifice arrangements in different ways but only a few salary sacrifice arrangements will continue to benefit from tax and NICs relief: pension contributions, childcare, cycle to work schemes and ultra-low emission cars.
Overall 2017 promises to be an interesting year in employment law, with plenty to keep retail HR professionals busy.
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