It may be a bit of an understatement, but 2016 can safely be called a year of surprises. A businessman who had never held political office was elected the next President of the United States of America; Leicester City won the Premier League at odds of 5,000/1; Team GB won even more medals at the Rio Olympics than they had in London four years prior; and, of course, the British public surprised the pollsters by voting in favour of the United Kingdom leaving the European Union.
We wrote in our Employment Update in April 2016 about the likely implications of a Brexit on employment law in the UK. We also prepared an Immigration special in July 2016 to reassure concerned EEA nationals regarding their rights. Although it has been more than six months since the referendum, we are sadly no closer to having any certainty over what this will mean in practical terms on either employment or immigration law. Indeed, at the time of writing the Supreme Court has yet to determine the Government’s appeal against the High Court’s decision which held that the triggering of Article 50 (the process by which the UK shall formally give notice of its intention to withdraw from the EU) required Parliamentary approval. The triggering of Article 50 itself will then lead to a further period of negotiations with the remaining EU Member States which is likely to last two years. All of this leaves a number of questions unanswered and a lot of issues up for debate.
So what can we be certain of in 2017?
National Living Wage and National Minimum Wage
The National Living Wage (NLW), which is applicable to those aged 25 and over, and the National Minimum Wage (NMW), which is applicable to those under 25 years old but above school leaving age, including Apprentices, will be reviewed every April. This April, the NLW will rise in from £7.20 per hour to £7.50, and the NMW will rise by 5p-10p (depending on the age of the worker).
Gender Pay Gap
A major focus of the upcoming legislative changes in employment law is the gender pay gap (the average hourly pay difference between men and women). Just this week the Resolution Foundation, a non-partisan think-tank focused on economic and social policy, published its analysis on the progress in female employment rates and found that the gender pay gap for those in their 20s was 5%, reflecting a significant improvement on previous generations. However, the findings showed that there remained a sharp rise in the pay gap after the age of 30, providing evidence that there is still work to be done to ensure equality.
In an effort to tackle this discrepancy, the Government have published draft regulations on gender pay gap reporting which are currently awaiting Parliamentary approval. The regulations are likely to come into force this April, and will include reporting requirements applicable to all private sector employers with 250 or more employees. These employers must publish data regarding the pay gap between their male and female employees, including any gender gap in annual bonuses (and the proportion of men and women who received bonuses). The requirement to publish the data will be applicable every year from April 2018 (based on data from 5 April 2017), and must remain available online for three years. Data regarding partners, including LLP members, is specifically excluded from these regulations.
Subject to the results of pilot schemes conducted since September 2016, the Government intends to double the current right to free childcare for working families with three and four year olds to 30 hours each week. It is anticipated that this will come into effect in or around September 2017.
In a further boost to workers with young children, a tax free childcare scheme is likely to be introduced which will allow working couples earning less than £100,000 each to receive 20% off childcare costs (up to a maximum of £2,000 per child up to the age of 12, or £4,000 per disabled child up to the age of 17).
Salary Sacrifice Schemes
The Autumn Statement, given to Parliament on 23 November 2016, announced that from April 2017, most salary sacrifice schemes will be subject to the same tax as cash income. Certain salary sacrifice schemes (pensions, pensions advice, childcare, Cycle to Work and ultra-low emission cars) will be exempt, whilst any arrangements in place before April 2017 will be protected for up to a year (or up to four years in respect of cars, accommodation and school fees).
Other Upcoming Changes
Other changes anticipated in the near future include:
- Changes to the taxation rules on payments in lieu of notice (PILONs), which will result in non-contractual PILONS of up to £30,000 no longer benefiting from the tax exemption currently available under the Income Tax (Earnings and Pensions) Act 2003. This is likely to be in force from April 2018;
- The Trade Union Act passed in May 2016 but is not yet in force, and the implementation date has yet to be decided. The aim of the Act is to limit the impact of industrial action on employers, providing protections such as a minimum 50% turnout on strike action votes;
- The Parental Bereavement Leave Bill will introduce an entitlement to two weeks’ statutory bereavement leave in the event of a child’s death at the same rate of pay as paternity pay or shared parental pay. The Bill is still in the early stages of Parliamentary process.
Matthew Cranton - Employment & Immigration
This article was first published on 5 January 2017 as part of our Employment Law Update series. Register above to receive our updates as soon as they are published, directly to your inbox!
This article is offered for general informational purposes only, and does not constitute legal advice. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views or opinions of Solomon Taylor & Shaw.