April is the traditional month for a bevy of employment law changes. This month we saw a rise in the NMW and more reporting and tax changes. In this article we summarise some of the latest changes and have a quick look at how the Modern Slavery Act can impact SMEs.
National Minimum Wage (NMW)
As is customary, the National Minimum Wage rose on 1 April 2017. The new hourly pay rates are:
Apprentices £3.50
Under 18 £4.05
18 – 20 £5.60
21 -24 £7.05
25+ £7.50.
It is illegal to pay below you staff below the relevant NMW. It can also be potentially damaging to the reputation of your business since the HMRC regularly publish a ‘Name and Shame’ list of employers who fail to pay their staff the minimum wage rate.
Some employers have been found to be effectively paying below NMW because of questionable (and in some cases, unlawful) business practices. SportsDirect, for example, were found to be paying below NMW because of their practice of:
- subjecting warehouse workers to searches at the end of their shift on unpaid time, and
- deducting 15 minutes of pay if a worker clocked in 1 minute late.
Employers who pay their staff on or near the NMW should be especially careful in how they calculate wages and deductions so that they don’t unintentionally pay below NMW. Here are few areas to be particularly aware of:
- tips and gratuities – can’t be included in calculations to bring pay rate up to NMW
- deductions for tools or work uniform – deductions cannot take pay rate below NMW for any given pay period
- regular small amounts of unpaid work – you may be underpaying employees if they regularly do unpaid work e.g. waiting after shifts (e.g. SportsDirect), opening or closing a shop
- birthdays – employees who move up a pay band must be paid the new NMW rate promptly.
Gender pay gap reporting
As from 5 April, all employers in the private sector who employ 250 or more staff are required to publish a set of statutory calculations that shows how big a pay gap exists between male and female staff. If you are an employer with fewer than 250 staff then you can publish these figures if you choose.
There is no statutory penalty for failing to publish gender pay gap data. Having said that, the results will be public so the negative publicity if you don’t comply is expected to be enough of an incentive.
The ACAS website has produced a number of guides and fact sheets on gender pay gap reporting. Here is an overview of the key points:
- The statutory calculations are:
- the differences between the mean and median hourly rates of pay for male and female staff
- the differences between the mean and median bonuses paid to male and female staff
- the proportion and male and female staff paid a bonus
- the proportions of male and female staff in specified quartile pay bands.
- The number of staff is taken as that on the 5 April of any one year. The definition of who is an employee is that provided in the Equalities Act 2010 and could include workers and/or self-employed.
- The statutory calculations must be published on your ( the employer’s) website as well as on the GOV.UK website within 12 months (i.e. by 4 April the following year).
- You may provide a written narrative along with the figures. The idea is that this narrative can be used to explain why any gap exists, what challenges it presents to your company, what follow-up actions are planned, and what improvements have already been made.
One employer has already published their gender pay gap figures. You can see them here on the GOV.UK website.
Tax savings through salary sacrifice
As of 6 April 2017 the number of employee benefits that attract tax saving when being offered through a salary sacrifice scheme has been significantly reduced. The types of benefits affected included:
- some company cars
- gym memberships
- school fees
- parking
- health screening
- purchase of computers, mobile phones and other IT devices
- accommodation.
These benefits can still be offered through salary sacrifice schemes but they will be taxes the same as cash. The changes come into effect immediately for anyone joining a scheme on or after 6 April. Employees part of a scheme prior to 6 April will continue to receive tax relief until 6 April 2018 unless the arrangement is changed, ended, or renewed. Tax relief on cars, accommodation and school fees will continue until 6 April 2021 for those in a scheme before the cutoff date.
These benefits will continue to attract tax savings:
- employer pension contributions
- low emission company cars
- cycle to work schemes
- childcare provided by the employer and workplace nurseries.
Modern Slavery Act
The Modern Slavery Act 2015 requires businesses with an annual turnover of £36m or above to publish an annual Slavery and Human Trafficking Statement. The Statement should set out what steps (if any) have been taken to make sure that slavery or human trafficking does not occur in its business or supply chain. The Act sets out the type of information that could be included – there is no statutory format.
Slavery and Human Trafficking Statements must be published in a prominent position on the business website. A link to the company’s anti-slavery statement should also be included on the home page.
Smaller businesses, while not being required to publish Slavery and Human Trafficking Statement, may still be affected if they are part of a larger supply chain. If your business has an annual turnover under £36m but you supply goods or services to a larger organisation, you may be required to accept anti-slavery and trafficking clauses in supply contracts. This means that you, in turn, may need to examine your practices and those of any business you deal with.
If you need more information the Home Office guide is useful starting point.
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