Employment Law 2016: What to expect?

Mon 11th Jan 2016

We take a look at some of the key developments expected in employment law over the coming year.

The National Living Wage

One of the most eagerly anticipated changes is the introduction of the national living wage in April of this year.

The national living wage will effect workers aged 25 years and older and will initially be set at a rate of £7.20 per hour; 50p higher than the current national minimum wage. The Government intends this rate to be increased gradually so that total wages reach 60% of median earnings by 2020. The Government has also announced plans to increase the financial penalty payable by employers who fail to meet the national living wage from 100% to 200% of the underpayment due to each worker, no doubt as a deterrent and to reduce the number of instances of breaches occurring.

Gender Pay Gap Reporting

The Equality Act 2010 requires employers to pay men and women equally where they are undertaking broadly similar work or work of an equal value. Despite this, gender pay equality remains an issue in the UK. In 2015 the Government consulted on mandatory gender pay gap reporting regulations as part of their commitment to addressing this inequality. If approved, the regulations will require large employers in England, Scotland and Wales to publish details of differences in pay and bonuses awarded between male and female employees. Further details of how this reporting will work in practice are expected to be published in 2016.

Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015

Exclusivity clauses in zero hours contracts will become unenforceable under UK employment law. The above Regulations will come in to force on 11 January 2015 and will build upon this. The Regulations state that employees will be regarded as being unfairly dismissed if the dismissal was on grounds of breach of an exclusivity clause in a zero hours contract. The Regulations also seek to prevent employees from being subjected to any detriment for failing to comply with such a clause.

Shared Parental Leave for Grandparents

The Government will consult on the proposal to extend shared parental leave and shared parental pay to grandparents in recognition of the increasing role they play in childcare arrangements. The consultation process is due to commence in 2016 with new legislation expected in 2018.

Simplifying Tax Payable on Termination Payments

During 2015, the Government gave consideration to how the tax and National Insurance contributions treatment of termination payments could be simplified and made fairer. Currently, payments received in connection with the termination of employment are subject to different tax treatment depending on the type of payment. The first £30,000 of payments by way of compensation for loss of employment is also tax free.

The Government consultation document published in summer 2015 proposed, amongst other things, the removal of the distinction between different types of payments as well as the replacement of the current £30,000 tax free allowance with an exemption for redundancy. The Government is expected to publish details of the responses to the consultation document during 2016.