Employment law update: what you need to know

Important changes in employment legislation have been announced. Many organisations will be affected and we have provided a summary of those changes and how employers should begin to prepare. In this edition we look at:

Accountability and whistleblowing in the financial sector

On 7 September 2016 new accountability and whistleblowing legislation was introduced. It creates the requirement for large organisations operating within the financial services to take a higher level of accountability for potential wrongdoing. The legislation includes a more transparent and formal process for whistleblowers to ensure sufficient protection is provided to them.

Affected organisations include: banks, building societies, insurance firms and investment firms whose turnover is in excess of £250m each year.

Organisations affected by the new legislation should already have appointed a senior manager responsible for the role of whistleblowers champion. This role is described as a level of authority and independence within the firm and is tasked with ensuring robust whistleblowing policies and procedures.

The Financial Conduct Authority (FCA) states individuals working for financial institutions may be reluctant to speak out about bad practice for fear of suffering personally as a consequence.

In summary, the new rules require organisations to:

  • establish and maintain internal whistleblowing policies designed to cope with all types of disclosure from all types of individual;
  • amend settlement agreement styles to make clear that they do not prevent signatories from blowing the whistle and remove any text which claims to limit their right to do so;
  • inform and provide adequate training to UK-based employees of the whistleblowing services offered by the FCA and PRA;
  • require its appointed representatives and tied agents to tell their own UK-based employees about the FCA whistleblowing services;
  • advise the FCA if it loses an employment tribunal with a whistleblower; and
  • present a report on whistleblowing to its board at least annually.

Modern slavery statements

The Modern Slavery Act 2015 requires UK based companies supplying goods and services with an annual turnover of at least £36m to publish a modern slavery statement for every financial year ending on or after 31 March 2016.

The government’s guidance for publishing this is within six months of the end of the financial year. Meaning for organisations with a financial year running April to April, the 30 September 2016 will be the publication date.

The statement must be obviously published on the company’s website or be available within 30 days of a written request for it to be produced. The statement must be signed by a director. 

Mandatory gender pay gap reporting

Larger employers need to start preparing to publish information about differences in pay between male and female employees. The regulations are to establish whether or not there are differences in mean and median pay and mean bonuses based on gender and are due to come into force in early 2017. Employers must report on the proportion of male and female employees who received bonus pay and where male and female employees sit within pay bands.

The information must be published in English and accessible on the organisation’s website. It must include a signed declaration that the information provided is accurate. A government website will also carry the information.

Reporting will be required of all private and voluntary sector organisations with 250 or more employees. It is likely to be introduced on a phased basis, with larger organisations being required to report first.

The first reports are expected to have to be published by April 2018, this will be for the pay period beginning from April 2017. The bonus information will be required for the period leading up to April 2017. In some instances employers need to have started collating data as far back as April 2016 in order to be compliant.

Prudent employers may like to consider analysing their data ahead of time to address any issues before publication becomes necessary.

Fines will be introduced for non-compliance and its introduction is bound to raise questions about equal pay within your organisation.

Minimum wage increase

The minimum wage increases with effect from 1 October have been announced. There has been no announced increase to the National Living Wage so this will remain at £7.20.

Other rates increase as follows:

  • aged 21 - 24 years will increase to £6.95 per hour;
  • aged 18 - 20 increases to £5.55 per hour;
  • aged 16 and 17 increases to £4.00 per hour; and
  • apprentice rate increases to £3.40 per hour.

An important note regarding apprentice pay rates

The rate shown above only applies to apprentices aged under 19, or over 19 and in their first year of their apprenticeship. Apprentices aged over 19 or those who have completed their first year of apprenticeship are entitled to receive the relevant rate based on their age.

This is the last time we expect to see minimum wage increases in October. Future changes will take place in April from now on.

Pensions auto-enrolment

The government has amended the phased increase in pension contributions under the auto-enrolment scheme.

The first increase was originally planned for October 2017 but is now delayed until April 2018. The new schedule is as follows:

  • 1 October 2012 to 5 April 2018 – total contribution of two per cent of a minimum one per cent employer contribution;
  • 6 April 2018 to 5 April 2019 – total contribution of five per cent inclusive of a minimum two per cent employer contribution; and
  • 6 April 2019 onwards – total contribution of eight per cent inclusive of a minimum three per cent employer contribution.

For further assistance on any of the changes please contact one of our team.