15 February 2017

Employment Law Developments 2017

Laura Clark, solicitor and employment law expert, takes a look at what employment law changes are due to be implemented this April.

April usually brings longer days and employment legislation. This year is no different, with the implementation of gender pay gap reporting and the apprenticeship levy.

Gender pay gap reporting

In an attempt to remedy the disparity in pay between genders in the UK, the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 will come into force on 6 April (subject to parliamentary approval).

These regulations require relevant employers (private or voluntary sector organisations with 250 or more employees) to take a snapshot of their relevant employees’ pay at a particular date each year. The employer should then publish the information on its website (where it should stay for three years) as well as on a specific government website.

The gender pay gap information should include the overall median and mean gender pay gap figures for employee pay and bonuses, along with information regarding the ratio of men and women in each quartile of the company’s pay distribution.

Although the first publication deadline isn’t until 4 April 2018, the reports will be based on the pay data snapshot as at 5 April 2017, so it is important for relevant employers to take steps to ensure that they have the methodology in place to comply with the new system.

Similar provisions come into force in relation to the public sector on 31 March, with a 30 March 2018 publication date based on a pay data snapshot as at 31 March 2017.

Apprenticeship levy

From April onwards, large employers will have to pay 0.5% of their annual wage bill towards the cost of apprenticeship training. Employers will have 24 months to spend the apprenticeship funding made available via a digital account system (”DAS”) before the availability of levy funds in the account expires.

The Government has published draft regulations (we await the final version) explaining how Levy payment will work. The intention is that the Levy will be reported via the PAYE process along with income tax and national insurance contributions. Employers will be expected to assess their annual pay bill for the previous and current tax years to decide if they are liable to pay the levy and inform HMRC of the amount of levy to be paid.

There is a £15,000 allowance, which means that employers with an annual wage bill of less than £3million will not pay the levy. The allowance operates on a monthly cumulative basis so any unused allowance from one month can be carried forward into the next. At the end of the year, any overpaid Levy can be offset against the employer’s other PAYE liabilities.

The Skills Funding Agency has published draft rules and guidance for Levy-paying employers which set out the requirements for an apprenticeship along with the employer’s obligations in relation to apprentices. They have also launched an online tool to help employers work out how much they will have to spend on apprenticeships.

Preparation will be the key to complying with these new provisions. If you need any help with this, please let us know.

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