Key employment law changes on the horizon for Spring 2018

With heavy snowfall across the country thanks to the “Beast from the East”, it’s hard to believe that Spring is just around the corner. We have put together a summary of some of the key employment law changes coming into effect in April and May that employers should be aware of.

General Data Protection Regulation

Changes to UK data protection law will come into force on 25 May 2018 when General Data Protection Regulation (GDPR) takes effect. GDPR compliance will require a greater focus from employers on the legal basis for processing of information and more information to be supplied to employees about the nature of the processing.

Employers should be preparing now for the introduction of GDPR. A key step in that process will be for employers to conduct a data audit to establish what employee data is held, where it was collected from, the purpose for which it is collected, what it is used for and who it is shared with. Employers should use that audit as the basis for further action, including providing employees with fair processing information (in the form of a privacy notice) and refreshing existing or introducing new HR policies. Procedures should be put in place to monitor and ensure compliance with GDPR, and training on the new regulations should be introduced throughout the organisation.

Tax on termination payments

Changes to the tax treatments on payments in lieu of notice (PILON) are coming into force. The intention is to tax as earnings the basic pay that an employee would have earned had the employee worked their notice in full.

Employers will be required to apply a formula to the total amount of payments or benefits made to an employee in connection with the termination of their employment. The element that represents the basic pay that the employee would have received had their employment been terminated with full or proper notice will be subject to tax and Class 1 National Insurance Contributions.

Currently, employers are in some circumstances able to make a payment in lieu of notice without deducting tax where there is no PILON clause in the contract of employment. Under the new regime, this will no longer be possible.

HMRC has confirmed that the changes look to both the date of payment and the date of termination. This means that the changes will only have effect where the payment is made, and where the employment is also ended, on or after 6 April 2018.

The rules are complex and separate tax advice should be sought.

Gender Pay Gap Reporting

The deadline for reporting gender pay gap information is looming. Large employers with 250 or more employees on the snapshot date of 5 April 2017 are under an obligation to report their gender pay gap data, and they have until 4 April 2018 to do so.

The information that must be reported includes the difference between male and female average hourly pay and the difference between male and female average bonus pay. The information must be published on the employer’s website and on a Government website. To date, just over 1300 employers have published their data.

Tribunal compensation limits increase

The maximum compensatory award that can be awarded by an Employment Tribunal in an ordinary unfair dismissal claim will rise from £80,541 to £83,682 (or 52 weeks’ pay, whichever is lower). This will apply to cases where the dismissal takes place on or after 6 April 2018.

The maximum amount of a week’s gross pay, used to calculate statutory redundancy payments and basic awards for unfair dismissal claims, will increase from £489 to £508.

National Living Wage

With effect from 1 April 2018, the National Living Wage for workers aged 25 and over will increase by 33p to £7.83 per hour. The National Minimum Wage will increase to £7.38 for 21-24 year olds, £5.90 for 18-20 year olds and £4.20 for 16-17 year olds.

Statutory payments increase

The level of Statutory Maternity, Adoption, Paternity and Shared Parental Pay will increase on 1 April to £145.18. Statutory Sick Pay will increase from 6 April to £92.05.

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28 February 2018

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