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Changes in UK Employment Law to look out for in 2016
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There is now a 2017 version of this article that lists the Employment Law Changes to look out for this year.

Are you ready for 2016? Chances are you’ve prepared your business financially for the New Year, but have you readied yourself for imminent employment law changes? Here we explain what’s in the pipeline and what you need to do to avoid being caught by surprise…

4 changes that are definitely going to happen:


1 – Auto Enrolment

If you don’t know about the changes to workplace pensions already, and have managed to miss the government’s rather memorable advertising campaign, then here’s what you need to find out:

  • When your staging date is — businesses with under 30 staff are starting to be enrolled this year
  • Which of your staff are eligible for Auto Enrolment
  • What you need to contribute to this workplace pension
  • Where you are going to source your workplace pension scheme

If you have no idea where to start, we’ve produced a handy checklist to help you right here.

2 – The National Living Wage

The National Minimum Wage for employees aged 25 and over will be increasing this April to a new National Living Wage rate. This will be set at £7.20 per hour, rising steeply to £9 per hour by 2020, and if you fail to pay your staff the right amount you’ll be treated in just the same way as an employer who misses the Minimum Wage update each October; with a large fine and your company name on a public list of offenders.

Take a look at what the new Living Wage means for small businesses right here.

3 – Further changes to Zero Hours contract law

Last year we saw an exclusivity ban put into place for employers using Zero Hours contracts, and in 2016 it looks like these changes will be taken that bit further. In 2016 employees are, as of January, going to be able to claim unfair dismissal from day one, should their employer attempt to rely on an exclusivity clause, as opposed to after 2 years of employment. (UPDATE)

4 – Tougher immigration rules

As of the 6th April 2016, employees from outside the European Economic Area (EEA) looking to stay in the UK permanently will need to be earning more than £35,000 after their first five years of residence. This change was announced back in 2012 but only comes into force next year, and is likely to affect the education and healthcare sectors in particular.

If you have anyone working for you on a Tier 2 ‘skilled worker’ visa you will need to take this into consideration over the next year; as if you employ someone without a right to work in the UK, you can be liable for an up to £20,000 penalty. And that’s before we even think about the fears of skills shortages after this law comes into force, although there are likely to be some sector specific exemptions where there is a known skill shortage.


10 things we’re keeping an eye on for you…


1 – Working Time Regulations and Holiday Pay

As we covered in our 2015 round-up, these two elements of employment law have been put under the microscope in recent months.

Essentially, several cases have been brought to clarify whether certain activities undertaken by staff should be counted as ‘working time’. For example, travel to and from work where the employee has no fixed place of work, or attending Health & Safety meetings or other work related meetings need to be treated as ‘working time’ under the regulations.

Furthermore, when calculating Holiday Pay, multiple cases are still going through the courts which suggest that an element of average overtime and commission should be included as part of the calculation.

However, the final say on the detail of these changes is still yet to come..

These cases are especially important though for employers that have staff paid on or near the Minimum Wage, and that pay overtime or commission. So if you want to find out more about what these legal updates are, head over to our 2015 roundup now.

2 – Shared Parental Leave for grandparents & Statutory Pay

Just when you thought Parental Leave couldn’t get any more complicated. The government is looking at the possibility of grandparents being able to share Parental Leave with their children, which could mean even more confusion when trying to determine whether staff are eligible.

It would appear that, because of very low levels of inflation, the government has no plans to increase Statutory pay for those on Parental Leave – something they usually do each April. We’re sure that will have you breathing a sigh of relief, knowing you have one less change to think about next year!

3 – Changes to exploitation laws

Currently, repeatedly breaking employment laws means that you’re liable for a large fine. However, under new laws proposed to take effect in 2016, what the government calls ‘aggravated infringement’ of employment law could become a criminal offence.

This will also be enforced by a new officer, the Director of Labour Market Enforcement who will be responsible for overseeing how all non- compliance by employers is dealt with, however accidental. So it would seem that the government is taking breaches of employment law even more seriously than before.

4 – Consultants being added to payroll

Closing up tax loopholes has been a big part of recent budgets, and now it would appear the government have their eye on contractors too.

Whilst there are no formal proposals yet, the rumoured change would mean any contractor working for you for more than a month would need to be added to your payroll. Something that is sure to be a nightmare for employers across the UK who rely on contractors for certain projects.

This might not happen, but it’s still worth knowing the difference between an employee and a contractor. Find out more from our blog here.

5 – Tax treatment of termination payments

The government has been consulting on how termination payments are treated in tax law. As part of their consultation which ran from July to October, they asked questions about the following:

  • removing the distinction between contractual and non-contractual termination payments and whether this will make it easier for employers and employees to understand
  • the design of the new exemption from income tax and NICs (National Insurance Contributions)
  • whether the income tax and National Insurance treatment of termination payments should be aligned
  • which of the existing exemptions that remove the liability to income tax should be retained and – whether any new exemptions should be introduced

Obviously, any further clarity that the government can bring on this area of employment and tax law is ideal, as currently it’s a bit of a grey area. However, employers may well need to spend more on termination agreements in future depending on how the consultation proceeds.

6 – Blind recruitment

This is something that government has been pushing big business to abide by in recent months, if only at party conference as opposed to in any formal government policy, so we’re keeping an eye on it in case a law makes its way into parliament.

Essentially this means that all identifying information will need to be stripped out of a CV before any decision is made. It’s a fairly complex change to recruitment practices, and we’ve found in the past that it makes little difference; but we’ll have more information on it for you should the law change.

Recruitment is a tricky area, and discrimination laws can be complex – as we’ve seen over the past year – so a change like this is sure to have a substantial impact on small business; never mind the extra paperwork!

7 – Sunday trading laws

It looks as though this proposed change in the law may never see the light of day, however the extension of trading hours on weekends would certainly have a huge impact on small businesses particularly retailers. So, we’ll certainly be keeping an eye out, just in case things change!

8 – 30 hours of free childcare

OK, so this may not impact upon your workforce directly, but it could well mean that a few of your part-time employees are freed up to work for you a bit more. So be prepared to make adjustments to hours as necessary, as it will only be available for those that work 16 hours a week or more.

9 – More Apprenticeships funding for small business

The government has published its response to an Apprenticeship Levy Consultation opened back in September, and they are proposing a Levy will be put into place at some point in 2017, but only payable by big businesses.

The new Apprenticeship Levy will be set at a rate of 0.5% of an employer’s payroll, should it exceed £3 million. The plan is that this should bring about £3bn in extra funding for 3 million new apprenticeships; good news for smaller employers.

10 – The EU Referendum

This change to employment law is perhaps the most uncertain for 2016 — after all, we’re not even sure when the vote will be, yet. However, we’ll certainly be keeping a close eye on this. Should we end up facing the reality of a ‘Brexit’, this could have far-reaching effects on employment law in the UK. It’s the first of the changes we were expecting when the government was voted in, so be sure that it’s always in the back of our minds…


If you’re just getting into the world of employment this year, then you’ll want to keep a close eye on all of these changes — just as we do.

However, we understand that business owners often just don’t have the time to devote to changes to the law. That’s why we created citrusHR; to help small businesses just like yours to get the information they need when the law changes; without all the legalese.

To ensure your business is compliant in 2016 and beyond, get in touch with our team today.


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