Gender pay gap reporting begins

A new law is being introduced that will require all relevant employers in the public, private and voluntary sector with 250 or more employees to publish gender pay gap information by reporting the percentage differences in pay between their male and female employees. Employers must release information relating to employee pay, bonus pay and the number of men and woman in each quartile of the organisations pay distribution. Employers will be required to take a data snapshot of their pay data on 5 April 2017 (for private and voluntary sector) and report on specific calculations by 4 April 2018 and 31 March for public sector organisations. Employers are required to publish the report on their website and also on a government sponsored website.

The Statistics

In recent years the gender pay gap has seen an ongoing downward trend in the UK. Here we have a look at the figures from the most recent years:

This has been the lowest gender pay gap since 1997, when the gap for all employees was 27.5%. The composition of the male and female employee workforces are quite different, with more women working part-time than men, 41% and 12% respectively.

The gender pay gap also varies by occupation, for example:

• Skilled trade’s occupations: 25.1%
• Managers, directors and senior officials: 18.9%
• Associate professional and technical occupations: 11.2%
• Caring, leisure and other service occupations: 8.1%
• Sales and customer service occupations: 3.9%

The new legislation will lead to greater transparency and drive employer action to reduce the gender pay gap. As an employer if you are required to publish gender pay gap information you have 12 months to publish the information, meaning that first publication will be required in or before April 2018.

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7 Key Employment Law Changes, April 2017

April 2017 will see a number of significant changes to employment law come into effect across the UK. Here we take a look at the key changes that are coming into place.

1. Apprenticeship Levy

From 6 April, large employers are required to pay an apprenticeship levy of 0.05%. The levy will only be paid on annual pay bills in excess of £3 million, and so less than 2% of UK employers will pay it. Each employer will receive an allowance of £15,000 to offset against their levy payment. Smaller employers that do not pay the levy will also be able to receive government funding towards the costs of apprenticeship training and assessment by contributing 10% towards the cost of an apprenticeship with the government paying the remaining 90%. For more information regarding these changes you can read our blog: The Apprentice Levy, what it means for SMEs.

2. Increase to Statutory Payments

On 2 April, the weekly amount of statutory maternity pay, statutory shared parental pay, statutory paternity pay and statutory adoption pay will increase from £139.58 to £140.98. On 6 April the weekly amount for statutory sick pay is also set to increase from £88.45 to £89.35. To be eligible for the above payments the individual average earnings must be equal to or higher than the lower earnings limit which is also set to increase from £112 to £113 in April 2017. For more information regarding these changes you can read our blog: April sees an increase to statutory payments.

3. Increase to National Minimum and Living Wage

On 1 April, the following increases will be made to the National Minimum Wage and National Living Wage National Living Wage rate: 25 and over: £7.50 from £7.20 National Minimum Wage rates: 21 - 24 Years: £7.05 from £6.95 18 - 20 Years: £5.60 from £5.55 Under 18: £4.05 from £4.00 Apprentices: £3.50 for those under 19 or those in the first year of their apprenticeship. Apprentices over 19 or who have completed the first year of their apprenticeship are entitled to the minimum wage rate for their age. For more information regarding these changes you can read our blog: Minimum wage rates to increase from 1 April.

4. Salary sacrifice tax changes

On 6 April, Benefits-in-kind offerings as tax savings through many salary sacrifice schemes are to be limited. Any scheme entered into before this date will be protected until April 2018 except for cars, accommodation and school fees when the last date is 6 April 2021. Some schemes that will not be affected include: employer provided pension saving and advice, childcare vouchers, cycle to work scheme and ultra-low emission cars.

5. Changes to foreign worker rules

Employers that sponsor foreign workers with a tier 2 visa will be required to pay an immigration skills charge of £1,000 per employee or £364 for smaller organisations and charities from 6 April. This will be an additional charge to current fees for visa applications.  The tier 2 minimum salary threshold will be increasing to £30,000 per year. New entrants to the job market and some health and education staff will be exempted from the salary threshold until 2019.

6. Gender pay gap reporting begins

A new law is being introduced that will require all relevant employers in the public, private and voluntary sector with 250 or more employees, to publish gender pay gap information by reporting the percentage differences in pay between their male and female employees. Employers will be required to take a data snapshot of their pay data on 5 April 2017 (for private and voluntary sector) and report on specific calculations by 4 April 2018 and 31 March for public sector organisations. The report must be published on their website and on a government website.

