Legislation Changes

National Minimum Wage and National Living Wage Increase April 2017

National Minimum Wage

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker’s age and if they are an apprentice.

The National Living Wage

The Government’s National Living Wage was introduced on 1 April 2016 for all working people aged 25 and over, and is currently set at £7.20 per hour. In April 2017 it will go up to £7.50. The current National Minimum Wage for those under the age of 25 still applies.

Key points

  • Most workers over school leaving age will be entitled to receive the NMW.
  • The NMW /NLW rate is reviewed annually by the Low Pay Commission.
  • HM Revenue & Customs (HRMC) can take employers to court for not paying the NMW/NLW.
  • There are a number of exemptions to those who receive the NMW/NLW. These do not relate to the size of the business, sector, job or region.
  • The compulsory National Living Wage is the national rate set for people aged 25 and over.It is important to note that these rates, which came into force 1 October 2016, apply to pay reference periods beginning on or after that date.
  • The rates from 1 October 2016 are:
  • Rates of pay
  • £7.20 per hour – 25 yrs old and over
  • £6.95 per hour – 21-24 yrs old
  • £5.55 per hour 18-20 yrs old
  • £4 per hour – 16-17 yrs old
  • £3.40 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.
  • The rate will then change every April starting April 2017. The rates from 1 April 2017 will be:
  • £7.50 per hour – 25 yrs old and over
  • £7.05 per hour – 21-24 yrs old
  • £5.60 per hour – 18-20 yrs old
  • £4.05 per hour – 16-17 yrs old
  • £3.50 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

April 2017: nine key employment law changes

The run-up to April is typically a busy time of year for HR professionals, with new employment legislation due to come into force. 2017 is no exception, with the most significant development being the introduction of the gender pay gap reporting duty for larger employers. However, there are a number of other key changes affecting all employers, regardless of their size.

1.Gender pay gap reporting rules come into force

Every year, larger employers (those with 250 or more employees) will have to report data about their gender pay gap, including bonus payments.

They will also have to report on the proportion of male and female employees in different pay quartiles and those who receive bonuses.

Employers in the private and voluntary sector must base their pay data on staff employed on a “snapshot” date of 5 April each year, starting from April 2017.

Bonus information must be based on the preceding 12-month period.

Organisations in the public sector must use 31 March as their snapshot date.

Employers have 12 months to publish the information on their own website and to upload it to a Government website. Therefore, employers in scope need to make sure that they can capture the necessary data.

2. Apprenticeship levy is introduced

The apprenticeship levy to fund apprenticeship training is due to come into effect on 6 April 2017. Employers will pay the monthly levy via PAYE if they have a paybill of more than £3 million.

Employers in England that pay the levy will be able to access funding through a digital service. The new system of funding is expected to operate from 1 May 2017.

Employers that do not pay the levy will also be able to access funding for apprenticeships.

Different arrangements exist around how apprenticeship funding will work will apply in Scotland, Wales and Northern Ireland (although the levy applies across the UK).

Also on apprenticeships – larger public-sector employers will have to meet apprenticeship targets.

3. There will be an immigration skills charge

Employers that sponsor skilled workers under tier 2 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 levy will apply in relation to each worker under tier 2, although there are some exemptions.

The immigration skills charge is due to come into force on 6 April 2017.

Other changes affecting employers that employ workers under tier 2 are as follows:

From April 2017, the Government is planning to 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”.

4. Reform to the intermediaries rules (IR35) in the public sector

The intermediaries rules (IR35) may apply where an individual supplies his or her services to a client via an intermediary, such as a personal service company.

If the individual could be regarded as an employee if the intermediary did not exist, the rules apply and the intermediary must make deductions for income tax and national insurance contributions (NICs) on the salary and wages that it pays to the individual.

New rules are expected to apply in relation to payments made from 6 April 2017 by public authorities paying a personal service company or other intermediary.

The public authority will have responsibility for establishing if the intermediaries rules apply and, if they do, making the tax and NIC deductions.

5. Tax advantages under salary-sacrifice arrangements to be limited

Benefits-in-kind attracting tax and NIC advantages when they are provided under a salary-sacrifice scheme, are to be limited.

This change is expected to take effect from 6 April 2017, with some exemptions.

Arrangements already in place are protected until April 2018, and until April 2021 for some benefits.

6. National minimum wage increases

On 1 April 2017, the rates of the national minimum wage will increase, despite an increase in most rates on 1 October 2016.

