Employment law for employers: What’s changing in 2017?
With employment law legislation changing with such regularity, it can be difficult for business owners to keep up-to-date with the latest developments.
Let’s be honest, keeping on top of what is new in employment law can be a challenge. But with a number of important legislative changes and developments taking place in 2017, it’s worth making sure you’re clued up for the year ahead.
1. Minimum wage + national living wage increases
The national living wage will rise to £7.50 in April for those aged 25+. At the same time, the personal tax allowance for lower-rate tax payers will increase to £11,500.
For the first time, increases to the minimum wage and national living wage will be aligned so that they take place at the same time in April, rather than in October and April respectively.
2. Changes to salary sacrifice schemes
Many organisations offer staff the option to exchange part of their salary for a non-cash benefit, such as gym membership or parking. By lowering their salary, employees pay less tax and national insurance, and employers save on NI contributions.
However such salary sacrifice schemes will lose their tax-efficient status from April.
Anything in place before April will be protected until April 2018 and arrangements for cars, accommodation and school fees will be protected until 2021. Pension contributions childcare and cycle-to-work schemes will remain unchanged.
3. Tax-free childcare scheme comes into force
Childcare vouchers will no longer be available to new applicants after April 2018; however a tax-free childcare scheme will be introduced for working parents in early 2017.
Working parents will be able to claim 20% of their annual childcare costs, up to £2,000 per child. This scheme supersedes the current employer-supported voucher scheme and will be rolled out gradually over the next 12 months.
To qualify, both parents must be working at least 16 hours per week (at minimum wage rates) but not earning more than £100,000 per annum. They must have at least one child aged under 12 when the scheme starts and can’t be claiming tax credits or universal credit.
4. Apprentice levy changes
From April, all employers with an annual payroll of more than £3 million will pay a 0.5% fee on their total salary bill to fund apprenticeships and training.
As a result, firms that offer accredited apprenticeships but who are too small to pay the levy (around 98% of those in England) will be required to contribute just 10% towards the cost of apprenticeship training with the government paying the remaining 90%. They’ll also receive further financial support of up to £2,000 per apprentice.
5. Gender pay gap reporting begins
From April 2017, organisations with 250 employees or more will be required to report on gender pay gaps for the first time. This will apply to private and public sector employers, as well as those in the voluntary sector.
The first reports, based on pay and bonus data from 2016/17, are expected in April 2018.
Organisations will be obliged to release information detailing salary and bonuses paid, as well as information on the number of men and women in each quartile of the firm’s pay distribution.
6. Immigration skills charge
Organisations employing foreign workers with a tier 2 visa will pay £1,000 per worker as an immigration skills charge from April 2017. This is reduced to £364 for small employers and registered charities.
Furthermore the minimum salary for anyone applying for a tier 2 visa will increase to £30,000; however there are some temporary exemptions to this – mainly to those in the health and education sector.