UNITED KINGDOM: Annual Update – Expected Labour Law Changes in 2017

European Union membership

UK to exit the EU:  The Brexit negotiation process is scheduled to start at the end of March 2017 and will last 2 years. This is subject to the Supreme Court’s decision on whether the Government can proceed without an Act of Parliament, which may cause a delay. The Judgment is expected in January.

Action required: None at present. There will be no immediate change to UK labour law.

Gender pay gap reporting

Introduction of new Regulations:  Employers with more than 250 employees in the UK will be required to publish information annually on the gender pay gap.

The new Regulations are expected to come into force on April 5, 2017. The first gender pay gap reports will be due in April 2018.

Action required:

(1) If this applies to you conduct an equal pay audit to identify if there is a gender pay gap and, if so, the reasons for it.

(2) Develop a strategy to address any gender pay gap.

Salary sacrifice

Limitation of tax benefits on salary sacrifice:  The benefits that qualify for tax and national insurance contribution relief when provided via salary sacrifice will be limited to enhanced employer pension contributions, certain childcare benefits, equipment provided under the Cycle to Work Scheme and ultra-low emission cars.

Effective from April 2017.

Action required: Understand the changes and review existing salary sacrifice arrangements to ensure compliance.

Financial Services sector: new Regulations

New rules for employers in the Financial Services sector:  Banks and insurers must comply with new regulatory reference rules for all candidates recruited to certain roles, including senior management positions, and those performing Financial Conduct Authority ‘controlled functions’.

Effective from March 7, 2017.

Action required:

(1) If applicable, become familiar with the new rules.

(2) Ensure that all staff in the affected roles meet the regulatory standards and conduct due diligence on candidates to ensure they are fit and proper.

Apprenticeship levy

Employers to pay a new apprenticeship levy:  Employers with an annual wages bill of more than £3 million in the UK must pay 0.5% of this bill towards apprenticeship training costs.

Scheduled to come into force in April 2017.

Action required:

(1) Calculate gross pay bill and assess levy liability.

(2) Assess current training arrangements and develop a strategy for spending the levy funds.

(3) Consider changes to payroll systems and processes to ensure the levy is paid.

Minimum wage

Mandatory increases in rates expected:  The National Living Wage (NLW) and National Minimum Wage (NMW) rates will increase.

Effective from April 1, 2017 .

Action required: None at present but ensure payroll practices are adjusted for April 1, 2017 if relevant.

Family Leave and Statutory Sick Pay rates

Increased payment rates:  Statutory maternity, paternity, shared parental and adoption pay will increase from £139.58 to £140.98 and statutory sick pay will increase from £88.45 to £89.35.

Effective from April 10, 2017.

Action required: None at present but ensure if applicable that payroll is adjusted prior to April 10, 2017.

Illegal workers

Hiring illegal workers will impact national insurance contributions:  Under new rules employers hiring illegal workers will be prevented from taking advantage of the employer’s national insurance contribution allowance.

Effective from April 2017.

Action required: Review all employees’ right to work documentation to ensure compliance with immigration requirements.

Caste discrimination

Proposal to introduce statutory protection against caste discrimination:  A consultation on making caste discrimination unlawful is expected, although it is not known when. In any event, the courts have decided that caste discrimination is unlawful.

Action required:

(1) Keep abreast of the current legal situation.

(2) Assume caste discrimination is unlawful due to case law, and review policies and procedures to ensure staff are not disadvantaged due to caste.

Corporate tax offence

Proposal to introduce new offence:  The government plans to introduce a corporate liability offence if employers fail to prevent employees evading tax.

Effective from April 2017 at the earliest.

Action required:  None at present but keep abreast of the current legal situation.

Data protection

Changes to UK data protection rules:  The General Data Protection Regulation came into force in May 2016 and will apply, subject to the UK’s exit negotiations with the EU, from May 2018. The Regulation contains numerous changes to current data protection practices to increase protection for individuals.

Action required: Become familiar with the new rules in due course and be ready to review and update data protection policies.