This is so that the timing of the annual increase in the national living wage rate for workers aged 25 or over can align with the other national minimum wage rates.

The rate for workers aged 25 and over (the national living wage) increases from £7.20 to £7.50. The rates within the other age bands also increase.

7. Pensions advice allowance is introduced

Members of defined-contribution and hybrid pension schemes will be able to take a tax-free amount of £500 from their scheme, to be redeemed against the expense of financial advice.

The allowance is expected to take effect from 6 April 2017.

The value of pensions advice provided by employers on which there is tax and NIC relief will increase from £150 to £500.

8. Statutory family-related pay and sick pay rates 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 2017.

The weekly rate of statutory sick pay will increase to £89.35 from 6 April 2017.

9. Statutory redundancy pay increases

New limits on employment statutory redundancy pay come into force on 6 April 2017.

Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age.

The weekly pay is subject to a maximum amount. From 6 April 2017, this is £489, increasing from £479.

National Minimum Wage

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker’s age and if they are an apprentice.

The National Living Wage

The Government’s National Living Wage was introduced on 1 April 2016 for all working people aged 25 and over, and is set at £7.20 per hour. The current National Minimum Wage for those under the age of 25 still applies.

Key points

  • Most workers over school leaving age will be entitled to receive the NMW.
  • The NMW /NLW rate is reviewed annually by the Low Pay Commission.
  • HM Revenue & Customs (HRMC) can take employers to court for not paying the NMW/NLW.
  • There are a number of exemptions to those who receive the NMW/NLW. These do not relate to the size of the business, sector, job or region.
  • The compulsory National Living Wage is the national rate set for people aged 25 and over.

Rates of pay

It is important to note that these rates, which came into force 1 October 2016, apply to pay reference periods beginning on or after that date.

The rates from 1 October 2016 are:

  • £7.20 per hour – 25 yrs old and over
  • £6.95 per hour – 21-24 yrs old
  • £5.55 per hour 18-20 yrs old
  • £4 per hour – 16-17 yrs old
  • £3.40 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

The rate will then change every April starting April 2017.

The rates from 1 October 2015 were:

  • £6.70 for workers 21 and over
  • £5.30 18-20 yrs
  • £3.87 for 16-17 yrs, who are above school leaving age but under 18
  • £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship

 

Statutory redundancy pay to increase from 6 April 2016

The maximum amount of statutory redundancy pay and the limit on the amount employment tribunals can award for unfair dismissal increase from 6 April 2016, under new legislation published today.

Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age.

The weekly pay is subject to a maximum amount. From 6 April 2016, this is £479, increasing from £475. This means that the top award of statutory redundancy pay also increases from £14,250 to £14,370.

The maximum statutory redundancy payment increases every year in line with the retail prices index.

Bar Huberman, employment law editor at XpertHR says: “Employers must factor in this increase when considering any redundancies, as it could have a significant impact on the amount they will need to pay out if they are making large-scale redundancies.

“Employers that operate an enhanced redundancy scheme will also need to consider whether or not to make changes to the scheme if it applies an uplift to the maximum amount of a week’s pay.”

The maximum compensatory award for unfair dismissal is also increasing to £78,962 from the current £78,335.

The rise in the unfair dismissal award applies where the effective date of termination is on or after 6 April 2016.

These increases are among a number of adjustments to awards that employment tribunals can make and payments that employers must make.

The new rates are set out in the Employment Rights (Increase of Limits) Order 2016, which comes into force on 6 April 2016.

National Living Wage April 2016

The Government’s National Living Wage is due to be introduced on 1 April 2016 for all working people aged 25 and over, and will be set at £7.20 per hour. The current National Minimum Wage for those under the age of 25 will continue to apply.

“Employers need to ensure that they are paying their employees the correct rates of pay in all instances. This page contains guidance and key points to remember. We encourage anyone unsure about minimum pay rates to try our online tool which can help identify any potential problems.” Who will be entitled to the National Living Wage?

Generally all those who are covered by the National Minimum Wage, and are 25 years old and over, will be covered by the National Living Wage these include:

  • employees
  • most workers and agency workers
  • casual labourers
  • agricultural workers
  • Apprentices who are aged 25 and over.

Penalties for failure to comply

With the introduction of the National Living Wage the penalty for non-payment will be 200% of the amount owed, unless the arrears are paid within 14 days.

The maximum fine for non-payment will be £20,000 per worker. However, employers who fail to pay will be banned from being a company director for up to 15 years.

