New National Minimum Rates announced

Effective from April 2018, the Chancellor Philip Hammond confirmed in his Autumn budget, national minimum wage increases and a new scheme affecting care sector employers who may have underpaid their employees.

New National Minimum Wage Rates

In line with the intention for the national minimum wage to increase to £9 per hour from 2020, it will increase from £7.50 to £7.83, representing a 4.4 percent uplift.  In practical terms, this will mean a pay rise of around £600 per year for a full time worker.

The other rates will increase as follows:

  • Workers aged 21-24 from £7.05 to £7.38 per hour
  • Workers aged 18-20 from £5.60 to £5.90 per hour
  • Workers aged 16-17 from £4.05 to £4.20 per hour
  • Apprentice rate from £3.50 to £3.70 per hour

The Budget was also used to announce a review of the flexibility in the way organisations may use their apprenticeship levy (large companies have been required to pay this levy since April 2017 which they can then use to fund apprenticeships) and a National Retraining Scheme to support worker’s career development.

Care employers advised to correct minimum wage wage under payments

A new scheme to encourage companies in the care sector to make good any minimum wage underpayments was launched on 1st November 2017.

Recent employment tribunal judgements have shifted a focus onto a companies minimum wage obligations in the specific area of sleep-in shifts.  HMRC’s interpretation of the legislation, in common circumstances, requires that all hours of a sleep-in shift attract the minimum wage, regardless of whether the worker is asleep.

In order to soften the impact of these decisions on social care companies, the Social Care Compliance Scheme (SCCS) will see any underpayments corrected but remove the enforcement measures applied to companies that are found to have underpaid their workers. Employers have until the end of 2018 to join up to the scheme.

Committees publish draft bill on gig economy workers

A joint draft bill containing enhanced proctections for gig economy workers has been published by two government committees.

The propsal focuses on giving individuals more certainty about their status by providing an automatic assumption of “worker” status, meaning that it would be for the company to prove otherwise at employment tribunal.  This would also mean that these workers would be entitled to certain employment rights from day one.

Some recommendations from the Taylor Report are also included in the Bill, such as considerations of a higher national minimum wage rate for those on zero hour contracts. The government is yet to provide its full response to the review and this Bill will add more pressure on the government to take action.

If you need any help or guidance on the above, get in touch with HR Revolution.

Give us a call +44 203 538 5311 or email: hello@hrrevolution.co.uk or visit www.hrrevolution.co.uk  where our expert CIPD HR professionals are waiting to help you with any questions you may have.

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A version of this article first appeared on CIPD HR-inform.

Hung parliament – what does it mean for HR and employment law?

We have a new government of sorts, after all the campaigning, the Conservative party didn’t get enough votes to form a majority government meaning they will be forming a minority government in alliance with the Democratic Unionist Party.

The main priority for the Government will be Brexit negotiations but the following points will be good to keep an eye out for:

  • There will be lots of attention to those working the in the “gig economy” and the introduction of legislation to make clear their worker/employed status.
  • There could be limited changes to National Insurance payments – they could rise but this has not be stated clearly yet.
  • It is likely there will be an increase in the personal tax allowance to £12.5k and £50k for higher tax payers.

Things for businesses to look out for

Brexit negotiations around the rights to work, both for UK and EU nationals and EU workers currently in the UK, should be kept under careful review for any developments.

With increased attention on the “gig economy”, it may result in the re-assessment of contracts between businesses and self-employed workers and will also require greater analysis of the status of an employee, worker or contractor.

If you need any HR advice give us a call, we are here to help +203 538 5311 or email: info@hrrevolution.co.uk

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Key Employment Law changes to look out for in 2017

The saying is so true, there are few things in life you can guarantee but death, taxes and employment law changes are among them!!  So we’ve outlined 3 changes that will be coming this year, so make sure you get 2017 off to a flying start by being prepared.

Remember you need to be compliant and there are absolutely no excuses when it comes to employment law, let HR Revolution advise you.

Let’s take a look at the changes you need to pencil in your diary…

Gender pay gap reporting

For the first time, private sector, public sector, and voluntary sector employers with 250+ members of staff will be required to publish information relating to the gender pay gap, and how they are performing in terms of driving forward equality.

At the moment, the exact requirements are still being drafted, though it’s expected that the deadline for the first report will be 4th April 2018, based on data from 2016/2017. We’ll release more guidance on this once it’s available.

Changes to regulations surrounding employment of foreign workers

From April 2017, employers sponsoring foreign workers with a tier 2 visa will have to pay an immigration skills charge of £1,000 per worker. This will be reduced to £364 for small employers and charities.

In addition to this, the minimum annual salary threshold for ‘experienced workers’ applying for a tier 2 visa will be increased to £30,000. If you employ foreign workers, or plan to open up your recruitment channels in the near future? You need to make sure you’re compliant.

National minimum wage and living wage changes to be aligned

The dates for changes to national minimum wage and national minimum wage will be brought into alignment, so the good news here is that there are less dates to keep track of!

