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The key employment law changes you should take note of in 2017

male and female

Clare Gilroy-Scott, senior solicitor in the employment team at Goodman Derrick LLP, looks at some of the employment law changes set to come into force in 2017, with a particular focus on the gender pay reporting legislation.

2017 already looks set to be just as busy for employment law and HR practitioners than previous years and we are not yet dealing with the implications of Brexit.

In terms of case law, recent landmark cases involving employment status and ‘gig economy’ workers such as the Uber drivers and CitySprint couriers, who were deemed to be ‘workers’ entitled to holiday pay and minimum wage, are expected to be appealed.

The question has been raised as to whether Uber is a ‘tech’ business with self-employed drivers who provide services to users of the Uber app or to Uber itself. Any business engaging individuals on flexible, generally short-term ‘self-employed’ assignments, in contrast to a traditional employment models, would be wise to review these arrangements.

In terms of new legislation, 6th April 2017 sees the apprenticeship levy come into force where businesses with a £3m-plus wage bill will face a 0.5% levy payable from April, which can be claimed back if they use it for training of apprentices. Businesses affected by this should consider use of apprentices to recoup some of additional cost from the levy.

6th April 2017 also sees the introduction of gender pay reporting legislation which requires private employers to provide reports on gender pay. Reports on pay disparity between male and female employees were consistently present in the news in 2016, with concerns certain sectors have a particular problem, the UK tech sector included.

Dubbed ‘Equal Pay Day’, 9th November 2016 marked the date from which women were effectively working for free for the remainder of 2016, according to statistics, this despite existing equal pay laws that provide for equal pay rights for men and women doing like work, equivalent rated work, or work of equal value.

Is your business affected?

The new regulations will affect employers with more than 250 employees on a ‘snapshot date’ of 5th April in each year, starting with 5th April 2017. Most companies in the tech space don’t have anywhere near this number of employees, but it’s worth small business owners learning about the legislation and checking whether their own pay structure is fair and balanced.

To encourage senior executives in each entity to take ownership of gender pay issues in their workforce, each company in a group must report as a separate entity if they meet the 250 employee threshold.

‘Employee’ will be widely interpreted to include not just those under employment contracts, but also anyone employed under a contract of apprenticeship or a contract ‘personally to do work’. This brings into scope casual workers, consultants and contractors who are required to personally carry out the work (ie they cannot sub-contract the work or employ their own staff to do it).

Also in scope are employees based abroad with a close connection to Great Britain. Partners and LLP members are specifically excluded as is any worker not on full-pay at the snapshot date, for example those on family or sick leave (although they must be included in the gender bonus gap report).

What’s required

The regulations require annual reports on the gender pay gap figures for men and women in four pay bands and gender bonus gap figures over a 12-month period. There is an exception to the requirement to report on pay where you do not have pay data on an individual and it is not reasonably practicable to obtain it (although that individual will count in the 250 employee threshold), for example where a consultant is not on payroll and you do not have remuneration and working time records.

What is meant by ‘pay’ and ‘bonus’ and the methods of calculation to be used, are detailed in the regulations and should be considered carefully. You may provide a narrative to explain anomalies in pay as well as any proposals for addressing them, which may go some way to putting the business in a better light.

Businesses will need to analyse gender pay figures each April and publish their report within 12 months on the business website (making it publicly available for three years) and uploaded to a government website. Thereafter reports must be produced annually. The first reports will therefore be due by April 2018.

To prepare now, you can:

  • Assess your workforce: will you be in scope with 250 ’employees’ on 5th April 2017?
  • Identify whether you have accessible bonus and pay data for employees.
  • Use the calculation methods in the regulations to familiarise yourself and identify issues in advance.

While the regulations don’t contain enforcement provisions or sanctions, the government intends to publish tables by sector and may create a database of compliance, factors which may affect reputation, recruitment and retention.

Whether the best talent will be guided by gender pay statistics remains to be seen, but this is likely to be only the start of mandatory transparency on gender pay, so even smaller tech businesses may want to review pay and other diversity initiatives now.