In spring 2016, the Government is introducing several key employment law reforms, which will affect employers both large and small, as well as a significant number of employees:
Mandatory Gender Pay Reporting
According to data from the World Economic Forum Gender Gap Report, women’s pay is 10 years behind that of men. With that in mind, large employers will soon be obliged to publish information relating to gender pay gaps in an overarching effort to narrow the deficit, which currently stands at women earning approximately 80 pence for every pound earned by a man (ONS).
The Government’s consultation on gender pay gap reporting closed in March, together with its draft regulations, which will make it compulsory for employers with 250 or more employees to publish information about the difference in pay between men and women. Pay includes basic pay, paid leave, maternity pay, sick pay, various allowances, shift premium pay, bonus pay and other pay, including car allowances paid through the payroll.
· The regulations will commence on 1st October 2016
· The target date is the pay period ending on the 30th April 2017
· First full reports by April 2018, thereafter annually.
Introduction of National Living Wage
On 1st April 2016, the National Living Wage commences, meaning that workers aged 25 and over will be entitled to £7.20 per hour. The National Living Wage is a new top rate of the National Minimum Wage. Employers should check, in particular, that employees’ pay is not brought below the new rate by salary-sacrifice arrangements.
The new rates are:
· Age 25+ – £7.20 per hour
· 21-25 – £6.70 per hour
· 18-21 – £5.30 per hour
· < 18 – £3.87 per hour
· Apprentices – £3.30 per hour
New, more stringent penalties are also being introduced for failure to pay the new rates, which increase the amount from 100 per cent of arrears owed to 200 per cent, although these will be halved if paid within 14 days. The maximum penalty will remain at £20,000 per worker. In addition, company directors can be disqualified for up to 15 years for failure to adhere to the new pay bands.
Statutory Family-Related Pay and Sick Pay Rates are Frozen
Many employers might be expecting changes around statutory rates of pay but these will not alter at all. Unlike in previous years, there will be no increase to statutory adoption, maternity, paternity or shared parental pay rates in April 2016. Statutory sick pay will also remain at the same rate that has applied since April 2015.
The current weekly rate of statutory maternity pay and other parental payments is £139.58 or 90 per cent of the employee’s average weekly earnings, if this figure is less than the statutory rate.
The rates usually increase annually in line with the Consumer Price Index (CPI). As the CPI fell by 0.1 per cent in the year to September 2015, there will be no increase to the rates in 2016/17.
Employers can typically reclaim 92 per cent of employees’ statutory maternity pay, paternity pay, adoption pay and shared parental pay.
The rate of statutory sick pay is also frozen at the current weekly rate of £88.45.
To be entitled to these statutory payments, the employee’s average earnings must be equal to or more than the lower earnings limit. This amount is also frozen at £112.
Financial Penalties to be Imposed for Non-Payment of Tribunal Awards
Legislation allowing tribunal enforcement officers to impose a financial penalty on an employer that fails to pay a tribunal award or ACAS settlement sum is expected to come into force in April 2016.
Research carried out in 2013 showed that less than half of tribunal claimants who had been awarded compensation received the full award from the employer.
The penalty will be 50 per cent of the unpaid award, subject to minimum and maximum amounts and a reduction for prompt payment.
Peter Mooney, head of consultancy at ELAS Business Support, says:
“The introduction of mandatory gender pay reporting is well overdue, as it is clear that without some compulsion, the gender pay gap will never be narrowed voluntarily. As it is, it will be 2133 before the global pay gap between men and women is finally closed.
“Another step in the right direction is the introduction of the National Living Wage, which will assist the lowest paid workers. What is not yet known, is the frequency of review, other than the Chancellor’s plan to increase it steadily, reaching £9 per hour by April 2020.
“The new penalties for non-payment of tribunal awards is welcome news for those claimants who have been left bereft by those employers who have failed to pay their awards. Hopefully, the threat of a severe financial penalty on top of the unpaid award will be enough to ensure prompt payment.”
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