Keeping a close eye on the government

21 December 2016

Despite the increasing pressures faced by employers to keep their businesses profitable and employees in jobs, the government continues to add to their reporting and financial burdens while removing key advantages that have helped fund their growing obligations.

Still no bang for your buck!

After much deliberation, the government will push ahead with the introduction of the apprenticeship levy in April 2017, bringing additional costs to businesses that have salary costs in excess of £3million.

Crucially however, there is still no detail on how employers in Scotland will be able to access the funds.

Despite the lack of information, it is critical that employers budget for this additional cost now and look at the impact the levy will have on profit margins.

A Fair Sacrifice?

It has long been speculated that the benefits of salary sacrifice schemes will be removed given the government’s obvious distaste for them. Many argue that the advantages offered by such schemes go only some way to alleviate the snowballing requirements placed on employers and that they should be allowed to continue.

However, confirmation was received in the 2016 Autumn Statement that the benefits of such schemes will be removed with effect from April 2017, with some exemptions and protection windows in place.

It is a positive that pensions will be exempt from the changes given that many employers are using salary sacrifice savings to fund another substantial drain placed on them by auto enrolment. We would encourage employers set to auto-enrol in the next few years to consider the advantages of salary sacrifice in this regard.

Shortening the Gap

The gender pay gap has been a hot topic for a number of years now, and it is no longer just a consideration for large supermarket chains or local councils!

New reporting requirements, to start in 2018, will require employers with more than 250 staff to publicise their gender pay gaps. Not only will the new requirements mean additional time and administration burdens on your HR and payroll teams, or extra costs from your payroll provider if you outsource, it could also lead to challenges from staff where there is a gender gap.

Time to Terminate?

The Government has finally published its draft legislation on termination payments with changes coming into effect from April 2018.

Employers should be aware that the changes are likely to make terminations costlier, increasing employer NICs liabilities and potential increases needed to the actual packages to compensate employees for lower net payments they are likely to receive.

If you are planning on making any redundancies given the current market conditions then timing could be critical to minimise any additional costs for both the business and the employee.

For more information contact Charlotte Stewart, IES Manager, charlotte.stewart@aab.uk

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