April 2017 – Changes in Employment, Immigration & Pensions Law
April 2017 sees the introduction of a number of significant changes that will change the employment landscape for years to come. Set out below is a summary.
Gender Pay Gap
6 April 2007 saw the introduction of the obligation on employers (i.e. those with 250 or more employees) to publish annual reports containing data on their gender pay gap, including mean and median averages of hourly pay, bonus payments and other allowances. Affected employers have 12 months to publish the data on their website and to upload it to a Government website.
Apprenticeships
On 1 April 2017 the Institute of Apprenticeships was established, as was the offence of a provider wrongly advertising training as a statutory apprenticeship. Training providers in England will no longer be able use the word "apprenticeship" except to describe a statutory apprenticeship. Breaches can lead to conviction and fines.
In addition, on 6 April 2017, employers with an annual payroll of £3 million will now have to pay a 0.5% levy on their payroll costs to fund new apprenticeships.
Trade Unions
The Trade Union Bill received Royal Assent last year and became the Trade Union Act 2016. The Act will, essentially, make it even more difficult for unions to bring industrial action with important to changes to the voter turnout requirements and union supervision of picketing. The different sections of the Act have been brought into force in stages, with the majority of the remaining sections becoming effective last month, as of 1 March. One of the final remaining parts came into force this month from 1 April "relevant public sector employers" which have at least one "relevant trade union official" will now be required to publish information on the time taken off by those officials to carry out trade union duties and activities.
Brexit – Article 50
The Government has served notice to leave the EU. Immediate concerns relate to the immigration status of EU employees in the UK and the transfer of various EU employment law into UK law under the Great Repeal Bill.
Yearly increases to rates of pay
a) 1 April - The National Minimum Wage bands
The minimum pay limits will increase to the following rates:
|
National Living Wage (25 and over) |
Standard adult rate (21 plus) |
Development rate (18 – 20) |
Young workers rate (16 – 17) |
Apprentice rate |
|
£7.50 |
£7.05 |
£5.60 |
£4.05 |
£3.50 |
b) 2 April - Statutory Pay Rates increase to £140.98 per week for statutory maternity, adoption, paternity and shared parental pay.
c) 6 April - Statutory Sick Pay increases to £89.35 per week.
d) 6 April - Statutory week's pay (used to calculate statutory redundancy payments and various other awards) will rise to £489.
Salary Sacrifice Benefits
April also sees the changes to the tax and NICs relief on salary sacrifice arrangements taking effect, whereby a number of reliefs will be scaled back. Benefits from which tax is removed effective of this month include car parking, dining cards and car schemes (excluding ultra low emission vehicles). Excepted from these changes are arrangements relating to pension contributions, child care vouchers and cycle to work schemes which will, for the time being, continue as before.
Pensions – Reduction in Money Purchase Annual Allowance (MPAA)
The MPAA is to be reduced from £10,000 to £4,000 with effect from 6 April 2017. The MPAA restricts the amount of tax-relieved contributions an individual can make in a year to a money purchase pension scheme if they have already flexibly accessed their pension savings. The measure is designed to counter an individual using the pension flexibilities around accessing a money purchase pension arrangement as a means to avoid paying tax on their current earnings – that is, by diverting their salary into their pension scheme (and gaining the tax relief) and then withdrawing 25% tax free. This measure is most likely to have an impact on those who have taken their pension but continue to work in their later years.
IR35
The new IR35 legislation effective from 6 April, seeks to put the responsibility on public sector bodies to ensure that the correct income tax and NIC payments are deducted under PAYE for individuals that provide services to them via personal service companies, if they suspect that the relationship with the individual is more one of employee or worker rather than a genuine independent contractor.
Immigration
A number of key changes to UK immigration law came into effect on 6 April. In particular an Immigration Skills Charge ("ISC") has been introduced of £1,000 per year for medium or large sponsors and £364 per year for small and charitable sponsors and will apply to both Tier 2 (General) and Tier 2 (Intra Company Transfer ("ICT") migrant workers. The ISC is payable upfront by the employer at the time of assigning the Certificate of Sponsorship and for the total period of time covered by the Certificate of Sponsorship. There are exemptions to the ISC for those in PhD level roles; those applying to extend their Tier 2 stay; Tier 2 (ICT) Graduate Trainees; and Tier 4 student visa holders switching to a Tier 2 (General) visa. Other key changes include the increase in the salary threshold in Tier 2 (General) to £30,000 and the closure of the Tier 2 (ICT) Short Term Staff sub-category.
More Information
The employment, pensions and immigration team at Fieldfisher are available to answer any queries or provide further information.