Employment law updates: a brief review of the key 2017 legal changes affecting you

Employment law updates: a brief review of the key 2017 legal changes affecting you

With 2018 dubbed ‘the year of regulation’, there are a number of upcoming changes that will affect organisations and how they are run.

To help you keep track of the latest developments and your rights in the world of work, we’ve highlighted some of the key legal changes that came into effect last year.

1. National living / minimum wage increase

The national living wage rate for workers aged 25 or over increased to £7.50/hour in April 2017. In addition to this, the increase in national minimum wage rate for all other age bands (including apprentices) took effect on the same date. The rates apply to employees and workers only, and do not apply to self-employed people or volunteers.

In April 2018 the national living wage rate will rise further to £7.83/hour, an increase above the current inflation rate of 3%. Alongside this, increases to the national minimum wage rate for all other age bands will also be effective on the same date.

The Government has previously pledged to raise the national living wage to £9/hour by 2020.

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2. Termination payments

Employers will be required to pay National Insurance contributions (NICs) on any termination payments that exceed £30,000. However, any payments under £30,000 will be exempt from tax and National Insurance. In addition, the taxation on contractual and non-contractual pay in lieu of notice (PILON) will be taxed as income and so will be subject to both income tax and National Insurance contributions.

The Government confirmed these changes will take effect from April 2018.

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3. Salary sacrifice benefits

In April 2017 the tax-free eligibility was removed for the vast majority of ‘benefits in kind’ (BiK), and were no longer offered on a salary sacrifice basis, including: health schemes, car parking, mobile phones and gym memberships.

The benefits that were not affected were limited to: pension contributions and advice, childcare arrangements and cycle-to-work schemes.

However, these BiK changes don’t prohibit employers from offering the full range of salary sacrifice benefits, but instead these benefits are subject to income tax and employer National Insurance Contributions.

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4. Tax-Free Childcare

The Government introduced the Tax-Free Childcare scheme in April 2017 to help working parents with the cost of childcare. Those eligible have to be parents of children under 12, and earning at least £120 per week on average, but under £100,000 per year.

The Government will provide up to £2,000 per child per year towards their childcare costs and up to £4,000 for disabled children.

Earlier this month Tax-Free Childcare was also opened to parents whose youngest child is under 9. The scheme will also open to all remaining eligible families with children under 12 on 14th February 2018 and applications can be made before the end of this financial year.

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5. IR35

In April 2017 the changes to the IR35 legislation came into place, aimed at shifting the responsibility of ensuring individuals are paying the right tax to the entity paying the personal service company (PSC) – often referred to as a limited company contractor. The legislation aims to ensure that such individuals pay tax in the same way as an employee, making it harder for individuals to falsely operate as a PSC in order to reduce their tax liabilities.

The changes are applied in any instance where the end client is a public sector body.

In November 2017, the Chancellor announced that the Government will consult on whether the reforms should be extended to the private sector. The consultation will draw on the experience of the public sector reforms through external research commissioned by the Government, due to be published this year.

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6. Apprenticeship Levy

Launched in April 2017, the Apprenticeship Levy was designed to boost the UK’s commitment to apprenticeship programmes. Every employer in the public or private sector, with a wage bill of over £3million, will pay a new 0.5% Levy on their annual pay bill to help fund this initiative, increasing training for millions of apprentices. This is supplemented with an additional 10% each month from the Government.

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7. The Taylor Review into modern employment practices

The Taylor review was set up to consider how employment practices need to change to keep up with modern business models, especially given the rise of the “gig economy”. In short, the main theme of the review was that ‘workers should be treated like human beings, not cogs in a machine’. It’s yet to be seen whether and how the Government may take on the changes, but some of the principles identified include:

  • Workers should know their rights from ‘day one’ and businesses should be transparent when employing people
  • There should be a clarification on the differences between employees, self-employed and individuals who work through platforms. It’s recommended that individuals working in this way should be classified as a ‘dependent contractor’
  • Flexible work is recognised as positive but the report stressed that it should benefit both the worker and the employer
  • Benefits, such as sick pay, should be made available to those in the gig economy.

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8. Employment Tribunal fees

The Supreme Court ruled that tribunal fees were unlawful and has introduced a refund scheme to reimburse all those who paid fees between July 2013 and July 2017.

Claimants whose claims were dismissed for failure to pay fees are being offered the opportunity to reinstate their claims by the Employment Appeal Tribunal.

The Government still intends to charge fees to ‘cover costs and deter frivolous litigation’, but the level of fees will need to be carefully balanced. However, the changes are unlikely before the end of 2018.

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9. General Data Protection Regulation (GDPR)

Throughout 2017, we’ve seen organisations prepare for the much anticipated GDPR regulation that’s coming into force on May 2018. The regulation is set to significantly change data protection with increased responsibilities, compliance and penalties for organisations. The regulation will harmonise data protection law across all EU member states and will also apply to businesses located outside the EU who process EU citizen’s data.

So far a considerable quantity of customer data has been collected by organisations without a proper opt-in consent process. As a result, one of the key obligations includes consent for processing data will have to meet very high standards and must be ‘lawful, fair and transparent’.

The changes to the regulation introduced tougher penalties for non-compliance, with fines of up to 4% of an organisation’s annual global turnover or €20million (whichever is greater).

More information

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Disclaimer: This post has been prepared for informational purposes only and does not constitute legal or financial advice. This post should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. No warranty is given with respect the accuracy of information contained in this post and neither Experis Limited, nor any of its affiliated companies shall have any liability for any loss which may arise from reliance on information contained in this post.