From April 2017, the national living wage for staff aged 25 or over will increase to £7.50 per hour.

All things considered, there’s plenty to think about in 2017, and plenty that you need to plan for. And of course, there’s the tricky issue of Brexit…

There’s still a grey area over what we should really expect, though things are likely to become clearer in the coming months. Make sure that you keep an eye on our updates for practical, no-nonsense guidance on what you really need to know.

Do you need help ensuring compliance? Give HR Revolution a call today: +44 203 538 5311 we’d love to help.

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National living wage set to rise to £7.50

Last week’s Autumn Statement from the Chancellor confirmed that the national living wage will rise to £7.50 per hour from April 2017.

The new rate will apply to workers aged 25 and over, and will mark the first rise in the new statutory minimum rate since it was introduced in April 2016, at £7.20.

In Philip Hammond’s first Autumn Statement as Chancellor and the first since Theresa May came to power as Prime Minister, he promised the Government would be committed to “fiscal discipline” and would make strategic investments to improve the UK’s productivity gap.

He said: “Raising productivity is essential to deliver the high-wage, high-skill economy we want.”

He pointed to the UK’s 30 percentage point lag behind Germany and the US, claiming this meant “in the real world, it takes a German worker four days to produce what we make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts”.

Regarding the job market, he described it as “robust”, pointing to predictions from the Office for Budget Responsibility (OBR) that the number of jobs would increase by 500,000 each year over the course of its five-year forecast. “Every UK nation and region saw a record number of people in work,” he said.

Other key announcements included:

  • The national insurance employer threshold and employee threshold will be aligned from April 2017, meaning that both employees and employers will start paying national insurance on weekly earnings above £157.
  • The personal allowance for tax will increase to £11,500 in April 2017, and will be £12,500 by the end of Parliament, with the threshold for higher-rate tax to be £50,000 by the end of the term.
  • From April 2017, those who access employee benefits will pay same tax as everyone else, although some salary-sacrifice schemes, such as childcare and cycle-to-work schemes, will be excluded.
  • The tax advantages of employee-shareholder status will be abolished after suggestions it has been misused by “high-earning individuals”.
  • New penalties will be introduced for those who enable use of tax avoidance schemes.
  • There will be a reduction in the rate at which benefits are withdrawn from people when they start work.

Hammond also pointed to the OBR’s predictions that the economy would grow at a rate of 2.1% in 2016 (compared with 2% predicted in March); 1.4% in 2017 (down from 2.2%); 1.7% in 2018 (down from 2.1%) and 2.1% in 2020 (same), with slow growth put down to Brexit-related uncertainty.

Many of today’s announcements were hinted at before the statement itself, with the Government claiming that Hammond’s proposals would “support ordinary working class families”, and that around three million households would benefit from changes to Universal Credit and higher wages.

However, shadow Chancellor John McDonnell called for the Government to offer a “real living wage” over and above the 30p rise announced.

Regarding the rise in the national living wage, TUC general-secretary Frances O’Grady said: “A raise to the national minimum wage for over-25s will help some low-paid workers. But the Government must also take the opportunity to boost the pay of hard-pressed nurses, teachers, firefighters and home helps, who face ten years of flatlining pay.”

The TUC believes working people will be around £1,000 worse off in 2020, if today’s predictions come to fruition.

The Chancellor also made the surprise announcement today that he would abolish the Autumn Statement itself, and that in future, there would be one main budget in the Autumn, with a “Spring Statement” that will respond to OBR forecasts.

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This article first appeared in Personnel Today on 23/11/16

 

4 things you need to do to prepare for the National Living Wage…

As part of the Governments vision of a “higher wage, lower welfare, lower tax society”, on the 1st April 2016, the National Living Wage becomes law.

This means that ALL workers in the UK aged over 25, and not in the first year of an apprenticeship, are entitled to an extra 50p per hour that sees their wage increase to £7.20 per hour. This is said to have a direct benefit to more than a million people in this bracket, and could see pay packets rise by up to £900 a year.

As an employer from 1st April 2016, you will need to make sure that you are paying your employees correctly and the National Living Wage will be enforced as strongly as the current National Minimum Wage.

Taking into consideration the following 4 steps will help you be ready for this change:

  1. Check who within your business is eligible. If you are in any doubt and need more information please click HERE for the government’s employment status page.
  2. Make sure your payroll department is aware, for useful guidance on HMRC tutorials please click HERE.
  3. Communicate with ALL your employees and make sure they know about their new pay rate.
  4. Make sure that your employees under the age of 25 are earning the correct rate of National Minimum wage, for the correct government rates please click HERE.

It is vital to remember that there are other things to consider.  In HRRevs recent blogs, we have highlighted how some of the big companies have been caught out by not paying the minimum wage, as they had not taken into account certain things.

Outlined below are some payments that must be taken into consideration when calculating the minimum wage:

  • Income tax and National insurance contributions
  • Wage advances or loans
  • Repayment of overpaid wages
  • Items that workers have paid for that are not needed for the job or paid for voluntarily, e.g. meals
  • Accommodation provided by an employer above the offset rate (£5.35 a day or £37.45 a week)
  • Penalty charges for an employee’s misconduct

Here is an example that the government use to help explain it better:

John is 27 and works a 40 hour week.  He earns £6.80 per hour or £272 per week.