7. Reforms to public sector exit payments

Reforms to public sector exit payments are set to come into place in June 2017, to ensure greater consistency between public sector redundancy compensation schemes and value for money for the taxpayer. A cap of £95,000 will be put on for all public sector workers who leave their roles including as a result of redundancy or voluntary exit. Any employee that earns over £80,000 will be required to repay exit payments if they return to any public sector role within a year of receiving an exit payment.

It is important for all businesses to be aware of the changes being made in April 2017 and how these changes may affect their business. It is also important for all changes to be implemented by their relevant dates.

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Minimum wage rates to increase from 1 April

On the 1st of April there will be an increase in the National Minimum Wage and the National Living Wage across the UK. From this April all national minimum wage rates including the national living wage will be uprated at the same time. Here we have a look at each new increase:

National Living Wage rate:

• 25 and Over: £7.50 from £7.20

National Minimum Wage rates:

• 21 - 24 Years: £7.05 from £6.95
• 18 - 20 Years: £5.60 from £5.55
• Under 18: £4.05 from £4.00

Apprentices:

• £3.50 for those under 19 or those in the first year of their apprenticeship. Apprentices over 19 or who have completed the first year of their apprenticeship are entitled to the minimum wage rate for their age.

Penalties and non-compliance

It is extremely important for employers to keep up-to-date employee records to ensure that you are complying with the new rates of pay as employees have a birthday and move from one rate to another. The consequence of non-compliance, even unintentional but rather an administrative error, may be significant for your company. Penalties can be up to 200% of arrears (halved if employers pay within 14 days) up to a maximum penalty of £20,000 per worker.

Government Name and Shame

Even worse than that, you do not want your company to be named and shamed by the government for not paying the correct minimum and national wage rate. Since the government scheme was introduced in 2013 over 400 employers have been named and shamed for underpaying their staff by over £1,179,000 with total penalties of over £511,000. Read more about it in our blog here.

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April sees an increase to statutory payments

This year will see the first increase in 2 years to statutory rates for maternity pay, shared parental pay, paternity pay, adoption pay and sick pay, as these rates have been frozen since April 2015.

Statutory Maternity, Shared Parental Pay, Paternity and Adoption

On 2 April 2017 the weekly amount of statutory maternity pay, statutory shared parental pay, statutory paternity pay and statutory adoption pay will increase from £139.58 to £140.98.

• Statutory maternity pay and statutory adoption pay is paid at 90% of the employees weekly wage for the first 6 weeks and at 90% of their weekly wage or £140.98 (depending on which one is lower) for the remaining 33 weeks.
• Employees taking paternity pay can choose to take either 1 or 2 weeks consecutive leave and are paid at 90% of their weekly wage or £140.98 (depending on which one is lower).
• Shared parental leave is paid at 90% of the employees weekly wage or £140.98 (depending on which one is lower).

Sick Pay

On 6 April 2017 the weekly amount for statutory sick pay is set to increase from £88.45 to £89.35 and will be paid by the employer for up to 28 weeks.

To be eligible for the above payments the individual average earnings must be equal to or higher than the lower earnings limit which is also set to increase from £112 to £113 in April 2017.

It is important for all business owners to be aware of the changes that are coming into place and make sure that these changes are implemented by the relevant dates.

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Posted in Employment Update

The Apprentice Levy, what it means for SMEs

The apprenticeship levy is due to come into effect on 6 April 2017. It is a levy on UK employers to fund the costs of apprenticeship training.

One of the aims of the apprentice levy is to ensure SMEs have access to funding to hire and train apprentices, so that they can build a talented and skilled workforce for the future.

The Apprentice Levy

From 6 April 2017, employers with a paybill of more than £3 million will be subject to a levy of 0.5%. Through a digital account these employers will be able to access the apprentice levy fund, which they can use to pay for apprenticeship training and end-point assessment (the assessment of apprentices by an independent organisation, required before they can complete the apprenticeship).

SMEs

It is estimated that 98% of UK SMEs do not have a wage bill of £3 million, meaning most will be exempt from the levy. However, SMEs will still be able to receive government funding towards the costs of apprenticeship training and assessment through co-investment.

How it will work

• Employers will simply use the register available on the apprentice service to select each of the following:
• the training they want their apprentice to receive
• the approved trainer
• the assessment organisation

Assistance with this is available from the National Apprenticeship service. 

•  The Government will pay 90% of the price agreed with the training provider, up to the maximum allowed by the funding band for the relevant apprenticeship standard or framework. This is referred to as co-investment.

