Employment law

The seven most important employment law issues in 2017

Business Advice | 12 December 2016 | 7 years ago

employment law
A lot could change in employment law next year, and employers should be ready.
Significant employment law changes are anticipated next year. Here, managing director at HR consultants Peninsula, Peter Done, gives his thoughts on what employers can expect.

The past 12 months have brought a number of challenges for business owners and managers throughout the UK, amid ongoing uncertainty resulting from the Brexit referendum vote.

In order to enter the New Year with a sound action plan, here is an essential summary for employers of the key employment law issues 2017 likely to affect employers and their business moving forward.

(1) Brexit

Since the referendum decision in June, Brexit has taken its vast share of press coverage. Article 50 is set to be triggered by the end of March 2017, starting the two year negotiating period.

Although no legal changes will take place, and Britain won’t leave the EU in 2017, the continued uncertainty around Brexit has the potential to affect employment and recruitment, especially where employers rely on large numbers of foreign workers to meet seasonal demands or work in undesirable sectors.

(2) Employment status and the gig economy

Arguably, the most important employment law decision of 2016 was that Uber drivers are workers rather than self-employed.

This case applied longstanding status principles to Uber’s business model, the likes of which are contributing to the growth of the so-called gig economy.

A judge in the London Employment Tribunal is currently hearing the first claim of four to be brought against similar companies operating similar styles of business. Alongside numerous tribunal claims, the government has launched a review of modern employment to consider how these new models and ways of working are affecting employment rights. We expect to see more rights and status questions being answered in 2017.

(3) Paying legal minimums

The government will continue to focus on making sure employers are correctly paying the National Minimum Wage (NMW) and National Living Wage (NLW) in 2017.

Phillip Hammond used the Autumn Statement to announce a 4.3m yearly increase in the amount available for enforcement of the minimum wage.

This money will be used to set up specific teams from HMRC which will target employers most likely at risk of not paying legal rates. This year has seen a record number of employers named and shamed for underpaying workers and it would appear the issue of underpayments is going to remain an important future focus for the government.

?(4)?Gender pay gap reporting

The law requiring employers to publish a gender pay gap report will take effect from 6 April 2017. Employers with 250 or more employees will have to calculate and publish the mean and median hourly pay gap and annual bonus gap between men and women.

Employers will also have to calculate the number of men and women who fall in to four pay quartiles. The report has to be published on the employer’s website within a year of the calculation date, i.e. by April 2018 for the first report, for three years and has to be submitted to the Secretary of State.

Draft regulation was released in December 2016, and the explanatory notes state, for the first time, that a failure to publish the report is an unlawful act which may prompt action from the Equalities and Human Rights Commission.

(5) Apprenticeship levy

April 2017 will also see the commencement of the apprenticeship levy, the government’s initiative to ensure the creation of three million apprenticeships by 2020.

Employers with an annual paybill of 3m or more will have to pay 0.5 per cent of pay amount in to a digital apprenticeship account. The government will give employers a 15, 000 yearly allowance to offset against this amount which will be applied monthly.

The funds entering the account have to be used within 24 months or they will expire. However, companies in a group structure will be able to transfer a maximum of 10 per cent of their funds to other employers in their supply chain from 2018.

(6) Benefits of salary sacrifice removed

Salary sacrifice is often seen as a useful way of providing employee benefits whilst receiving a financial benefit. the employee doesnt pay income tax and national insurance contributions arent paid on the amount sacrificed.

These schemes have expanded greatly over recent years to provide a multitude of goods to employees at a significant cost to the Exchequer.

The tax advantage will be removed for all salary sacrifice schemes from April 2017 except for the provision of pensions, vouchers and cycle to work schemes and ultra-low emission vehicles. Schemes in place before April 2017 will be protected from these changes until April 2018 with some remaining protected until 2021.

(7) Caste discrimination to be introduced?

Caste is a hereditary way of classing an individual’s status based on factors such as their rank, wealth and occupation. It is not explicitly included as a protected characteristic in the Equality Act 2010 however a tribunal case found that ethnic origins, included in the protected characteristic of race, could include questions of descent and therefore caste.

The government indicated they would expressly include caste as an aspect of race in 2015. Currently, no order has been made to do this and a consultation was announced in September 2016. 2017 may be the year caste is finally written in to the Equality Act.

Peter Done is managing director at Peninsula.

The future of the gig economy hangs in the balance.

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