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Small business need to be ready for employment law changes in 2016

Last year saw a number of significant rulings and changes to UK employment Law and 2016 is likely to include a similarly high number of changes for which businesses need to be prepared.

Small to medium-sized enterprises (SMEs) should start planning now for the most significant changes to employment law. To help you with this please find the changes below:

National Living Wage

The new National Living Wage will require employers to increase the wages of workers aged 25 and over. From April 2016 the minimum wage for this group will increase to £7.20 an hour; an increase of 50p on the current full rate for this age group. The National Living Wage will increase every year, with the aim of it being 60 per cent of median earnings. It is expected to be £9 by 2020.

As with previous changes to the statutory wage, failure to pay could lead to fines and the prospect of being named and shamed by HM Revenue & Customs (HMRC).

Workplace pensions 

Although auto-enrolment has been in force for several years now, its phased introduction means that many smaller employers will now only begin to get to grips with it in 2016 and 2017.

Businesses can find out their staging date (the date by which they need to have the auto-enrolment scheme up and running) by checking on the Pensions Regulator’s website, but should bear in mind that it takes a few months to select a scheme, get it set up and put the employee paperwork in place.

In most cases, businesses need to start planning the process at least six months before their staging date. Failure to meet the staging date could lead to fines or even prosecution.

Zero hours contracts

In 2015 the Government introduced legislation so that exclusivity clauses in zero hours contracts banning an individual from taking on other work were no longer enforceable. However, as many commented at the time, the legislation did not give these individuals any remedy if they were dismissed or punished for taking on other work.

However, on 11 January 2016, new legislation (The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015) came into force giving zero hours employees the right to bring employment claims if they are dismissed or subjected to a detriment for breaching an exclusivity clause.

Statutory pay rates

Statutory Maternity Pay will not be increased this year and will remain at its current rate of £139.58 a week (paid for 33 weeks after the employee has received six weeks’ pay at 90 per cent of her weekly earnings).

Link: Department for Work & Pensions