As you’ll know, as the start of the new financial year, April tends to be a hectic time for businesses – spring may be here but so is a cluster of employment law changes that your business will need to adhere to. There have been significant legal changes in the past few months, with more on the horizon. No matter the size of your business, all employers and HR managers will need to be aware of the new developments and compliance requirements.
Here’s what you’ll need to be focusing on…
With 25 May rapidly approaching, it’s crucial that your business is prepared for GDPR. GDPR is a data protection legislation that gives individuals more control over how their personal data is handled, meaning that businesses have to be transparent about how they use data. It will mean a greater administrative burden on your HR department, as they will have to audit all personal information they have on file. As an employer, you’ll also be obligated to explain to your employees what you are doing with their data – such as payroll information – and why you are handling it. Failure to adhere to the new rules can incur penalties of either four per cent of your global annual turnover, or €20 million depending on which figure is higher.
Minimum wage increases
As of April 2018, the National Living Wage for employees over the age of 25 has risen from £7.50 to £7.83 per hour, and the National Minimum Wage has increased across all age brackets:
- From £7.05 to £7.38 for 21 – 24 year olds
- From £5.60 to £5.90 for 18 – 20 year olds
- From £4.05 to £4.20 for 16 – 17 year olds
- From £3.50 to £3.70 for apprentices.
You will need to ensure that you are paying the appropriate rate for each employee, as failure to pay the correct amount can result in expensive tribunal claims and even potential penalties of £20,000 per worker. Your HR department will also need to keep up-to-date records to prove their compliance with the new rules.
Statutory payment rises
Parental leave and sickness absences are to be expected in every workplace, so on top of the usual procedures that will need to be followed in these circumstances, there are also changes in payment to contend with. As of April, statutory maternity, paternity, shared parental and adoption pay will rise from £140.98 to £145.18 a week, whilst the rate of statutory sick pay has increased to £92.05 per week. In addition to making sure that these payments are accurate, your HR department will need to review any policies such as the maternity and sickness policy that might mention these rates.
If a dispute arises in the workplace, one potential solution is to offer a termination payment in exchange for an employee’s promise to not make any claims against the employer, which prevents costly and time-consuming employment tribunals. The new changes mean that a termination payment of up to £30,000 can be paid tax and NI free, but any figure above that will be subject to taxation and national insurance contributions. The new rules also mean that pay in lieu of notice will also be taxed.
Since July 2017, employees seeking to bring a tribunal claim no longer have to pay a fee – good news for disgruntled employees, but not so good news for employers, who could potentially see an increase in tribunal claims as a result. Combined with the maximum award for unfair dismissal having rocketed to £83,682, your business will need to have watertight policies and procedures in place to avoid being hit with a tribunal claim.
There are other potential legal changes coming later on this year, including updates to working time restrictions and holiday pay, as well as Brexit negotiations being finalised around October. Your HR department will need to stay vigilant to make sure your business doesn’t get caught out.