Employment law changes anticipated for 2017

A round up of the employment law changes anticipated for 2017, amid the ongoing uncertainty resulting from the Brexit referendum. 

Large compliance projects for data protection and gender pay gap reporting will dominate the HR agenda in 2017.

Employers are likely to see costs increase as the apprenticeship levy and additional fees for sponsoring foreign workers are introduced, and tax savings for employee benefits are significantly reduced.

Now more than ever it is important to ensure you are have good up-to-date HR practices and are employing the right people on the right terms and conditions.

  1. Data Protection Regulation compliance efforts underway

Although the EU General Data Protection Regulation (GDPR) does not come into force until May 2018, the scope of the changes under the new Regulation means that preparing for the GDPR will be high priority for employers in 2017.

Employers will need to carry out audits of employee personal data that they collect and process to ensure that it meets GDPR for employee consent. New governance and record-keeping requirements mean that employers will also have to create or amend policies and processes on privacy notices, data breach responses and subject access requests.

As the GDPR will come into effect before the UK exits the EU, organisations that are not compliant by May 2018 will risk fines of up to 20 million euros or 4% of annual worldwide turnover, whichever is higher.

  1. Gender pay gap reporting begins

Private-sector, voluntary sector and public-sector organisations with 250 employees or more will be required to publish gender pay gap information for the first time.

Employers will be obliged to release information relating to employee pay and bonus pay, as well as information on the number of men and women in each quartile of the organisation’s pay distribution.

Gender pay gap regulations for private and voluntary sector employers are still in draft form but the deadline for the first report is expected to be 4 April 2018, based on pay and bonus data from 2016/17.

Reporting requirements for public-sector employees are expected to mirror private-sector timelines and requirements.

  1. Apprenticeship levy on large employers introduced

Employers with an annual payroll of more than £3 million will be required to pay a 0.5% levy on their total pay bill starting on 6 April 2017.

Large employers will be able to access levied amounts, plus a government top-up of 10%, to fund apprenticeships from accredited training providers.

Smaller organisations that are not required to pay the levy will also be able to receive funding for accredited apprenticeships by contributing 10% towards the cost of an apprenticeship, with the Government paying the remaining cost.

This is potentially great news for employers and young people entering the workforce.

  1. Salary-sacrifice schemes significantly restricted

Employers may need to reconsider their benefit offerings as tax savings through many salary-sacrifice schemes will be abolished from 6 April 2017.

Schemes related to pension savings (including pensions advice), childcare, cycle-to-work and ultra-low emission cars will not be affected.

Schemes in place prior to April 2017 will be protected until April 2018, while arrangements related to cars, accommodation and school fees will be protected until April 2021.

  1. Changes to rules for employing foreign workers 

Employers sponsoring foreign workers with a tier 2 visa will be required to pay an immigration skills charge of £1,000 per worker (£364 for small employers and charities) beginning in April 2017.

The immigration skills charge will be in addition to current fees for visa applications.

In April 2017,the minimum salary threshold for “experienced workers” applying for a tier 2 visa will also increase to £30,000.

New entrants to the job market, and some health and education staff will be exempted from the salary threshold until 2019.

  1. Restraints on public-sector exit payments are still expected

Restrictions on public-sector exit payments, which had been expected to come into force in 2016, are still anticipated, although their implementation dates have not yet been confirmed.

Exit payments will be capped at £95,000 when public-sector employees leave their roles, including as a result of redundancy or voluntary exit.

Employees earning over £80,000 will also be required to repay exit pay if they return to any public-sector role within 12 months.

This will be a key area for the National Audit Office to look at closely and ensure that further loopholes aren’t being created.  Poor practices that included raising salaries exceptionally to benefit from Defined Benefit pension schemes, offering VR to expensive senior staff who merely wished to retire as well as agreeing terms to re-hire have been costly to the public purse.

  1. National minimum wage changes 

Cycles for national minimum wage increases – including the national living wage – will be aligned, with the next round of changes taking effect on 1 April 2017.

The next increase will see the living wage for staff aged 25 or over rising to £7.50.

Use this link to check you are paying the correct rate. Also look at current and future statutory rates for maternity pay, paternity pay, adoption pay, shared parental pay and sick pay.

https://www.gov.uk/national-minimum-wage-rates

  1. Trade union balloting changes to be implemented 

Employers await the implementation date for new balloting requirements under the Trade Union Act 2016.

Under the rules, a successful vote for strike action will require a 50% minimum turnout and a majority vote in favour of industrial action.

Industrial action in important public services will require a strike vote of 40% of all eligible voters.

Data, data everywhere – but what data should I do something about?

Data, particularly “big data”, seems to be constantly in the headlines – whether it be because data has been lost (the TalkTalk hacking incident) or because it’s being used for something that’s perceived to be intrusive (adjusting insurance premiums or the monitoring of emails by the NSA).  For some people and organisations data is a fundamental part of what they do, but for the rest of us – should we be taking more notice of our data?  Are we missing a trick?

Depending on what type of organisation you currently work for, then you may find that you are already required to report on and publish some key data.  If you work in an organisation that is classed as a “public body” under the Equalities Act 2010   definition (for example the BBC, a local Council or the Police) then you already need to publish data about your workforce.  Specifically data that relates to how your workforce is made up relating to “protected characteristics” and other equality data – for example the percentage of your workforce who are disabled, the age profile of your workforce and the gender split. If you work in local or central government then you already have to publish data about the remuneration of your senior / executive managers.

