New year brings fresh challenges for business
This is likely to be a year when there is greater focus on gender pay equality, and on more childcare support for parents of children under four. There may be less strike action, but it may cost employers more to ‘exit’ staff. And employers may be given the power to ‘snoop’ on staff lawfully.
Employers face increased cost, delay and complexity when ‘exiting’ staff if proposed changes to the taxation of termination payments are introduced. A consultation
by the Office for Tax Simplification in October suggested that all termination payments should be taxable, although with some limited exemptions. Currently non-contractual termination payments under £30,000 are paid tax free, so there will be pressure on employers to ‘gross-up’ such payments if the changes go ahead. They could even lead to more disputes. For example, only part of the sum paid to a redundant employee with more than two years’ service will be tax free, and it’s not clear whether payments made as part of a restructuring exercise that does not meet the legal definition of redundancy will be exempt.
Currently employees do not pay tax on any contribution paid by their employer to legal fees when they are asked to sign a Settlement Agreement. The proposals suggest removing this concession which, again, is likely to result in pressure on employers to gross up the contribution.
Gender pay equality
Paying women less than men to perform like work has been unlawful since 1970 but the gender pay gap still exists. In July, the government consulted
on how to introduce a requirement for employers with more than 250 staff to report their gender pay gap figures, with the aim of eliminating the gender pay gap. Its response is due early this year.
This poses challenges for business including where and how often they should report such data, whether their existing systems can produce it, and whether providing further information on the context of the pay differences should be voluntary or compulsory. Perhaps the biggest issue is whether producing this information will make a difference in achieving pay equality.
Employers should be planning for the change now, which may mean carrying out equal pay audits to assess the extent of any risk of legal challenges arising from publishing such figures.
Trade Union Bill
The Trade Union Bill 2015
, currently making its way through Parliament, may be in force by this April. Its key feature is the introduction of a new voting threshold to make strike action less likely in all sectors. A higher proportion voting for strike action will be required for those working in ‘important public services’, including transport and health, both of which have been the subject of strike action recently.
Even if a vote does achieve the new voting thresholds, employers will be able to dilute the impact of strike action. The current ban on using agency workers to cover striking workers will go and the legislation will bring in a new four-month time limit on a strike mandate, after which a new ballot will be required.
Helen Farr is a partner at Fox Williams LLP