He pays £15 a week to rent his uniform and the money is not refunded.  He also chooses to eat in the canteen and pays £20 per week for his meals.

To calculate his minimum wage, John’s employer must deduct the uniform rental from the pay but not the money paid for meals.

This means John makes £257 per week (£272 minus £15) which is £6.43 per hour.  This is below the minimum wage rate of £6.70

It is also important to note that employers who deliberately fail to pay the national living wage to qualifying staff face fines of 200% of arrears owed up to a maximum of £20,000 per each underpaid employee, although this will be halved if paid within 14 days. They may also face criminal charges, so it is critical that companies get it right.”

If any of your employees are not over 25 and do not qualify for the National Living wage, please see below the rates that still apply.

Year 21 and over 18 to 20 Under 18 Apprentice
2016* £6.70 £5.30 £3.87 £3.30

* next wage rates update in October 2016

Download our FREE guide to Payroll, PAYE and Tax in the UK HERE or get in touch and talk to one of our HR Consultants today to see how we can help!

 

Major employment law changes in 2016

Major employment law changes in 2016 – a CIPD Update

Following the election in May 2015, many of the announcements made by Government will start to come into force in 2016, the highlight of these being the new National Living Wage comes into affect from April, which is expected to affect half of all employees.

Another pay issue is to be addressed with legislation is that large organisations will be required to publish gender pay gap reports, including bonus payments. Additionally tax-free termination payments may also become subject to tax following a consultation last year by the Office of Tax Simplification.

If passed by Parliament, bills (see below) will bring changes to strike laws, use of the term ‘apprenticeship’, exit payments for public sector workers, and employing overseas workers.

Consultations expected this year include proposals for working parents with children aged three to four to receive 30 hours of free childcare, and working grandparents to access shared parental leave to care for grandchildren.

In January

  • Regulations giving zero hours workers the right not to be unfairly dismissed or subjected to a detriment for failing to comply with an exclusivity clause, and to claim compensation – come into force 11 January.

In April

  • The new National Living Wage comes in to force. The minimum wage for workers age 25 and over will be £7.20 – from 1 April.
  • The National Minimum Wage amendment regulations also double the financial penalties if employers are found to have paid less than the minimum – from 1 April.
  • Statutory rates of maternity allowance and statutory maternity pay (SMP), statutory paternity pay (SPP), statutory adoption pay (SAP) and statutory sick pay (SPP) usually increase in April each year. The Government has announced that rates will not be increased this April.
  • Public sector employees will be required to repay a tapering proportion of a ‘qualifying exit payment’ if they return to the public sector within a period of 12 months under regulations – expected to come into force on 1 April. A £95,000 cap on the total value of exit payments for public sector workers will also be introduced, but no date has yet been given for its implementation.

Employment-related Acts and Bills

  • The Trade Union Bill introduced on 15 July 2015 continues its passage through Parliament. It will reform strike laws in Great Britain.
  • The Enterprise Bill introduced on 16 September 2015 continues its passage through Parliament. It includes provisions on apprenticeships and capping exit payments for public sector workers (see above).
  • The Immigration Bill introduced on 17 September 2015 continues its passage through Parliament. It contains more provisions on illegal working, the introduction of a skills charge and a new duty on public authorities to ensure that everyone who works for them in a customer-facing role speaks fluent English.
  • Plans for a Counter-Extremism Bill were announced in the Queen’s Speech and will enable employers to check whether an individual is an extremist and bar them from working with children.

Consultations and reviews

The Ministry of Justice is currently carrying out its commitment to review the impact of employment tribunal fees. The review was announced in summer 2015 and is continuing.

European developments

  • Consolidation of worker information and consultation directives – The European Commission consulted with the social partners on the possible consolidation of three directives: Collective Redundancies, Acquired Rights and Information and Consultation of Workers. The consultation ended on 30 June 2015.
  • Data Protection Directive – final agreement was reached in December 2015 between the Commission, European Parliament and European Council on comprehensive reform of the Directive. The revisions are expected to be formally adopted by the European Parliament and Council and the new rules will apply two years after that date.
  • The Free Movement of Workers Directive – in April 2014, the EU Council of Ministers adopted an enforcement directive to facilitate the free movement of workers in the EU. Member states have two years to implement it at national level.
  • The Posted Workers Directive – is intended to stop worker abuse and ensure that posted workers enjoy their rights relating to holiday and pay.  The Council of Ministers adopted the Directive in May 2014; member states have just over two years to implement it in their national legislation. The UK Government carried out a consultation in 2015 on how it will comply.
  • Working Time Directive review – following a second consultation, the social partners expressed interest in negotiating on the review. Further talks were held but no agreement was reached. In December 2014 the European Commission published an online public consultation on the review which closed in March 2015.

Taken from CIPD, thank you to them.