According to Marianne Calnan of CIPD, the new legislative changes in the UK are an opportunity to rethink the traditional way of doing things, and ensure your organisation is compliant with so many new regimes.
From apprenticeship levy to gender pay reporting to the minimum wage, People Management rounds up key legal and practical changes coming to the UK in April
The government wants three million new apprenticeships by 2020 – and it plans to fund them with a new payroll tax that has broad implications for the way apprenticeships are organised, shifting responsibility away from training providers and on to employers.
When it comes into force on 6 April, employers in England with a paybill of £3m or more will pay 0.5 per cent of their monthly payroll as a levy via PAYE.
This CIPD feature explains, plenty of employers are already innovating and introducing new apprenticeship schemes. But there have been worrying reports of ‘kickbacks’ from training providers and the rebadging of graduate schemes. And with weeks to go before the levy came into force, City & Guilds found that a third of eligible employers were still unaware of its existence.
|The apprenticeship levy|
Limited salary sacrifice tax advantages
Employees currently use salary sacrifice arrangements to pay for everything from white goods to gym memberships. But that is set to change dramatically when the tax and national insurance contribution advantages of many such arrangements come to an end.
Company cars, parking, private health schemes and health screening checks, gym memberships, mobile phone contracts, computers, accommodation and school fees are among the benefits-in-kind that will be taxed through payroll for the first time from 6 April.
Certain transitional arrangements exist for plans already in place before April 2017, which are protected until April 2018 or April 2021 in some cases. And pension contributions and advice, childcare, cycle-to-work schemes and ultra-low emission vehicles remain exempt from tax.
Minimum wage increases
The national living wage for those aged 25 and over is due to climb from £7.20 per hour to £7.50 on 6 April – an increase of 4.2 per cent.
Other rises that will apply include: the national minimum wage for 21 to 24-year-olds moving from £6.95 to £7.05 an hour, 18 to 20-year-olds increasing from £5.55 to £5.60 an hour, 16 to 17-year-olds going up to £4.05, and the apprentice rate rising from £3.40 to £3.50.
Gender pay reporting
The gender pay gap is stubborn and troubling. But will the reporting regime getting underway this month prove the first step in its eradication?
Organisations with 250 or more employees will be required to publish the difference between mean and median hourly pay of full-time male and female staff, as well as the difference between mean and median bonus pay for male and female employees, and the proportions of men and women awarded bonuses. Employers’ proportions of male and female full-time staff must be recorded in the lower, lower middle, upper middle and upper quartile pay bands, which will lead to some complex calculations for the local number-cruncher.
Private and voluntary sector firms are required to base their data on staff employed on a ‘snapshot’ date of 5 April, while public sector organisations must use 31 March. Employers then have 12 months to publish the information on their website and a government website. The figures, along with a written statement confirming their accuracy, must be accessible to staff and the public.
It is unclear if and how pay gaps will be publicised as ‘league tables’, and sceptics suggest the broad figures do not address like-for-like inequalities between similar jobs. But Denise Keating, chief executive of the Employers Network for Equality & Inclusion, says: “These rules should not be seen as a punishment for employers but a real opportunity to create a difference in tackling the pay gap and increasing female representation at the higher levels of organisations.”
|Gender pay gap reporting|
|New guide explains how to:|
Statutory family-related, redundancy and sick pay
New limits on statutory redundancy pay come into force on 6 April; employers making redundancies must pay those with two years’ service an amount based on their weekly pay, length of service and age. Qualifying weekly pay is rising by £10, to £489.
The weekly rate of statutory sick pay will also increase from £88.45 to £89.35 from 6 April. To be entitled to these payments, employees’ average earnings must be equal to or greater than the lower earnings limit, which is rising to £113.
Statutory maternity, paternity, adoption and shared parental pay is increasing to £140.98 for weeks commencing on or after 2 April. These rates will reduce to 90 per cent of an employee’s earnings if this is lower than the statutory rate.
But the biggest change for parents has yet to come. Chancellor Philip Hammond confirmed in March that a new tax-free childcare scheme would be rolled out to eligible parents by the end of the year. This will provide those with children under 12 with an equivalent tax credit of up to £2,000 a year per child.
Immigration skills charge
Brexit will profoundly affect the nature of skilled migration, but a less-heralded change this month may have its own significance for employers. Businesses sponsoring skilled workers under tier 2 of the immigration points-based system will have to pay an annual levy of £1,000 per certificate of sponsorship from 6 April. A fee of £364 will apply to small employers and charities. The salary threshold for the tier is also due to increase to £30,000 for migrants who are ‘experienced workers’.
Changes to the IR35 tax system mean public sector employers will have to deduct tax and NICs from contractors’ pay at source, rather than allowing them to defer and claim expenses. It has been suggested that, from 6 April, many who work regularly in the public sector could lose 30 per cent of their take-home pay.
The reforms affect central and local government, the armed forces, the police, the NHS and Transport for London, among others. Some will prefer to work in the private sector; others will charge increased day rates. But HMRC is likely to be watching closely, with some pundits expecting the rules to be extended beyond the public sector in the future.