The Top 5 New and Upcoming Regulatory Changes for Executives Look Out For
When it comes to regulatory law, rules and proposals for new ones, every lawyer, business and often individuals need to keep up to date. Here Clive Rich, lawyer and chairman of online legal service provider LawBite, gives CEO Today a rundown of the latest important changes every small or medium enterprise needs to keep an eye out for, and potentially take action on or risk being fined.
Everyone is talking about changes to the Data Protection Act with GDPR being introduced in 2018, so most of the UK’s small to medium enterprises (SMEs) should already be aware of how this might affect their day-to-day business. There are lots of sources of information outlining what SMEs need to know and much of the key information can be found here if needed.
However, it’s not all just about data protection (as important as those upcoming changes are). There are other key areas of new and upcoming regulation that SMEs need to be aware of and we’ve pulled together a ‘Top 5 need to know’ list to help raise awareness and mitigate any future issues for smaller business owners.
- National minimum wage increases
Minimum wage increases are particularly important for smaller business owners as they may be applicable to their staff more often (whether they are employees or contractors), particularly compared to larger businesses and organisations. In April 2017 the rate of the national minimum wage increased, despite an increase in most rates on 1st October 2016 – another detail SMEs should be particularly aware of. This was so that the timing of the annual increase in the national living wage rate for workers aged 25 or over can align with the other national minimum wage rates. The rate for workers aged 25 and over (the national living wage) increased from £7.20 to £7.50. The rates within the other age bands also increase. It’s important to be aware of these changes across the bands so you’re paying staff fairly and within regulatory parameters.
- Apprenticeship levy is introduced
For businesses that have either offered apprenticeships or are looking to do so, you need to be aware of the apprenticeship levy to fund apprenticeship training which came into effect in April 2017. However it’s important to know that different rules apply depending on the size of a business’s paybill. Employers with a paybill of more than £3 million will pay the monthly levy via PAYE. These employers (in England) will be able to access funding through a digital service, a new system which began operating in May of this year. Most importantly for most smaller business owners, employers that do not pay the levy will also be able to access funding for apprenticeships. It’s also good to be aware that although the levy applies across the UK, apprenticeships are a devolved policy which means that authorities in each of the UK nations manage their own apprenticeship programmes including how funding is spent on apprenticeship training. So if you’re an employer with operations in Scotland, Wales or Northern Ireland, you may want to contact your apprenticeship authority for more specific information.
- Immigration Skills Charge, in force from April 2017
If you’re thinking of hiring someone from overseas (or rather, from outside the EU), you need to consider this third legislative change that has been in place since April 2017 and affects the cost of hiring. From now on, Tier 2 visa applications will include a mandatory £1,000 fee for medium and large businesses per sponsored employee for every year of sponsorship. However, for smaller businesses as well as educational, charitable and other institutions of a similar nature, a concession will be granted. This concession reduces the Immigration Skills Charge to £364, which is more manageable but still an additional cost for a small business that will have to be weighed up. The new Immigration Skills Charge has been introduced to ‘incentivise training of British workers’, so you might want to look within your own team first before paying out additional fees for migrant workers.
- Statutory family-related pay and sick pay rates increase
The world of employment law changes rapidly and it’s often a challenge for businesses to keep up. For SMEs this poses a particular challenge, as any increase in bills having to be paid is another expense that needs to be taken into account. So, here’s what you need to know so you can plan and budget accordingly: as of April 2017, statutory maternity, paternity, adoption and shared parental pay will increase to £140.98 per week. Also, the weekly rate of statutory sick pay has now risen to £89.35.
- Statutory redundancy pay increases
And finally, as you may or may not know, if you make an employee who has had two years’ or more service redundant you must pay them an amount based on that employee’s weekly pay, length of service and age. Currently, there is a maximum amount you have to pay here. The key part about this change is that from April 2017 this maximum has been increased from £479 to £489. Although it is a relatively small change, when thinking about making an employee redundant you should still bear this in mind in terms of the cost of doing so.
It’s important to remember this list is not exhaustive and there are changes afoot all the time, so you should always keep abreast of changes. If you’re confused as to whether or not something applies to you and your business, we’d always recommend you speak to your legal adviser.