Even if there is no statutory requirement for you to report and publish the sort of employee data highlighted above, could you find this information useful?  Certainly if you do any form of workforce planning for your business then you probably already look at and use key employee data such as salaries, length of service, duration that people have been in role, employment status (temporary or permanent) and key skills / competencies.  If you don’t currently do any workforce planning, should you think about doing some to help your business to be ready for the future? (hint – we recommend you do!)

If you are struggling to recruit to a certain role then looking at the data could help you come up with a solution. Filling some roles takes more than an advert on your website and Totaljobs etc…..  Looking at your recruitment and candidate data may help you to tap in to a new pool of potential candidates who you’ve previously overlooked or help to identify a different, more effective recruitment channel.

Even if you don’t want to go on a data journey yet, you will find that going forward more and more businesses are going to have to start reporting on and publishing key employee data.  Hopefully you are aware of the gender pay reporting requirements (The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017) that are due to come in to force some time in 2017?  If you employ more than 250 staff, then these regulations will apply to you so you need to start preparing now.

There are also discussions about whether businesses need to do more to be transparent about what they pay their senior staff (eg. Directors and Chief Executives).  After all, the public sector already has to report on what they pay their senior staff.  The government has just issued a “Green Paper” to consult on whether businesses must report on the pay of their most senior staff compared to the pay of their average employee. The consultation is open until 17 February 2017 if you want to contribute.  Should the consultation end up being translated in to new legislation, then you’ll need to get to grips on your data again – so watch this space.

If you’re struggling to get to grips on your employee data then we can help…Consider having an audit of your organisation’s HR systems and procedures which can examine what data you hold and why and provide you with an overview of your obligations and how compliant you are.

Equally commissioning a gender pay audit to enable you to address any issues before the data becomes public could be helpful.

www.amelore.com

Job evaluation scheme and gender pay audits

With the new requirements for organisations with 250+ staff to conduct a gender pay audit and publish results from 2018, many organisations are reviewing or implementing their job evaluation schemes.

Employers operate job evaluation schemes for a range of reasons, including the development of clear and orderly pay and grading structures and to help counter equal pay claims, as well to assist with market pricing where required.

A single job evaluation may be implemented to cover the whole workforce or employers may operate different schemes for varying groups of employees. The former approach is often favoured as this is likely to help counter any potential equal pay issues.

Types of job evaluation

There are two main types of job evaluation: analytical schemes, where jobs are broken down into their core components, and non-analytical schemes, where jobs are viewed as a whole. The use of analytical schemes is more popular because of the capacity to help provide a defence against equal pay claims.

Analytical schemes

These offer greater objectivity in assessment as the jobs are broken down in detail.

Examples of analytical schemes include ‘points rating’ and ‘factor comparison’ approaches.

Points rating – the key elements of each job, which are known as ‘factors’, are identified by the organisation and then broken down into components which may also be weighted. Each factor is assessed separately and points allocated according to the level needed for the job. The more demanding the job, the higher the points value.

Examples of factors commonly assessed include:

  • knowledge and skills
  • people management responsibility
  • communication and networking
  • decision-making
  • working environment
  • impact and influence
  • financial responsibility.

Factor comparison is also based on an assessment of factors, though no points are allocated. Use of this method is less widespread than ‘points rating’ systems as the latter approach enables a large number of jobs to be ranked at the time.

Non-analytical schemes

These are less objective than analytical schemes, but are often simpler and cheaper to introduce. Methods include job ranking, paired comparisons and job classification.

Job ranking -puts jobs in an organisation in order of their importance, or the level of difficulty involved in performing them or their value to the organisation.

Paired comparisons – compares each job in turn with another in an organisation. This takes longer than job ranking as each job is considered separately.

Job classification, also known as job grading. Before classification, an agreed number of grades are determined, usually between four and eight, based on tasks performed, skills, competencies, experience, initiative and responsibility. Clear distinctions are made between grades. The jobs in the organisation are then allocated to the pre-determined grades.

Developing job evaluation schemes

Whether adopting an analytical or a non-analytical approach, organisations have three main options over scheme design and development:

  • a scheme may be developed in-house
  • a consultancy’s off-the-shelf package may be purchased
  • a consultancy may tailor its package to suit the organisation’s needs.

The system selected will depend on the size of the organisation and the aim of the job evaluation exercise. The Hay Group’s Guide Chart-Profile Method is the most widely used scheme.

Other factors to consider

Job evaluation is a complex and time-consuming task and many organisations draw on the expertise of external organisations to help. The key issues to consider include:

  • The process is often as important as the results.
  • Job evaluation is an ongoing process.
  • An appeals procedure should be established before the evaluation begins.
  • Clear, detailed and up-to-date job descriptions have to be drawn up.
  • The more complex the scheme, the more detailed the job description needed.
  • Accurate records of decisions have to be kept.
  • The results have to be checked to see if there are any pay anomalies.
  • Effective communications are essential, as employees may have concerns over their future job grading and pay.

Operational considerations

Many organisations don’t have the skills in-house to conduct a Gender Pay audit or review or implement job evaluation schemes. The latter can be a big piece of work and organisations should not under estimate the time and cost implications.  Given we are half way through 2016 and first set of published results will be April 2018 time is tight to really get your house in order though still possible. 

Any company Job evaluation (and market pricing exercises) schemes need to be reviewed regularly to ensure such approaches continue to meet changing business needs. Job evaluation is an assessment of the role, not the person doing it, and should be based on a fair, transparent system that is effectively communicated and understood by employees.

The type of scheme chosen will depend on organisational needs, but any staff making decisions on job roles must remain impartial and may require training in the chosen system.

How can we assist you?

Amelore can provide both job evaluation and gender pay auditing services tailored to your needs.  If you would like more information, please get in touch with us.

www.amelore.com