Statutory Holiday Entitlement 2016

Due to the way that the Easter holidays fell in 2016 and how they will fall in 2017 means that employers whose holiday year is from 1 April to 31 March may not be providing their employees with the statutory entitlement of 28 days – 20 days holiday plus eight Bank Holidays for the current holiday year.

In 2016 the Easter Bank Holidays were 25 and 28 March, in 2017 they will be 3 and 6 April.  Unfortunately, employers cannot rely on the fact that employees benefitted in a previous holiday year because there were two Easters to take no action in this holiday year.

In order to avoid being in breach of statutory entitlements, employers whose holiday year is 1 April to 31 March will need to “top up” their employees’ entitlement by two days for one year only.  This can be done with a simple communication to employees, informing them that this is a "one-off" event and is not a promise for the future.

National Living Wage

With effect from 1 April 2016 the new National Living Wage (“NLW”) will be introduced, which will increase the National Minimum Wage (“NMW”) for workers aged 25 and over to £7.20 an hour.  This should not be confused with the voluntary living wage calculated independently by the Living Wage Foundation, which is currently £8.25 an hour (£9.40 an hour in London). 

It is the Government’s intention that the NLW will increase to £9 an hour by 2020.  Increases in the NMW will take effect in April each year in future although it is not yet clear whether any increases in NMW will be applied in October this year.  It would, however, be prudent to assume that increases in the NMW bands will take place in October but will exclude the NLW.

If you have not already made arrangements for this adjustment, you should be reviewing the impact on your payroll now.  Employers operating a salary sacrifice arrangement should be aware that salary sacrifice cannot reduce a worker’s cash earnings below the NMW.  It is not clear whether this requirement will apply to the NLW, but again it would be prudent to assume that it does. 

Employers should also consider that other benefits are linked to pay, for example pension contributions, life cover, income protection and therefore the cost of these benefits will also increase.  Employers should, however, beware of any thoughts of consolidating certain allowances or supplements into basic pay so that the overall remuneration package remains the same but more of it counting towards the NMW/NLW.  An employee must not suffer any detriment as a result of qualifying for the NMW/NLW and any changes to benefits to satisfy the requirements could contravene this rule.

Zero hours contract workers are entitled to the NMW/NLW in the usual way.

Mandatory Gender Pay Reporting

The Government has just announced its requirements for employers with 250 or more employees to publish their gender pay records, with mandatory reporting from April 2017.  This followed a period of consultation with employers on issues such as frequency of reporting, threshold of employees and the cut off period for calculation. 

The gender pay gap is the difference between all men and women’s average salary and directly affects the types of job women apply for and the level of seniority they achieve. In the UK, this differential was 19.2 per cent last year.

The requirements are more rigorous than expected  and will include reporting on bonuses as well as basic pay.  This is intended to capture employers who use bonus payments to conceal the differential between salaries for men and women.  From 2018 the government will publish league tables intended to shame those employers who have failed to take appropriate corrective action.

The new legislation will also apply to public sector bodies in England – public sector bodies in Scotland and Wales are already subject to reporting requirements.

Affected employers should not underestimate the effect of this reporting on their brand and reputation and their ability to recruit and retain staff. Nicky Morgan, the Education secretary, says women should boycott companies that are failing to close the gender pay gap.

Employers should now be reviewing their pay scales and practices; understanding their workforce; and analysing the current arrangements to identify potential areas of risk. 

Travel time

In September 2015, the European Court of Justice ruled that time spent travelling to and from the first and last appointment for workers without a fixed office should be regarded as working time.  It does not affect those workers with a fixed place of work.  This ruling relates to the EU Working Time Directive and therefore also applies to the UK.

The ruling said: "The fact that the workers begin and finish the journeys at their homes stems directly from the decision of their employer to abolish the regional offices and not from the desire of the workers themselves.

"Requiring them to bear the burden of their employer's choice would be contrary to the objective of protecting the safety and health of workers pursued by the directive, which includes the necessity of guaranteeing workers a minimum rest period."

Employers should consider the effect on the pay of any peripatetic workers they may have.  Specifically, it may have an impact on the National Living Wage or the National Minimum Wage if they are not already paid for this time.   If these employees have opted out of the working time regulations, it should not have the effect of reducing working hours, but employers should ensure that mobile workers are able to take their entitlement of 11 hours’ rest between when they reach home from their last appointment to setting off for their first appointment next day.