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Are you prepared for dramatic employment law changes?

This month there have been significant changes in the law that could radically impact on businesses across the UK following the introduction of the Apprenticeship Levy and the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.

The Government’s long awaited Apprenticeship Levy came into force on 6 April and will see any business with total employee earnings subject to Class 1 secondary NICs, or “pay bill”, having to pay 0.5% of their payroll costs towards the levy. The new legislation applies to companies in the public sector, not-for-profit organisations, charities and schools, as well as private businesses.

Companies with a pay bill will benefit from a £15,000 allowance available for each tax year, which can be used to offset levy payments. This allowance ensures that only businesses with a pay bill of more than £3million a year will have to contribute to the levy. Levy payments will not start until May and it is up to employers to notify HMRC each month whether they are required to pay.

While many businesses have been preparing for the levy for months, several recent surveys, including one from the British Chambers of Commerce, have revealed large numbers of employers were not aware of the levy and had no plans to recoup any of the levy contribution they will have to pay. Those businesses committed to training staff could stand to benefit, as they can claim back the cost of approved training courses under the scheme. But employers will need to train sufficient numbers of apprentices to reap the rewards of the new scheme.

After registering and paying the levy, companies can access funding through a Digital Apprenticeship Service account. The Government will also continue to co-fund apprentices by paying 90% of the training costs of those organisations who fall below the levy threshold.

To ensure you benefit from the new levy, here are HR Manager and Consultant Jane Eldridge’s top five tips:

To make sure you are fully prepared and benefit from the new levy:

1) Calculate your “pay bill” - your pay bill is your total employee earnings subject to Class 1 secondary NICs

2) Calculate the levy due - for example:

·       Annual pay bill £10million, levy applied 0.5 per cent x 10,000,000 = £50,000

·       After allowance applied: £50,000 – £15,000 means £35,000 levy payment

·       You can use the HMRC’s basic PAYE tools to help you calculate the levy

3) Register for your Digital Apprenticeship Service account

4) Decide how many and which apprenticeships you will support and how you will recruit the apprentices (internally or externally)

5) Identify suitable accredited training providers

New equal pay changes

The new Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which also came into effect on 6 April, aims to reduce inequality by forcing all employers with 250 employees or more to publish details on the differences between the salaries they pay their male and female staff.

Latest figures from the Office for National Statistics show the gender pay difference is 9.4%, which has resulted in many businesses coming under the microscope. The purpose of the new legislation is to encourage businesses to pay men and women equally when carrying out identical roles by bringing them under public pressure.

Publishing unfavourable statistics or failing to publish any at all is likely to have an adverse effect on the reputation of those businesses, restrict their ability to recruit staff and attract unwanted press attention. Failure to report on the data could also result in the Equality and Human Rights Commission taking punitive action.

Private sector employers are required to publish the results on both their website and a designated government website by no later than 4 April 2018, while public sector organisations only have until 30 March 2018. Results will then need to be updated on an annual basis. Specific details that organisations will need to publish include:

·       Mean gender pay gap in hourly pay

·       Median gender pay gap in hourly pay

·       Mean bonus gender pay gap

·       Median bonus gender pay gap

·       Proportion of males and females receiving a bonus payment

·       Proportion of males and females in the company’s lower, lower middle, upper middle and upper hourly rate quartile pay bands

Does your holiday year run from 1 April to 31 March?

Employees’ holiday rights could be breached in 2018 due to the way the Easter public holiday falls this year and next year. This will depend on the amount of holiday employees receive and the wording of their contract, but employers could be liable for an unanticipated fluctuation in an employee’s holiday entitlement over the next two years.

Employers who have a holiday year from 1 April to 31 March should review their employees’ contracts to see if annual leave entitlement is stated as being 20 days plus public holidays. If so, this year employees will be entitled to nine public holidays instead of eight, as Good Friday falls on 30 March 2018. If employers only allow their employees the usual 28 days’ annual leave, they would be acting in breach of contract.

A problem could arise the following year as there may only be seven public holidays between 1 April 2018 and 31 March 2019. This would leave employees with just 27 days’ annual leave, which is less than the 28 day statutory minimum. If only 27 days’ annual leave are provided the following year, an employer may face claims under the Working Time Regulations by multiple employees for compensation.

If you would like your business to benefit from any of the changes above, or are unsure where you stand with employee holiday allowance then contact Blanchards Bailey on 01258 488220 or email jane.eldridge@blanchardsbailey.co.uk 

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