Employment Law Update - April 2016
Employment law solicitor Natalie Ruane highlights some of the latest employment law changes including increases to statutory redundancy pay, the introduction of the national living wage and gender pay reporting.
Increase in statutory redundancy pay in force
As from 6th April 2016, the gross capped weekly wage figure for statutory redundancy pay and the limit on the amount employment tribunals can award for unfair dismissal increased.
The statutory redundancy payment and the basic award made for unfair dismissal claims is calculated by using a specific multiplier against a capped gross ‘week’s pay’ figure. On 6th April 2016, this figure increased from £475 to £479. This means that the top award of statutory redundancy pay also increases from £14,250 to £14,370.
The maximum compensatory award for unfair dismissals on or after 6th April 2016 also increased to £78,962 from the current £78,335.
It is important to factor in these increases when considering any redundancies or exit packages, as it could have a significant impact on the amount employers need to pay out if they are making large-scale redundancies or settling a potential tribunal claim.
Job Adverts - New Guidance Published
The Equality and Human Rights Commission (EHRC) has published new guidelines on advertising for organisations who advertise jobs or services.
If an employer advertises in a way that won’t reach people with a particular protected characteristic (for example, older people, working mothers or those with disabilities), or doesn’t advertise a job at all - this might in some situations lead to indirect discrimination, unless the employer can objectively justify their approach. This is because not advertising or only advertising in a very limited way may stop people with a particular protected characteristic finding out about a job, which could count as detrimental treatment.
If an employer does advertise, whether on a notice board, in a shop window, in a newspaper or on a website, or by using a recruitment agency, an employer must not give the impression they intend to discriminate.
The EHRC guide gives the following examples:
Discrimination by not advertising
A large employer recruits workers to driving jobs through word of mouth. This results in everyone who has a driving job being a member of the same few families or a friend of these families. All the family members and their friends are white, despite the workplace being in an area of high ethnic minority population. Unless the employer can objectively justify the way drivers are recruited, this is likely to be indirect discrimination because of race.
Advertising which is potentially discriminatory
An employer advertises for a ‘waitress’. To avoid direct discrimination because of sex, they should advertise for ‘waiting staff’ or ‘waiter or waitress’.
There are some exceptions listed in the Core guidance, for example if a young actor was required to take the part of a teenager in a play, then older applicants will not meet this criteria - the employer could mention a particular protected characteristic (in this case age) in the job advertisement.
The link for the recently published guide is at http://www.equalityhumanrights.com/en/sites/default/files/publication_pdf/EHRC Advertising - Equality Law 12.pdf
National Living Wage
From 6th April the National Living Wage (NLW) was introduced at £7.20 per hour for workers aged 25 and over. Workers aged 24 and under will only be entitled to the NLW rates for their appropriate age, which are currently:
- 21-24 year olds: £6.70 per hour
- 18-20 year olds: £5.30 per hour
- 16-17 year olds: £3.87 per hour
- Apprentices: £3.30 per hour
This NLW will rise to £9.00 per hour in 2020.
Impact on business
The British Retail Consortium, which represents the retail sector, has claimed that as many as 900,000 jobs could be lost in the sector, as a result of both the NLW and the Apprenticeship levy.
Some businesses have been reported as taking away employee perks to make up for the rise in wages.
Some businesses have stopped paying staff during lunch breaks after the introduction of the NLW. Employees are legally required to have a break if they work for more than six hours but are not entitled to be paid for that unless it is in their contractual terms.
What penalties will employers face if they don't pay the NLW?
From 1st April, penalties for non-payment of the NLW doubled compared to the previous sanctions for non-payment of the National Minimum Wage. The fine for employers who fail to pay has increased from 100% of the money owed in wages to 200%. Employers found guilty can also be disqualified as a company director for up to 15 years. The maximum penalty will remain at £20,000 per worker. A new enforcement team has also been set up at HM Revenue and Customs to pursue criminal prosecutions.
Gender Pay Reporting
The Government have unveiled plans for a league table ranking large firms by gender pay gap from 2018, in which companies with more than 250 employees will have to disclose how much they are paying in salaries and bonuses to their male and female staff.
This means that affected companies will have to begin collating data from 1st May 2016 – being the start of the reporting year ending April 2017.
It is illegal to pay different amounts to men and women doing the same jobs under the Equal Pay Act. The Office for National Statistics estimates that the pay gap currently stands at 19.2% for full- and part-time workers in the UK, meaning a woman on average earns around 80p for every £1 earned by a man.
It is understood there will be a number of figures to be reported on, including mean and median calculations, bonuses and earnings distribution across different levels of income and seniority.
The reporting requirement includes workers as well as employees – so agency workers, temps and those on zero hour contracts will all be included.
Information has to be published on the company website – so companies with poor gender pay equality will be ‘named and shamed’: which in turn could give rise to potential Equal Pay claims from those being paid less than their male or female colleagues.
If you would like to discuss any of the above changes in more detail, please contact Natalie Ruane on 01228 552222.
About the author
Natalie is a Partner and leads the Employment Law & HR team and specialises in education.
Published: Thursday 14th April 2016