2016 UK Employment Law Changes – GEO Newsletter Q4 2015

2016 UK Employment Law Changes – GEO Newsletter Q4 2015

Are you ready for the employment law changes in the UK coming into force from April 2016? Our resident HR expert Sue Rowbottom provides a rundown of the top legislation changes affecting your workforce.

Compulsory National “Living Wage” – 1st April 2016

In the Summer Budget on 8 July 2015, the Government announced that a new compulsory national “living wage” of £7.20 per hour will be introduced in April 2016 for workers aged 25 and over.

Future changes will be recommended by the Low Pay Commission, in the same way that it makes recommendations for changes to the national minimum wage rates. The new living wage rate is not connected to the rate used by the Living Wage Foundation.

State Pension Regulations 2015 – 6th April 2016

The Pensions Act 2014 introduces a new state pension for people reaching state pension age on or after 6 April 2016. The State Pension Regulations 2015 set out some of the detailed rules of the new scheme.

The Pensions Act 2014 introduces a new state pension for people reaching state pension age on or after 6 April 2016. The State Pension Regulations 2015 set out some of the detailed rules of the new scheme. In particular, they:

  • specify the minimum number of years of national insurance contributions or credits a person will need to qualify for any new state pension
  • specify the rate at which a person who defers claiming their new state pension will accrue an increase to their new state pension when they finally claim it
  • provide that the new state pension will not be payable to prisoners, except in certain circumstances
  • make transitional provisions enabling a person in the new state pension scheme to inherit a deferral payment where their deceased spouse or civil partner had deferred an old state pension
  • amend regulations relating to the sharing of state scheme rights following divorce or dissolution of a civil partnership, as a consequence of new arrangements for state pension sharing.

Employer NICs abolished for apprentices under the age of 25 – 6th April 2016

In Autumn statement 2014 the Chancellor of the Exchequer announced that employer national insurance contributions for young apprentices are abolished from April 2016. To make it cheaper to employ young people, employers will not have to pay Class 1 national insurance contributions on earnings up to the upper earnings limit for apprentices aged under 25. The new measure is contained in the National Insurance Contributions Act 2015.

Increases to income tax personal allowance rates and thresholds – 6th April 2016

The Finance (No.2) Act 2015 increases the income tax personal allowance rate to £11,000 and increases the basic rate tax threshold to £32,000.

Changes to the income tax higher rate thresholds – 6th April 2016

The threshold at which employees pay higher rate tax increases from £42,385 to £43,000.

Pension Tax relief to be introduced for top earners – 6th April 2016

The Finance Bill introduces a measure that will restrict pension tax relief by reducing the amount of the annual allowance for individuals with income in excess of £150,000.

Salary requirement for tier 2 workers introduced – 6th April 2016

Skilled migrant workers who apply to settle in the UK from April 2016 under the tier 2 general and sportsperson categories of the points-based system are required to earn at least £35,000 (or the appropriate amount for their job, if higher). The statement of changes to immigration rules can be viewed on the UK Border Agency website.

Single Tier State Pension Introduced – 6th April 2016

The Chancellor of the Exchequer, George Osborne, confirmed in Budget 2013 (on the HM Treasury website) the introduction of a single-tier state pension, ending the ability to contract out of the state second pension.