The Low Pay Commission

The Low Pay Commission which currently recommends the level of the minimum wage will recommend any future rises to the National Living Wage rate.

The difference between the National Living Wage and the Living Wage

The new National Living Wage is different from the Living Wage, which is an hourly rate of pay and updated annually. The Living Wage is set independently by the Living Wage Foundation and is calculated according to the basic cost of living in the UK. Employers choose to pay the Living Wage on a voluntary basis.

National Minimum Wage

The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker’s age and if they are an apprentice. Any changes to the rate are normally introduced in October each year. Information is also available on this page for the National Living Wage which comes into force in April 2016.

Key points

  • Most workers over school leave age will be entitled to receive the NMW.
  • The NMW rate is reviewed annually by the Low Pay Commission.
  • The minimum rate depends on the age of the worker.
  • HM Revenue & Customs (HRMC) can take employers to court for not paying the NMW.
  • There are a number of exemptions to those who receive the NMW. These do not relate to the size of the business, sector, job or region.
  • The compulsory National Living Wage is the national rate set for people aged 25 and over.
  • The NMW rates for those aged under 25 change on 1 October every year whilst the NLW rate for those aged 25 and over will change every year on 1 April.

The rates from 1 October 2015 are:

  • £6.70 for workers 21 and over
  • £5.30 18-20 yrs
  • £3.87 for 16-17 yrs, who are above school leaving age but under 18
  • £3.30 for apprentices under 19 or 19 or over who are in the first year of apprenticeship.In October 2016 the new rates will be:

It is important to note that these rates, which come into force 1 October 2015, apply to pay reference periods beginning on or after that date.

  • £6.95 per hour – 21-24 yrs old
  • £5.55 per hour 18 – 20 yrs old
  • £4 per hour – 16-17 yrs old
  • £3.40  for apprentices under 19 or 19 or over who are in the first year of apprenticeship.

The rate will then change starting April 2017.

Minimum Wage and National Living Wage – an overview

Exemptions

There are a number of people who are not entitled to the NMW.

  • Self-employed people.
  • Volunteers or voluntary workers.
  • Company directors.
  • Family members, or people who live in the family home of the employer who undertake household tasks. 
  • All other workers including pieceworkers, home workers, agency workers, commission workers, part-time workers and casual workers must receive at least the NMW.

Agricultural Wages

Agricultural and horticultural workers in England employed after 1st October 2013 must be paid the appropriate NMW rate (see above).

Workers who were already employed before 1 October 2013 will still be entitled to the same terms and conditions set under their contract of employment; this may include overtime rates, agricultural wages, sick pay or dog allowance. DEFRA will continue to enforce complaints made by workers in respect of underpayments or non-compliance with terms and conditions of an Agricultural Wages Order before 1 October 2013 for up to six years after the breach occurred.

For agricultural workers in Scotland there is no change, and in Wales workers must be paid at least the Agricultural Minimum Wage, or the NMW if that’s higher.

Family member exemption

For this exemption to apply, workers must either be a member of the employer’s family, or live in the employers’ family home.

Either the worker is a member of the employer’s family and:

  • resides in the family home of the employer.
  • shares in the tasks and activities of the family.
  • Or the worker resides in the family home of the employer, and:
  • is not a member of that family, but it treated as such (in regards to the provision of living accommodation, meals and the sharing of tasks and leisure activities)
  • is neither liable to any deductions, nor to make any payment to the employer, or any other person, as respects the provision of the living accommodation or meals.
  • if the work had been done by a member of the employer’s family, it would not be treated as work.

Non-payment of the NMW

It is against the law for employers to pay workers less than the National Minimum Wage or to falsify payment records.

If an employer doesn’t pay the correct rate, a worker should talk to their employer and try to resolve the issue informally first. If this doesn’t work a worker may make a formal grievance to their employer.

A worker can make a complaint to HMRC who will investigate the complaint. If HMRC find that an employer hasn’t paid at least the National Minimum Wage, they can send a notice of arrears plus a penalty for not paying the correct rate of pay to the worker.

Working Time Directive – Mobile workers – September 2015

The European Court of Justice in a recent case gave the judgement that mobile workers who have no fixed place of work, and spend time travelling from home to the first and last customer, should have this time considered as working time. The Court add that because the workers are at the employer’s disposal for the time of the journeys, they act under their employer’s instructions and cannot use that time freely to pursue their own interest.

Acas is assessing the impact of this judgement on workers and employers in Great Britain, including whether it has any effect on the payment of the National Minimum Wage, and will provide more detailed guidance when it is available.