• Employers with less than 50 employees will not be required to contribute to the cost of the apprenticeship where the apprentice is:
• Aged 16 to 18
• Aged 19 to 24 and has previously been in care or has a local authority education, health, and care plan

• Additionally, the Government will pay a £1,000 grant to companies that take on a 16-18 year old apprentice.

• Businesses will also receive a grant of £1,000 when taking on apprentices who are aged between 19-24 and have previously been in care or have a Local Authority Education, Health and Care plan.

Overall, the new apprentice levy should provide a real opportunity for SMEs. By taking advantage of the funds available, SMEs have the prospect of significantly improving the skills and expertise of employees and ultimately their own competitiveness.  

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Highest Amount Ever of Zero-hours Contracts

New information released from the Office of National Statistics have revealed that 910,000 employees are now working on zero hour contracts, the highest amount to date. Back in 2005 there were only 100,000 originally on zero-hour contracts.

The research revealed that over the last number of years there has been a significant growth in the number of zero-hours contracts being used by UK employers. In 2015 it is believed that 805,000 employees where on zero-hours contracts. Furthermore, In comparison to 2014, there is an increase of 30%. However, it must be noted that even though the figure released is a record high, the report does show a rapid slow down in the rate of the increase in the last six months of 2016.

A zero-hours contract is an employment contract that an employee has that has no set minimum hours or definite schedule of work. It allows employers to hire employees with no guarantee of work. Many employers use such contracts to cover situations where work fluctuates. Employees under these contracts are required to be flexible, and due to personal circumstances this can be a suitable working arrangement for some.

Conor D’Arcy, policy analyst at the Resolution Foundation, which undertook the analysis of the ONS’s Labour Force Survey, said: “It’s notable that the increase of 0.8% in the second half of 2016 compares to a 7.7% rise over the same period in 2015."

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8 Employment Myths Busted

We've clarified the truth on some of the most common employment law myths.

Myth 1: No employment contract exists if there is nothing in writing or signed.

Fact: Even verbal agreements are binding. An employment contract exists from the moment a job offer is accepted. Legally, an employer should within two months of an employee starting work, issue a written statement of terms and conditions of employment. However, if this document has never been issued a binding employment contract still exists between the employer and employee. Where terms are agreed orally, the situation is ripe for disputes.

Myth 2: Holidays start to accrue once the probationary period is successfully completed.

Fact: Holidays start to accrue from the first day an employee is employed. The existence of a probationary period will not affect a new employee's length of service or statutory employment rights.

Myth 3: Employees can say when they take their holidays.

Fact: Employees requests for annual leave can be refused by an employer for business reasons. However, when considering leave requests employers should also bear in mind the employees family responsibilities and entitlement to rest periods. Based on business needs employers can specify certain periods where annual leave can or cannot be taken. Employers should consult with employees at least one month before any holidays are due to commence. Employers are advised to agree with employees how and when employees should give notice of annual leave, ideally through an annual leave policy.

Myth 4: Employees on long-term sick leave should be left alone.

Fact: Although employers should not put undue pressure on employees who are on long-term sick leave, they are entitled to find out more information about the illness with the aim of establishing when and how the employee could return to work. 

Myth 5: An employee’s continuous service resets after moving roles within a company.

Fact: Moving roles within the same company does not ‘reset’ an employee’s continuous service.

Myth 6: Employees have the right to have bank holidays off work, or to be paid overtime for working them.

Fact: Employees are not automatically entitled to a day off or extra pay on a bank holiday. Any such right will depend on the contract of employment. Employees are entitled to 5.6 weeks annual leave per year, whether or not bank holidays are included as part of this leave will be up to individual employers.

Myth 7: An employee who is dismissed for gross misconduct is not entitled to pay in lieu for holidays accrued.

Fact: Regardless of the reason for dismissal, if an employee is dismissed part way through a holiday year, they will be entitled to pay in lieu of untaken statutory holiday that has accrued up to the termination date. Regarding holidays over and above statutory entailment, payment for these should be made unless the contract of employment specifically states that these days will be forfeited in cases of dismissal for gross misconduct.

Myth 8: The 10 keeping-in-touch days for employees on maternity leave, adoption or additional paternity leave and 20 shared parental leave KIT days are pro rated for part-time employees.

Fact: The legislation does not make provision for the 10 keeping-in-touch days or 20 shared-parental-leave-in-touch days to be pro-rated for part-time employees. For example, an employee on maternity leave who normally works only a three-day week is still entitled to 10 keeping-in-touch days.

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Posted in Employee Handbook, Employment Contract

Reasons for not paying minimum wage

Last week the Government named and shamed 360 employers who are underpaying their employees. Top of the list was Debenhams were nearly 12,000 employees were short-changed.

