With Brexit dominating the political agenda, it is perhaps understandable that we are not seeing the same amount of legal developments this year as we have done in previous years. Although the main changes in April involve gender pay gap reporting and the apprenticeship levy there are a number of other changes that employers should be aware of.
Gender Pay Gap Reporting
UK employers with more than 250 employees are required to carry out their first gender pay gap data analysis on 5th April 2017, although they will have a further 12 months to publish the data. Publication should include the gender pay gap, the bonus pay gap, the proportion of each gender receiving a bonus over a 12 month period, and the distribution of men and women working across four equally divided pay quartiles.
Pay data must be based on the "snapshot" date and employers will be required to publish their gender pay gap information within 12 months of that date and annually thereafter. The snapshot date is 5 April in the private and voluntary sectors and 31 March in the English public sector. The regulations are complex and employers should carefully consider who is included in the calculations, and what constitutes pay, allowances and the definition of bonus. The CMS Gender Pay Gap Toolbox provides more detailed guidance and practical advice to help employers prepare for the change.
From 6 April UK employers with an annual pay bill of £3 million or more will be required to pay an apprenticeship levy at a rate equivalent to 0.5% of their payroll costs. Employers will receive an allowance of £15,000 to offset against their levy payment. In England, the levy funds will be accessible to employers through a digital service to help meet the cost of providing apprenticeships. Different arrangements for apprenticeship funding exist in Scotland, Wales and Northern Ireland, although the levy applies across the UK.
The devolved authorities are yet to provide clarity on how levy funds will be accessed to assist with the provision of training. Employers that do not pay the levy will also be able to access funding for apprenticeships.
The Institute of Apprenticeships The Enterprise Act 2016 (Commencement No. 3) Regulations 2017 come into force on 1 April 2017, establishing the Institute of Apprenticeships and creating an offence which bans training providers in England from using the word "apprenticeship" except to describe a statutory apprenticeship. This does not apply in Scotland.
IR35: Public Sector Tax Changes
IR35 is designed to combat tax avoidance by workers supplying their services to clients via an intermediary company, who would otherwise be considered employees of the client if the intermediary was not used. The aim is to catch these “disguised employees” (who seek to avoid paying employee tax by supplying their services through an intermediary and paying themselves in dividends) and to ensure that they pay the appropriate Income Tax and NICs.
From April, the responsibility for deciding if IR35 applies will shift from the worker’s intermediary to the public authority client receiving the services. The client will then be responsible for calculating Income Tax and primary NICs, deducting them from the intermediary’s fee and paying the relevant amounts over to HMRC. These new measures apply to payments made on or after 6 April 2017, and include any subsequent payments made for contracts entered into before that date.
Immigration Skills Charge
Employers that sponsor skilled workers under tier 2 (General) and tier 2 (Intra Company Transfer) of the immigration points-based system will have to pay a levy of £1,000 per certificate of sponsorship per year (£364 for small employers and charities).
The Government will also introduce a requirement for those workers coming to the UK under tier 2 for certain posts in the education, social care and health sectors, to obtain criminal records certificates from the countries that they have lived in over the last 10 years.
The tier 2 (General) salary threshold will increase to £30,000 from 6 April 2017, for migrants who are “experienced workers”.
On 1 April 2017, the rates of the national minimum wage for all age bands will increase again from the rate set in October 2016, to align with the timing of the annual increase in the national living wage rate. The national living wage for workers aged 25 and over will increase from £7.20 to £7.50.
Statutory Pay Increase
The weekly rate of statutory maternity, paternity, adoption and shared parental pay will increase to £140.98 for pay weeks commencing on or after 2 April. The weekly rate of statutory sick pay will increase to £89.35 from 6 April.
Tribunal Compensation Limits
The maximum compensatory award for unfair dismissal will rise on 6 April from £78,962 to £80,541. At the same time the maximum amount of a week's pay, used to calculate statutory redundancy payments and various awards including the basic and additional awards for unfair dismissal, will increase from £479 to £489.
Further changes also include the limitation of certain benefits-in-kind, which attract tax and NIC advantages when provided under a salary-sacrifice scheme; and the introduction of a pension’s advice allowance for members of defined-contribution and hybrid pension schemes, who will be able to take a tax-free amount of £500 from their scheme, to be redeemed against the expense of financial advice.