If you have further questions about the National Minimum Wage or National Living Wage or would like to discuss your alternatives when not being paid the right amount call the Acas helpline on 0300 123 1100.

 

Employment law changes in 2016: eight things employers should know

In 2016, employers will begin to feel the impact of the employment law reforms made by the first Conservative Government in nearly 20 years, with some controversial decisions affecting a number of HR areas.

The introduction of the national living wage sees a major change to minimum pay levels; this will be a big issue for many employers as they consider how to introduce it.

For the first time, large employers will also be required to publish details of their gender pay gap.

Aside from these two big reforms, other changes to which employers need to pay attention include the Trade Union Bill and new rules on exit payments for public-sector workers.

Read our guide to the key employment law changes in 2016 to ensure you have a head start to the year ahead.

Gender pay reporting begins

Large employers will be obliged to publish information about their gender pay gaps.

We know that regulations must be introduced by 26 March 2016 that will make it compulsory for organisations with 250 or more employees to publish information about the difference in pay between men and women. This will need to include details of the gap in bonus payments.

However, further details of what this means for employers are yet to be disclosed, including the particulars that they will need to provide and where the information should be published.

It is expected that employers will be given time to get to grips with the legislation before the reporting requirements come into force.

National living wage introduced

A significant change for the lowest-paid workers is the introduction of the national living wage on 1 April 2016.

For the first time, employers will need to pay staff aged 25 and over the national living wage, which will work as a new top rate of the national minimum wage. For those aged under 25, lower national minimum wage rates will apply.

The national living wage is initially set at £7.20.

The national living wage is separate to the living wage, a recommended rate based on the cost of living, used by the Living Wage Foundation.

Another change concerning minimum pay is the doubling of the penalty for failure to pay staff the national minimum.

Statutory parental pay rates and sick pay frozen

The Government has proposed that the annual increase in the weekly rate of statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory shared parental pay will not happen in 2016.

The rates normally increase every year, but a fall in the consumer prices index has meant no uplift for 2016/17.

Statutory sick pay will also remain the same.

Restrictions placed on public-sector exit payments

Payments made to public-sector staff when they leave their job are subject to new rules.

First, to limit excessive payments, exit payments for public-sector employees are capped at £95,000. There is no confirmed implementation date for this change.

Second, from 1 April 2016, there will be a requirement for public-sector employees with annual earnings of £100,000 or more to repay exit payments where they return to work in the same part of the sector within 12 months.

Trade union law amended

The Trade Union Bill reforms the law applying to trade unions, including placing more stringent requirements on trade unions before they take industrial action.

The measures include: increasing the voting threshold to 50%; introducing a requirement that 40% of all those entitled to vote in the ballot vote in favour of industrial action in important public services; setting a four-month time limit for industrial action after the ballot; and increasing the amount of notice to be given to an employer of strike action.

Workers given power to seek redress where employer ignores ban on exclusivity clauses

Exclusivity clauses in zero hours contracts were prohibited in 2015. New regulations that apply from 11 January 2016 aimed at addressing avoidance of the ban, give employees the power to make a complaint to an employment tribunal where they have been dismissed or subjected to a detriment following breach of an exclusivity clause.

New rules to protect apprenticeships

The Government bans organisations from using the term “apprenticeship” where it is applied to describe a scheme that is not a statutory apprenticeship, for example in a job advert.

There will also be an apprenticeship target for public-sector organisations.

Updated laws on employing foreign workers

The Immigration Bill makes various changes to the law applying to foreign workers, including: creating an offence of illegal working; requiring all public-facing public-sector employees to speak English fluently; and introducing an immigration skills charge for employers that use foreign workers.

MONITORING YOUR EMPLOYEES’ ELECTRONIC COMMUNICATIONS DOES NOT BREACH THEIR HUMAN RIGHTS – IN CERTAIN CIRCUMSTANCES

A symptom of the digital age we live in is that the majority of communications we make at work are done so electronically, be it over the telephone, through email, instant messaging or social media. Historically speaking, this is a relatively new way of working, which has resulted in an emergence of legislation and case law around how employers can monitor their employees to ensure they are using the computers and the internet to carry out their employment duties properly.

The REC Legal Helpline has seen an increase in number of calls from employers who have ‘caught’ their employees using work computers and telephone systems for personal activity rather than using them in the course of their employment. Methods of monitoring employees in this way can range from the relatively simple, such as checking internet history, to more complex software packages which record every button pushed by the employee.

