October 2016 the Government will introduce several employment law reforms including changes to current legislation concerning the National Minimum Wage, immigration and gender pay gap reporting. The changes will affect companies of all sizes so there’s no better time to make sure your business is up-to-date and compliant.
National Minimum Wage – The Low Pay Commission made recommendations to the government regarding the National Minimum Wage and the new rates will go into effect from 1st October. It is a criminal offence not to pay employees NMW and both company and manager can be held responsible for breaching the law. As we’ve seen recently with the publicity surrounding Sports Direct it’s easy for companies to get a bad reputation if they don’t abide by all employment laws, including NMW. The government also publishes an annual list naming and shaming companies who fail to pay their employees NMW.
The National Minimum Wage rates will be as follows from 1st October:
Aged 21-24 – £6.95 (up from £6.70)
Aged 18-20 – £5.55 (up from £5.30)
Aged 16-17 – £4.00 (up from £3.87)
Apprentices – £3.40 (up from £3.30)
NB: there is no change for the rate payable to 25+ (known as the National Living Wage) which will remain at £7.20 but is likely to change in April 2017.
Gender Pay Gap reporting – This new law requires large employers (companies with 250 employees or more) to publish mean and median gender pay gaps from 2017. The first reports are due to be published in April 2018 for the period covering April 2017-April 2018. Information on any bonuses paid also needs to be published in April 2018 for the 12m period ending April 2017. Employers cannot ignore this. Companies should ideally start gathering the data now to ensure that they comply with the reporting procedures ready for April 2017.
Whilst there is no obligation to explain the gender pay gap nor any duty to address it if a company is complying with the Equality Act, a failure to do so may lead to a heavy amount of adverse publicity. Furthermore, the best candidates may not be attracted to working for companies with a large gender pay gap if they feel that their gender will adversely impact on their career prospects.
Immigration – Companies who are found to be employing illegal workers may result in a 48hr closure of the business. Further court orders can then close the business for up to 12 months. This is in addition to the already large fines and prosecution – no exact start date has been confirmed. Companies should conduct an HR audit to make sure that they have proof of right to work on file for every employee.
Public Sector Exit Payments – We understand that this is NOT coming into force in October 2016 and that further consultations have been announced. This means we are looking at 2017 before likely implementation. In any event, this is unlikely to affect the vast majority of employers.
For further guidance on these changes, or any other employment law or HR questions, contact your ELAS consultant today on 0161 785 2000 .