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HR Outlook: what SMEs should be looking out for in 2017

Written by Simon Morgan, HR Dept South East London and North Kent 

Between Brexit and Trump, we start 2017 in a period of great uncertainty. But though there are many unknowns, there are a few fairly significant employment legislation changes that we do know are coming, and that we as small businesses need to prepare for.

Here’s our list of what SMEs should be looking out for in the year ahead.

1. Changes to the rules for employing foreign workers

The Immigration Act 2016 skills charge comes into effect in April this year. The Act aims to reduce employers’ reliance on migrant workers, and provide an incentive to train British staff, by imposing a levy of £1000 per year for each foreign employee recruited under Tier 2 of the immigration points system (£364 for smaller businesses and charitable organisations). The charge won’t apply to PhD-level jobs.

2. Synchronised statutory wage rises

Until this year, increases to the National Minimum Wage were always applied in October, while the National Living Wage rose in April. From this April, both will increase together, reducing the administrative burden on small businesses.

The National Living Wage, currently £7.20 per hour for workers aged 25+, will increase to £7.50, while the National Minimum Wage rate will rise to £7.05 for 21-24 year-olds, £5.60 for 18-20 year-olds, £4.05 for 16-17 year-olds, and £3.50 for apprentices.

3. Significant restriction of salary-sacrifice schemes

Although more of an issue for large firms, some small businesses will be affected by the abolition of tax savings through salary-sacrifice schemes from 6 April.

Schemes relating to pension savings, childcare, cycle-to-work and ultra low emission cars won’t be affected. Schemes in place before April 2017 will be protected until April 2018.

4. Apprenticeship levies on large employers
Large employers with an annual payroll of more than £3million will be required to pay a 0.5% apprenticeship levy on their total pay bill. Small businesses won’t be required to pay the levy but will be able to benefit – receiving 90% of funding for accredited apprenticeships from the fund.

5. Efforts to get ready for General Data Protection Regulation compliance should be underway

The EU General Data Protection Regulation doesn’t come into force until May 2018, but SMEs need to spend time this year making sure that they’ll be able to comply when it does.

Employers will need to audit the employee personal data that they collect and process to ensure that it meets the Regulation’s conditions for employee consent. New governance and record-keeping requirements mean that employers will also have to create or amend existing processes on privacy notices, data breach responses and access requests. Firms that aren’t compliant by May 2018 risk fines of up to €20million or 4%of annual worldwide turnover, whichever is higher.

The next few years are going to be a period of significant change for businesses; make sure that your firm is as prepared as it can be by having the right people and processes in place.