Employment law update: Key developments for April 2016
As always, April sees a raft of changes to employment law coming into force. As a result, we’ve put together an overview of these changes so that you can ensure your organisation is up to date, remains compliant and is on top of the most recent changes.
Introduction of National Living Wage
From 1 April 2016 the new National Living Wage (“NLW”) will apply to all workers aged 25 and over. This means that all employers will be obliged to pay workers aged 25 and over a minimum of £7.20 an hour, irrespective of size of the organisation and/or number of employees.
The current rates for those aged under 25 remains the same until October 2016 when increases take effect. BIS has published some helpful guidance on who is eligible for NLW and how to calculate.
Penalty increase for non-compliance with National Minimum Wage and National Living Wage
The penalty for non-payment of NMW and NLW will be increased from 100% of arrears to 200% of arrears from 1 April 2016. The penalty will be halved if the employer pays the penalty within 14 days. This move follows an increase in the maximum financial penalty for employers who fail to pay their workers NMW/NLW to £20,000 per worker, previously having been a £20,000 maximum for a breach regardless of number of workers.
Employment Tribunal - compensation limit increase
The maximum compensatory award for an unfair dismissal claim will increase form £78,335 to £78,962. The maximum amount of a week’s pay rises from £475 to £479.
Employment Tribunal – additional penalties
Employers who do not pay employment tribunal awards or sums due under settlement agreements will be required to pay additional penalties to the Secretary of State. From 6 April 2016 in addition to the power of tribunals to impose a financial penalty on employers found to have breached a claimant’s employment rights, a financial penalty can be levied on an employer who fails to pay a tribunal award promptly and in full (following receipt of a warning and penalty notice).
The penalty will be 50% of the unpaid sum, subject to a minimum of £100 and a maximum of £5,000. There will be a reduction of 50% if, within 14 days of the notice, the employer pays both the unpaid sum and penalty.
‘People with Significant Control’ register
From 6 April 2016, almost all UK companies (other than those that are publically traded and already report on control) as well as LLPs and SEs will be required to keep a new statutory register of people with significant control to be referred to as the “PSC register”. This will be one of the statutory registers that companies are required to keep. There will be an obligation to forward this information to Companies House from 30 June 2016.
The PSC register will contain information on individuals who qualify as a person with ‘significant control’. This will include those that own or control 25% of a company’s shares or voting rights, or who otherwise exercise control over the company and its management.
New General Data Protection Regulations
Originally expected to be adopted the early part of 2016, this now appears to have been put back to the summer of 2016 and will not come into effect until a further two years later. The Information Commissioner’s Office is urging companies to start preparing now and have published a 12 step checklist.
Compliance with the current Data Protection Act will meet the new regime’s requirements in many aspects, however, new elements and enhancements will arise together with a potential increase in fines for breaches.
Public sector exit payments
New Regulations are expected to come into force in April concerning public sector exit payments . These will allow the recovery of exit payments made to public sector employees who earn more that £80,000 and who return to any part of the public sector within a year of their exit.
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