For employers, 2017 will see increased pressure on so-called EJams (employers just about managing). In terms of financial pressure, April will see the annual minimum wage increase, introduction of the apprenticeship levy and the immigration skills charge. The pressure builds further due to the increase in pension auto-enrolment, whilst the current advantages of salary sacrifice are being scaled back. Employers will also have to contend with increased scrutiny of the gender pay gap and a continued focus on board diversity.
Although positive for employees, employers will need to accommodate the increase in the National Living Wage from £7.20 to £7.50 an hour and the National Minimum Wage from £6.95 to £7.05 an hour.
The apprenticeship levy will mean that all UK employers with annual wage bills of more than £3 million will have to pay 0.5 per cent of their annual wage bill towards the cost of apprenticeship training.
After the implementation of the immigration skills charge, employers with migrant workers under tier 2 of the points-based system of immigration will be subject to a levy of £1,000 per certificate of sponsorship per year.
Salary sacrifice tax and NIC advantages will also reduce. The only benefits that will continue to enjoy tax and NIC relief through a salary sacrifice arrangement are enhanced employer pensions contributions, childcare benefits, equipment provided under the cycle to work scheme and ultra-low emission cars. Arrangements in place before April 2017 will be protected until April 2018, and arrangements for cars, accommodation and school fees will be protected until April 2021.
Parents should note the changes to childcare vouchers, which will be removed in their current form. From early this year, there will be introduced a new tax-free childcare scheme under which qualifying working families will be able to claim 20 per cent of qualifying childcare costs for children under five (and disabled children under 17) up to a cap of £2,000 per child per year. The scheme will be available for families in which the total household income of the parents is at least £50 per week, but there are exceptions, including a parent being an additional rate taxpayer.
The implementation of the Trade Union Act is expected this year and will bring increased ballot thresholds, introduce new information and timing requirements in relation to industrial action and impose legal requirements on unions for the supervision of picketing.
The gender pay gap must be published by UK employers with at least 250 employees within one year of 5 April 2017, including mean and median overall pay and bonuses for each gender. The information will comprise a snapshot of gender pay data in April 2017 and annually thereafter in April, to be published on the employer's and a Government website by 4 April 2018, and annually thereafter.
Whilst the Scottish Parliament has already committed to removing tribunal fees (at a date yet to be confirmed), in England and Wales, in March, the Supreme Court will determine Unison’s judicial review challenge of the fees regime. The removal of fees would mean more claims, therefore, increased defence costs (and, where a claim succeeds, awards) for employers to bear.
We also await the outcome of a Government Inquiry focussed on the rapidly changing nature of work, the status and rights of agency workers, the self-employed and those working in the gig economy. This could bring about changes to the definitions of agency workers, casual workers and the self-employed and their categorisation for the purposes of tax, benefits and employment law.
Of course, Brexit will remain on our radar given that much of the UK's employment legislation is derived from EU law. Theresa May has made clear, however, that for so long as she remains Prime Minister, existing workers' rights will continue to be guaranteed.
Gina Wilson is an Employment Law Partner, Clyde & Co (Scotland) LLP