- October 4, 2016
- Posted by: admin
- Category: Autum Winter 2016 Newsletters
Employment Legislation – Recent important changes.
Not to be confused with the National Living Wage which kicks in at age 25! From 1 October the rates for the NMW will be changed to: aged 21 and over but under 25 – £6.95 (was £6.70); over 18 to under 21 – £5.55 (£5.30); 16/17 years old – £4.00 (£3.87) and finally apprentices £3.40 (£3.30). The plan is to review these again from April 2017 so that the NMW and the National Living Wage become effective at the same date each year (April)
Gender Pay Reporting
One (of the many!) consequences of the Brexit vote is that Government time and focus has been taken away from other issues. Some important employment initiatives are suffering as a result of lack of time and resource. We were expecting the Gender Pay Gap Regulations to come into force, but that has been pushed back to April 2017. Information on how the Apprenticeship levy will work in practice has also been delayed; which is very poor given that these significant changes have a real impact on businesses.
Following an earlier consultation and the 2016 Budget announcement, the Government has published draft legislation and indicated that from 6 April 2018:
- It will no longer be necessary to consider if payments made in lieu of notice (PILON’s) are contractual or not to determine tax liability. Effectively anything that the employee would have received if they had remained in employment and worked out their notice will be taxable and subject to NIC, whether or not their employment has ended early.
- The rules for income tax and employer NIC will be aligned so that both will be payable on any termination payment that exceeds £30,000. Interestingly HMRC has decided to retain the employee NIC exemption where the payment exceeds £30,000. Whilst this is good news for the employee it will result in complexity for the employer in processing these amounts correctly through the payroll.
- The Foreign Service exemption will be removed. This will impact employees who have worked overseas for a proportion of their period of employment
- The £30,000 exemption for both tax and employers NI will be retained. There was talk of providing a lower exemption and based on length of service but these have all been dropped.
HMRC are of the opinion that the vast majority of termination payments are less than £30,000 and will therefore remain free from income tax and NIC. However the change on non-contractual PILON’s will increase the tax payable on a number of termination payments albeit that it will simplify the position for employers.
These proposals will increase NIC costs and this may result in a reduction in the value of settlement offers.
New Whistleblowing rules
Large financial services employers are now required to take steps to encourage and protect Whistleblowers in their organisations. A new regulation applies to firms with turnover of at least £250 million per annum. A senior Whistleblowing “champion” has to be appointed, who will report to the Board annually on all Whistleblowing issues.
Two recent and conflicting opinions have been given by the European Courts over the wearing of religious headscarves in the workplace. One opinion was that the ban was justified, the other that it was not! The cases were referred to the Courts from Belgium and France. The sooner we get a full decision (rather than non binding opinions) the better!
Asda equal pay case
This dispute has received a lot of press coverage due to the potential impact across the retail sector. Some 7,000 current and former female employees of Asda are claiming that their work (stacking shelves in the stores) should be rated as equivalent to the (mainly male) roles in the distribution centres. The Court of Appeal has decided that the case can proceed to employment tribunal, not the High Court as Asda was proposing.
HM Courts and Tribunals service has announced that new employment tribunal judgments will be made available online from autumn 2016. Copies of specific decisions can be also ordered by post free of charge. The database will permit the public to search for first instance judgments from England, Wales and Scotland.
Past employment decisions at present will still only be available from Bury St Edmunds and Glasgow following the launch of the new online service. There has been no decision on whether past judgments will be available online
New Sunday working rights for employees on the way.
The Enterprise Act 2016 contains some additional protections for Sunday workers. Although the Government’s plans to extend Sunday working hours were defeated in the Commons, they are still proceeding with changes to workers rights. Sunday workers will be able to object to working more hours that their “normal” hours by serving notice on the Employer. They will also be protected against dismissal or other detrimental treatment as a result. There is no service required for this protection. The rights do not apply to staff who only work Sundays. More details are contained in the Enterprise Act, including sanctions on employers who fail to notify staff of these options; there is no commencement date as yet for these new rights.
From July 2016 employers will face tougher sanctions for employing illegal immigrants
The controversial Immigration Act 2016 will come into effect over the coming months through new regulations, but some provisions started from 12 July this year. These include prosecuting employers who have “reasonable cause to believe” that the person is an illegal worker. This will lower the burden of proof and is likely to expose more businesses to criminal prosecutions and fines. Prison sentences can now also be as much as 5 years.