Monitoring employees’ use of electronic communications was the subject of a recent ruling by the European Court of Human Rights in Barbulescu v Romania. This case was well publicised by the media and it is therefore important to consider what this case means for employers wishing to monitor their employees in a similar way

Employers should have a clear policy in place outlining what is expected of employees in terms of their use of company equipment and the internet. If you wish to monitor your employees, the policy should clearly set out the nature and extent to which the employees will be monitored. You should ensure that all of your employees have been made aware of the policy, as well as what the consequences will be for breaching it.

If you wish to take disciplinary action against an employee for breaching such a policy you will need to ensure that you have a legitimate business objective for monitoring your employees, and given this legitimate business objective you need to ensure the level of monitoring you have undertaken is both reasonable and proportionate.

The Information Commissioner’s Office Employment Practices Code encourages employers to advise their employees to mark any personal/private emails or messages as such. Where this has been done and it is clear that a particular communication is personal, you do not necessarily need to read the communication to establish that your employee has breached your company policy. Reading communications that you have already established are personal will run the risk of violating the employee’s Article 8 rights because your level of monitoring may not be a proportionate way to establish that your company policy has been breached

NATIONAL LIVING WAGE – 1ST APRIL 2016

From 1 April 2016 workers in the UK aged over 25 earning the minimum rate of £6.70 per hour will see a 50p increase. The National Living Wage supports the government’s vision of a higher wage, lower welfare, lower tax society. 

Read More.

National Minimum Wage increase – 1st October 2015

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. Find out what the current rates are and where to get help if you think you are being paid below the minimum wage rate.

Rates from 1 October 2015

The National Minimum Wage Rates will rise from 1 October 2015 to:

  • £6.70 – the main rate for workers aged 21 and over
  • £5.30 – the 18-20 rate
  • £3.87 – the 16-17 rate for workers above school leaving age but under 18
  • £3.30 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeshipThere are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:

Current NMW rates

  • £6.50 – the main rate for workers aged 21 and over
  • £5.13 – the 18-20 rate
  • £3.79 – the 16-17 rate for workers above school leaving age but under 18
  • £2.73 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Managing sickness absence

A health and work assessment and advisory service is to be introduced, offering free occupational health assistance for employees, employers and GPs. The service can provide an occupational health assessment after four weeks of sickness absence. Further information is available from GOV.UK – Fit for Work guidance.

Roll out during 2015

Holiday pay arrears

New regulation come into force to prevent claims of arrears of holiday pay going back more than 2 years.

1 July 2015

All young people to be in education or training until the age of 18 (England)

All young people in England will need to participate in education or training until the age of 18.

26 June 2015

Tax-free childcare scheme

Families where both parents work and each earns less than £150,000 per year will be eligible to receive 20% of their yearly childcare costs of up to £2,000 for each child or £4,000 if the child is disabled.

Autumn 2015

New statutory pay rates

Statutory pay for maternity, paternity, adoption and shared parental leave will increase to £139.58 per week.Statutory sick pay (SSP) rate will increase to £88.45 per week.

6 April 2015

Statutory adoption leave and pay

The statutory adoption leave will no longer have the 26-week qualifying period, and adoption pay will be brought in line with maternity pay, which will be 90% of normal earning for the first six weeks.

6 April 2015

Parental Leave extended to 18

The right to unpaid parental leave will be extended to parents of any child under the age of 18 years.

6 April 2015

Surrogate parents eligible for adoption leave

Provided they meet the eligibility criteria parents who have a child through surrogacy will be permitted to take ordinary paternity leave and pay, adoption leave and pay and shared parental leave and pay. Both parents will also be entitled to take unpaid time off to attend two antenatal appointments with the woman carrying the child.

6 April 2015

New limit for redundancy pay

The limit for a week’s pay when calculating redundancy pay will increase to £475.

6 April 2015

New compensation limits for employment tribunal awards

The limit for a week’s pay will increase to £475 when calculating compensation for basic unfair dismissal. The maximum compensation amount will increase to £78,335.

6 April 2015
For parents of children born or matched for adoption on or after 5 April 2015

Under this new system parents will be able to choose how they share the care of their child during the first year after birth. Mothers will still take at least the initial two week following the birth, following that they can choose to end the maternity leave and the parents can opt to share the remaining leave as flexible parental leave. Also under this new shared parental leave it is proposed to allow the husband, civil partner or partner of the pregnant women the right to unpaid time off to attend up to 2 antenatal appointments.

1 December 2014