National Living Wage
The Chancellor of the Exchequer has announced that the new government will be introducing a new level of minimum wage that will apply only to workers aged 25 and over, known as the National Living Wage.
The National Minimum Wage will remain in place. The National Living Wage – which will apply from April 2016 – will be £7.20 (50p above the level of the National Minimum Wage at that date). Employers will need to consider whether their rates of pay will need to be increased to reflect this increase.
Publishing gender pay data
In July 2015 the government confirmed that it was seeking views as to what more it could do in order to close the gender pay gap. The Conservative manifesto indicated that the party would require larger employers to publish gender pay information.
If this becomes law, the obligation is likely to impact on private and voluntary sector employers in England, Wales and Scotland with at least 250 employees. This will require a large employer to collect and publish pay data by gender – although the specific details of what form the reporting process will take is not yet clear. The Government Equalities Office is seeking the input of employers on this proposal.
The European Union
The government plans to renegotiate the UK’s relationship with the European Union through the European Union Referendum Bill. The proposed time frame for an in-out referendum on membership of the EU is the end of 2017.
However, there has been speculation as to whether a referendum will take place at an earlier date. The Prime Minister has already begun negotiations with his European counterparts over Britain’s membership of the EU.
Many of our employment laws are rooted in the UK’s membership of the EU. If the UK were to leave the EU, the UK parliament would, in theory, be able to repeal or adapt laws which it did not agree with and the courts would not be required to interpret UK laws in accordance with European case law. While it is unlikely that an exit from the European Union would give rise to immediate and significant change to UK employment law, a gradual movement away from the positions taken in European Union case law would be inevitable.
Human rights
The Conservative government has indicated that it will replace the Human Rights Act 1998 with a British Bill of Rights, although it is unclear whether this would also involve the UK withdrawing from the European Convention on Human Rights. This would raise questions as to whether the UK Supreme Court would therefore become the ultimate arbiter of human rights matters in the UK.
This is a separate question to that of the UK’s membership of the EU and no indication of a time frame for this has been given.
The content of a British Bill of Rights will no doubt attract significant consultation and debate. A repeal of the Human Rights Act 1998 is likely to have an impact on discrete areas such as privacy, discrimination and trade union issues.
Income tax and NI
The National Insurance Contributions Bill together with the Finance Bill will contain provisions ensuring that there are no rises in income tax rates, VAT rates or National Insurance contributions rates for individuals, employees and employers in the five year parliament.
The freeze on rates is intended to assist the government’s plans to create two million jobs and three million apprenticeships over the course of the Parliament. Overall the government aims to reduce red tape and bureaucracy for employers as a means to create jobs and increase employment, although interestingly the government has said that it will introduce a levy on large UK employers to fund the new apprenticeships.
The government consulted over the summer on the simplification of tax and National Insurance Contributions treatment of termination payments. Back in 2012, the Chancellor asked the Office of Tax Simplification (OTS) to carry out a review of termination payments and the way they are taxed. In its final report on employee benefits and expenses, published in July 2014, the OTS made a number of recommendations relating to termination payments, the most interesting being that the current £30,000 exemption to income tax (when paid by an employer to a worker as compensation for loss of office) should be replaced with a new system of income tax relief, applicable only in redundancy situations. How this will impact on compensation paid for other reasons, such as compensation for unfair dismissal or damages for wrongful dismissal, remains to be seen.
The government has also indicated that it will be scrutinising salary sacrifice schemes and will consider reforms to the IR35 rules – which will impact upon the way in which organisations engage consultants/contractors.
Immigration
An Immigration Bill will introduce an offence of illegal working and will allow wages paid to illegal migrants to be seized as the proceeds of crime. A new enforcement agency will be created with powers to take action against employers who exploit migrant workers. The Immigration Bill will also make it illegal for employment agencies to recruit solely from abroad without first advertising those jobs in the UK.
Full Employment and Welfare Benefits Bill
The Full Employment and Welfare Benefits Bill will introduce statutory duties on ministers to report annually on progress towards achieving full employment and meeting the government’s target of three million new apprenticeships.
Extremism
An Extremism Bill will introduce 44 BUSINESS & FINANCE VETERINARY PRACTICE NOVEMBER 2015 a number of measures to tackle extremism, including the ability for employers to check whether an individual is an extremist and bar them from working with children.
Employment tribunals
Under new regulations, the government has imposed a penalty from 1st October on employers who fail to pay employment tribunal awards or sums due under a settlement agreed following ACAS conciliation. The new scheme will give enforcement officers the power to impose a financial penalty of 50% of the unpaid award subject to a minimum of £100 and maximum of £5,000. The penalty will be payable directly to the Secretary of State.
The introduction of fees in employment tribunals in July 2013 has proved a controversial decision. Many attribute the introduction of the fees to a dramatic decrease in the number of claims brought to tribunal. The total number of claims heard between April 2014 and March 2015 was 61,306; down from 105,803 over the same period in 2013/14 and 191,541 in 2012/13, the last 12-month period before the introduction of fees.
Following the election, the government announced a review of the impact and effectiveness of employment tribunal fees and the fee remissions scheme for low earners. This review began in June 2015.
It is clear that the government’s agenda for the coming session contains a number of significant reforms for employment law. Alongside the headline issues of the Human Rights Act 1998 and an EU referendum, employers will need to ensure they get to grips with the impact of other changes for employment law. Employers should seek to keep on top of changes in the employment law landscape as they emerge and amend their procedures accordingly.