Employing an illegal immigrant
Any employer found to employ an illegal immigrant will face criminal sanctions if it had “reasonable cause to believe” that they are an illegal worker. The Government has not yet provided any guidance about what sort of evidence is likely to show “reasonable cause” but it is clear that the burden of proof will be lower than the existing test and it will be easier to prove the offence.
Currently employers can only be prosecuted if they know that an employee was working illegally.
The custodial sentences that can be imposed will increase from 2 years to up to 5 years. Employers can also be fined (currently up to £20,000 per illegal worked employed).
To avoid criminal prosecution and/or civil penalties employers must be able to establish a statutory defence. This requires:
- Obtaining original proof of the right to work from prescribed lists;
- Checking the authenticity of those documents; and
- Keeping copies of the documents.
Immigration Officers will also be able to close a business (for up to 48 hours) where illegal working is suspected and the employer has already been issued with a penalty or has an unspent conviction for employing illegal workers.
Talking of Immigration…!
In the second half of 2015 the Home Office issued 1,217 illegal working penalties to businesses totalling £21.6 million!! If you don’t want to be adding to the Government’s coffers, do make sure you get the right document checks in place and keep accurate copies and records of the documentation viewed.
By the way; this is something we offer training on!
English- language requirement for customer-facing workers in the public sector
Public authorities will be required to make sure that all staff in customer facing roles can speak fluent English (or Welsh in Welsh authorities) and must set up a complaints procedure for members of staff to complain about poor language skills.
The Immigration Act 2016 introduced a new requirement that workers in the public sector in customer-facing roles speak fluent English (or Welsh in Wales). The requirement also applies to agency workers where the public-sector body is the hirer. A code of practice has been issued by the government setting out how to adhere to the requirements.
The necessary standard of language proficiency should be based on the individual’s role and factors such as:
- complexity of the topics being discussed;
- frequency and duration of verbal interactions;
- whether technical or specialist vocabulary is needed;
- whether the spoken word is supplemented by written communications.
Despite this new requirement to speak English employers should take care during the recruitment process. The Equality Act 2010 outlaws discrimination on the grounds of protected characteristics including disability and race. This means that when shortlisting candidates, criteria must not be linked to nationality, such as applicants’ accents or dialects, or disability, such as speech impediments.
If any existing members of staff fail to meet the English-speaking requirement, support them by offering training and suitable alternative roles before dismissal is considered, in order to avoid breach of contract or constructive dismissals claims.
Trade Union bill is passed.
The Trade Union Bill has concluded its passage through Parliament and is now an Act (The Trade Union Act 2016). No implementation date is yet set.
Key provisions are:
- requirement for at least 50% turnout in votes for industrial action
- in certain public services, including in the health, education, transport, border security and fire sectors, an additional threshold of 40% of support to take industrial action from all eligible members must be met for action to be legal
- setting a 6 month time limit (which can be increased to 9 months if the union and employer agree) for industrial action so that mandates are always recent
- requiring a clearer description of the trade dispute and the planned industrial action on the ballot paper, so that all union members are clear what they are voting for
- creating a transparent process for trade union subscriptions that allows new members to make an active choice of paying into political funds
- ensuring that payroll deductions for trade union subscriptions are only administered where the cost is not funded by the public
Apprenticeship Levy April 2017
From 6 April 2017, all employers with an annual pay bill over £3 million must pay a levy of 0.5% of their pay bill towards funding apprenticeships. Fewer than 2% of employers are likely to meet this threshold, but once triggered the levy applies across private and public sector businesses, irrespective of whether they employ apprentices or are already paying into an existing industry levy scheme. The levy will be paid to HMRC on a monthly basis via the PAYE system.
2016 Statutory Rates.
Despite announcing in January that the rates of payment for Maternity, Paternity, SSP etc remain unchanged for 2016; there is a small increase in compensation payments from Tribunals. From 6 April 2016 the calculation of a week’s pay goes up from £475 to £479; the upper limit for unfair dismissal, the compensatory award, rises to £78, 962 (from £78,335)
Cap on Exit Payments in Public Sector
Public sector employees (Earning more than £80k per year) will be required to repay a tapering proportion of a ‘qualifying exit payment’ if they return to the public sector within a period of 12 months under regulations – expected to come into force shortly. A £95,000 cap on the total value of exit payments for public sector workers will also be introduced, but no date has yet been given for its implementation