What small businesses need to know about employment law in 2016

With a number of impending amends already confirmed, and several more rumored changes in the pipeline, read on to find out more about key updates

2015 was a big year for employment law, and 2016 looks like it’s going to be just the same. Here, we’ve outlined what you need to know about employment law now, and how the law might change in the coming months.

What changes happened to employment law in 2015?

There were a range of changes and legal cases which delivered new interpretations on the law last year, including the following:

  • Shared Parental Leave became available
  • Zero Hours exclusivity clauses were banned
  • The National Living Wage was announced for 2016
  • Fit for Work went live after a steady rollout
  • The Minimum Wage increased
  • Cases were seen relating to Holiday Pay and Working Time Regulations too

If you aren’t familiar with any of these changes or legal cases, all of which are sure to impact upon many small businesses, there’s a helpful roundup of all the updates available here.

What about changes to employment law in 2016?

2016 is likely to see a huge number of changes already, however they are split into two camps, very likely; meaning in draft or confirmed, or unconfirmed updates we’re keeping an eye on.

What’s very likely, or definitely happening?

1. Auto-enrolment

If you’re a small employer with fewer than 30 employees, this year you will need to start auto-enrolment of all eligible staff to a suitable workplace pension.

Here’s what you need to find out right now, if you haven’t even begun to think about organising your staff’s workplace pensions:

  • When your staging date is — businesses with under 30 staff are being enrolled this year
  • Which of your staff are eligible for auto-enrolment
  • What you need to contribute to this workplace pension
  • Where you are going to source your workplace pension scheme

If you haven’t yet got an answer to any of this, the checklist here can help you get on the right path.

2. The National Living Wage

As mentioned above, the government last year announced a new National Living Wage for employees 25 and over. This will be set at £7.20 per hour and is set to come into force in April.

The government’s aim is that this new Living Wage will rise to £9 by 2020, so small businesses may want to start looking at how they manage the performance of their staff. The FSB has warned the Living Wage could potentially be harmful for small businesses, so you may need to start thinking about how you can get the most return for your payroll bill.

3. No increases to Statutory Pay

It looks as if, in a break from tradition, the government will not be increasing Statutory Pay levels this April. While they would usually do this, the low inflation we’ve seen over the past year means that they’re giving employers a bit of a break from more admin!

You can find all the current levels of Statutory Pay on the government’s site here.

4. Further changes to Zero Hours contract law

A new law introduced this January has extended the regulations introduced last year on exclusivity clauses in Zero Hour contracts. Not only is exclusivity now banned, but employees can also claim unfair dismissal from day one, should the employer rely on these outlawed clauses (as opposed to after the usual two years of service).

What should we be keeping an eye on?

1. The EU Referendum

The big one, are we in or out of the EU? This year could be decision time, but then it might not.

If the vote is made this year, and we choose to leave, this could have a huge impact on employment law in the UK. There is a huge amount of law relating to working time etc. that relies on EU legislation, so a ‘Brexit’ could change a lot. Find out what small business owners think about a potential exit here.

2. Rulings on Working Time Regulations and Holiday Pay

Essentially, several cases have been brought to clarify whether certain activities undertaken by staff should be counted as ‘working time’. For example, travel to and from work where the employee has no fixed place of work, or attending health and safety meetings or other work related meetings need to be treated as ‘working time’ under the regulations.

Furthermore, when calculating Holiday Pay, multiple cases are still going through the courts which suggest that an element of average overtime and commission should be included as part of the calculation.

However, the final say on the detail of these changes is still yet to come, so we’ll be keeping an eye on this over the coming year — and we’d suggest you do too.

3. Shared Parental Leave for grandparents

As if Parental Leave wasn’t complex enough, it looks as though the government may be extending Shared Parental Leave (SPL) to grandparents this year too. Potentially adding more confusion to the already complex eligibility process required for SPL.

4. Changes to exploitation laws

Currently, repeatedly breaking employment laws means that you’re liable for a large fine. However, under new laws proposed to take effect in 2016, what the government calls ‘aggravated infringement’ of employment law could become a criminal offence.

This will also be enforced by a new officer, the director of labour market enforcement who will be responsible for overseeing how all non-compliance by employers is dealt with, however accidental. So it would seem that the government is taking breaches of employment law even more seriously than before.

5. Consultants to be added to payroll

A big rumour as opposed to anything official, there could potentially be a change to the law meaning that any contractor working for you for longer than a month would be required to be added to payroll. A prospective nightmare for employers throughout the UK!

6. Tax treatment of termination payments

The government has been consulting with businesses about how tax is worked out on payments when an employee’s contract is terminated.

Any further clarity on this subject would be great for employers, as this is a bit of a grey area. However, it could mean the costs of terminations increase in future.

7. Blind recruitment

The government has been informally stating its wish for big businesses to follow the ‘blind recruitment’ trend in recent months. Essentially meaning that employers wipe any identifying information from CVs when they are received, and before any decisions are made.

It’s not anywhere near being made law, but we’ll be keeping an eye on it this year, just in case.

8. 30 hours of free childcare

This may not affect your staff directly, but it’s worth looking at as employers may have to make adjustments to hours should employees want to work the required 16 hours to be eligible.

9. Apprenticeship funding

There is a potential new Apprenticeship Levy coming in 2017, which will be set at 0.5% of payroll, should it exceed £3m. A win for smaller employers!

And there you have it, everything you might need to think about in employment law in 2016, or might want to know.

If it all seems very overwhelming, you’re not alone, and there is always help available out there for small businesses looking for HR support and advice on employment law. You just need to know where to look

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