Some of the more generic excuses for underpaying employees included:

• Pay is topped up with tips
• Wages were docked to pay for their Christmas Party
• Wages were docked to pay for their uniform

However, some more imaginative excuses included:

• “It's part of UK culture not to pay young workers for the first three months as they have to prove their worth first.”
• "I thought it was OK to pay foreign workers below the national minimum wage.”
• "She doesn’t deserve the national minimum wage because she only makes the tea and sweeps the floors.”
• "I’ve got an agreement with my workers that I won’t pay them the national minimum wage; they understand, and even signed a contract to this effect.
• "My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone.”

The national minimum wage and national living wage (those over 25) will increase from 1 April 2017. If employers wish to avoid being named and shamed, they need to familiarise themselves with new rates and make plans to amend payrolls where necessary. 

National minimum wage rates from 1 April 2017.

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Why your business needs contracts of employment

The contract of employment is one of the most important documents any employer will deal with, it is the cornerstone of the employer / employee relationship. Unfortunately however, this essential document is often neglected or feared, particularly by busy, small employers.

Below are some of the key points employers need to know about contracts of employment.

• A legal obligation: all employees must receive a written statement of their terms and conditions within two months of starting employment. Legislation sets out certain terms that must be put in writing:
• Name of employer & employee
• Date employment and continuous employment started
• Job location
• Pay and pay frequency
• Working hours
• Holiday entitlement
• Details of job and job title
• Details of any collective agreement
• Possible fines: in the event of an employment tribunal, if a business is found to have not issued a complete contract they could face a fine of up to a month’s pay.
• Employer Protection: additional clauses can be included in the contract that can protect your business’ interests.
• Short-time working or lay-off: if inconsistent demand for work is a factor in your business this clause may help you manage staff levels.
• Notice on termination: legislation requires employees to give their employers 1 weeks notice if they intend leaving employment. Would this be enough for your business to find alternative cover and schedule a proper hand-over? If not you can include longer notice periods in the contract.
• Confidentiality: if your employee will have access to confidential information or any trade secrets you may need to consider protecting the use of this information through a confidentiality clause.
• Restrictive covenant clauses: are you fearful that ex-employees might set up in competition to you, or work for a competitor, putting your business in jeopardy? If so, restrictive covenant contract clauses can help protect your business.

Having appropriate contracts of employment will not only ensure your business is legally compliant, but it will also make clear to employees what their rights are and what is expected of them, ultimately helping to protect your business in times of disputes or conflict.

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4 Tips to Banish your Employee's January Blues

The third Monday in January has officially been reported as the most depressing day of the year, Blue Monday. Research also shows that the month of January has the highest rate of sick leave.

After the hype and excitement of December, January brings lighter bank balances, tighter waistbands, and overall melancholy that the fun and festivities are over for another her. So it’s not surprising that your employees will catch the “January Blues”, feeling tired, unmotivated, lacking energy and focus. However, the New Year is also a time for fresh starts, a time to plan and to set targets for the months ahead.

Here are our top tips on how to stamp out the January Blues in your workplace:

Generate enthusiasm

To help generate enthusiasm, you need something for staff to look forward to that will be energetic and fun. Why not introduce a team building event or social event? Something that will refocus the team, it’s upbeat and entertaining. Even a team lunch on a Friday afternoon will lighten the mood and enthuse staff to apply themselves.

Set targets

 Goal setting in January is a good idea. It allows you to set out plans for the year ahead and let your employees know what the key objectives for the business are – and how they will play a crucial role in achieving that. Along with setting Company goals, set individual goals, and team goals.

Recognition

A key factor in driving motivation amongst employees, is the feeling of being recognised for their work and achievements. Acknowledging employees for a job they have done well, will make them feel valued and encourages them to continue doing what they do effectively.

The impact of simply saying thank you, can go a long way. These two words, can have an overwhelming effect on employee engagement and productivity.

Workplace wellbeing

One of the most popular New Year resolutions people pledge, it to lose weight. The chances are several of your team will be looking to achieve this, as they are feeling sluggish from all the Christmas over-indulgence.

As we know, it’s important as an employer to invest in workplace wellbeing and fruit is a fantastic superfood that can help concentration and productivity levels. So why not show your support to staff and their resolution, by providing complimentary fruit platters for employees to enjoy.

The New Year is an opportunity to start fresh and achieve success. You need a fully focused workforce to accomplish this. Follow these top tips to help refocus employees and make 2017 a prosperous year.

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