April is always a busy time of year for HR professionals, with new and amended employment laws taking effect. In April 2018, large employers face their first gender pay gap reporting deadline. There are also important changes to the taxation of termination payments and increases to the national minimum wage, maternity pay and redundancy payments.
1. Meet the first gender pay gap reporting deadline
April 2018 employment law changes – the gender pay gap
In the past few months, the number one priority for many HR professionals at employers with 250 or more employees has been to put the finishing touches to their first gender pay gap report.
The deadline for private-sector and voluntary-sector employers is 4 April 2018, while public-sector employers must publish their first gender pay gap report no later than 30 March 2018.
The gender pay gap report must appear on the employer’s website in a publicly accessible manner and, once published, must remain there for at least three years.
Employers should also upload the gender pay gap results to the Government’s reporting website. Although commentary on the gender pay gap results is not required, many organisations are adding a narrative to help to put their numbers in context, particularly where there is a wide gender pay gap.
Once the deadlines pass, large employers that have not published their gender pay gap figures are likely to face public criticism for failing to do so. By mid-March, around 3,000 of the estimated 9,000 employers covered by the requirement had published their figures, suggesting that many employers will still be working into April on finalising their numbers.
- Example gender pay gap report
- Reporting the gender pay gap: 2017 XpertHR survey
- Gender pay gap reporting: the basics
2. Review how your organisation makes termination payments
Taxation of termination payments
The proposed introduction of employer national insurance contributions on termination payments in excess of £30,000, which was also due to take effect from 6 April 2018, will now be introduced from 6 April 2019.
An important change to the rules on taxation of termination payments comes into force on 6 April 2018.
Whether or not a payment in lieu of notice is taxable has traditionally been dependent on the terms of the employee’s contract of employment:
- If there is an express clause allowing the employee to be paid in lieu of notice, the payment represents wages and is subject to tax and national insurance contributions.
- If there is no express clause, but the employer’s practice is always to pay in lieu, a payment in lieu of notice term is implied and it may be taxable.
- If there is no express clause and no chance of a clause being implied, the payment is regarded as compensation for a breach of contract and the first £30,000 is tax free.
The change simplifies the rules so that all payments in lieu of notice, whether contractual or not, are taxable and the £30,000 exemption does not apply to any payments in lieu of notice.
HR professionals should ensure that no payments in lieu of notice are treated as non-taxable. The change affects payments made on or after 6 April 2018 in relation to terminations that take place on or after that date.
- If an employer pays an employee in lieu of notice, is the payment taxable?
- Notice and pay in lieu of notice: the basics
- How to make a payment in lieu of notice
3. Ensure that your organisation is paying the national minimum wage
XpertHR’s legal timetable provides summaries of all pending employment laws and regulations, with implementation dates.
The national living wage for workers aged 25 and over increases to £7.83 per hour on 1 April 2018.
Other national minimum wage rates also increase, with rates rising to £7.38 per hour for workers aged 21 to 24, to £5.90 per hour for workers aged 18 to 20 and to £4.20 for workers under 18 who are no longer of compulsory school age.
HR professionals should ensure that workers are being paid at least the national minimum wage rate that applies to them.
HR must keep adequate records of all payments so that they can show that their employer has complied with the national minimum wage rules.
- How to review your organisation’s pay rates against the national minimum wage
- National minimum wage: the basics
- Podcast: National minimum wage
4. Increase statutory family-related pay and statutory sick pay
The weekly rate of statutory maternity, paternity, adoption and shared parental pay increases to £145.18 for pay weeks commencing on or after 1 April 2018.
The weekly rate of statutory sick pay increases to £92.05 from 6 April 2018.
It is up to HR to make sure that staff on maternity, paternity, adoption shared parental leave and on sick leave are paid these statutory minimum rates. HR professionals also need to review their policies and documents that mention the rates, such as their maternity policy and sickness absence procedures.
- Family-friendly statutory rates
- Example family-friendly policies, letters, forms and contract clauses
- In what circumstances can an employee claim statutory sick pay?
5. Adjust your organisation’s statutory redundancy pay calculations
Unfair dismissal compensation
The maximum compensatory award for unfair dismissal increases to £83,682 for dismissals that take place on or after 6 April 2018.
New limits on employment statutory redundancy pay come into force on 6 April 2018.
Employers that dismiss employees for redundancy must pay those with two years’ service an amount based on the employee’s weekly pay, length of service and age. The weekly pay is subject to a maximum amount. This amount is £508 from 6 April 2018.
HR professionals should ensure that calculations for statutory redundancy payments are made on the basis of this maximum amount for redundancy dismissals on or after 6 April 2018.
- Statutory redundancy pay: quick reference
- Example form setting out particulars of redundancy payment
- Award limits and amounts payable under employment legislation
6. Continue your organisation’s GDPR preparations
GDPR: more resources
XpertHR has a range of resources to help employers in their GDPR-compliance efforts.
As soon as HR professionals have finished their April employment law tasks, their attention will turn to final preparations for the General Data Protection Regulation (GDPR), which comes into effect on 25 May 2018.
Many organisations will be well advanced with their preparations, which includes embedding data minimisation and privacy considerations in their procedures; ensuring that they have a legal basis for processing personal data; and preparing privacy notices for employees and job applicants.
There are also changes to the law on data subject access requests. The publicity surrounding the GDPR means that employers may see a spike in requests from employees and job applicants to see the information that your organisation holds about them.