Autumn 2016 employment law update

This is a round-up of the main employment law changes that have recently come into effect, including those taking place from autumn 2016. Emma Thompson, employment law specialist at Thackray Williams outlines the main changes and the action you need to take as a result.

National minimum wage rises

The national minimum wage is reviewed every year and traditionally any increases come into force in the autumn. The new hourly rates from 1 October 2016 are:

• adult rate (21 to 24): £6.95;
• youth development rate (18 to 20): £5.55;
• young workers’ rate (16 and 17): £4.00; and
• apprentice rate: £3.40.

It is understood that these rate changes will only apply for six months because the government has decided to align all further changes with the national living wage changes, which will take effect on 1 April each year.

This also means that the national living wage, payable to workers aged 25 and over, will not go up on 1 October 2016 as expected but will change on 1 April 2017. The national living wage is currently £7.20. The Low Pay Commission is set to recommend to the government later in the month the level of rates to apply from April 2017.

The accommodation offset limit has risen to £6.00 per day.

Employers should ensure that staff have been paid the correct new rates from 1 October 2016. It might be a good idea to keep a record of staff birthdays triggering a change in the wage rate payable. In August the government published a long list of employers to be named and shamed for failing to pay their workers the national minimum wage. Between them the 197 companies owed £465,291 in arrears. The employers ranged from football clubs and hotels to care homes and hairdressers. All of the money owed to these workers has now been paid back to them. If you need assistance on staff wages, please contact us for legal advice.

Statutory parental pay and sick pay rates remain frozen

The annual increase in the weekly rates of statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory shared parental pay has not taken place in 2016. The rates usually increase every year but a fall in the consumer prices index has meant no uplift for 2016/17. As a result, they all remain fixed at their current rate of £139.58 per week or 90 per cent of the employee’s average weekly earnings, if this figure is less than the statutory rate. Statutory sick pay also remains the same for the tax year 2016/17 at the rate of £88.45 per week.

In addition, the lower earnings limit, that is, the minimum amount an employee must earn in order to qualify for statutory sick pay and the statutory parental payments, is unchanged at £112 per week.

If you are working out your payroll budget for 2016/17, you can use the rates to work out how much to set aside to pay employees on family-friendly leave or taking sick leave.

Calculating holiday pay

Where overtime has become part of a worker’s normal work pattern, it should become part of their normal pay too. Overtime should also be included in the calculation of holiday pay in respect of the first four weeks of annual leave under the Working Time Regulations 1998.

You may need to review your policies and the amount and regularity of voluntary overtime being done. If employees undertake voluntary overtime so regularly that payment for it becomes a normal feature of their pay, you will need to include it in holiday pay.

Immigration Act 2016 changes

From 12 July 2016 it has been made easier for employers to be found culpable for the criminal offence of employing illegal workers. They will fail the test if they are considered to have ‘reasonable cause to believe’ that a person is an illegal worker, rather than needing actual knowledge of illegal working. The maximum custodial sentence for employing illegal workers has increased from two to five years, along with a potential unlimited fine. This is over and above the £20,000 fine per illegal worker. All employers should take steps to ensure that you obtain the right documents for each new person you hire. We can help you adapt your recruitment policies to cover the necessary checks.

Mandatory gender pay gap reporting

The government is committed to closing the difference in pay between men and women. Mandatory gender pay gap reporting was due to come into force on 1 October but has now been delayed until next April. This will make it compulsory to publish information about any difference in pay between men and women. This only applies to employers with 250 or more employees. If this affects you, consider carrying out an audit as soon as you can to find any potential differences in pay and identify ways to close the gap and reduce the risk of equal pay claims and penalties under the new legislation. All employers should ensure that their equal opportunities policy covers equal pay.

Brexit

This update would not be complete without a brief mention of Brexit. Theresa May has stated that the UK will begin the formal Brexit negotiation process by the end of March 2017. There are no immediate implications in relation to employment law or European migrant worker rights. That said, it might well be worthwhile for EEA nationals who have lived in the UK for five years while working, studying, actively seeking work or being financially self-sufficient to apply for permanent residence. There is no guarantee that they will have any preferential status at the date of Brexit but it is likely to be a useful step to take now. We will have to wait to see which of the employment legislation stemming from Europe may be changed following our exit, if any.

Please contact Emma Thompson for advice if you have any queries on these changes or you would like us to help you update your policies.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.