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3 Important Employment Law Changes in 2016

It seems that rules and regulations are continually being updated in the area of employment law. Therefore, it is vital that both employers and employees are well aware of this as early as possible to help them make decisions on various employment issues.

22 February 2016
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In 2016, employment law faces a number of changes that are set to have a significant impact on employee’s roles and their futures within their company.

Let’s take a look at what they are and how they will affect you…

  1. Gender Equality

While the gender pay gap is an issue that has improved in recent years, the government still has concerns that the gap remains too wide.

As a result, in April 2016, companies with over 250 employees will be required to publish a report that details how much they pay men and women. Although it remains uncertain exactly just how comprehensive this information will need to be and it is unclear how the information will need to be shown, the government has emphasised the need for it to demonstrate the true picture of gender equality relating to pay within the workplace. The mandatory reporting of gender pay was first set out in s.78 of the Equality Act 2010 but is yet to come into force.

Leading up to this requirement in April, companies should seek to understand and improve any gender pay issues they may have. It is not only likely that any unfair results could create tens, hundreds or even thousands of employees bringing legal claims based on unequal pay, but it may also result in the company severely damaging its reputation and creating a possibly irreversible PR nightmare.

Successful employees found to have been the recipient of unequal pay may be able to claim damages dating back to 2010 when the act was enacted. With falling sales and plummeting stocks the potential result of a company’s damaged reputation, companies need to make sure they are addressing these issues now.


  1. Pension Overhaul​

In April this year, pensions will be entirely modernised to reflect the current complexities and confusion surrounding the pension tier system. Removing the current five-tier pension system, which has five separate elements, it shall be replaced with one single tier pension.

However, it appears that a large number of employers have not considered how this will affect occupational pension schemes. Research states that 70% of people with defined-contribution (DC) schemes and 57% of those with defined-benefit (DB) schemes have not considered the impact that this one tier pension system will have on the pension amount they receive.

One of the biggest uncertainties emanates from increased national costs resulting from employers inability to “contract out” of the additional state pension. The option to do this has been removed and, therefore, employers are at a loss as to how to handle payroll cost increases of between 2% and 3% for employees earning DB pension benefits, along with the lack of retirement feasibility for DC employees. Employers must look for a way to handle these pension changes effectively and fairly before April arrives.


  1. Extra Tips​

There’s always the uncertainty when we give a tip to a member of staff of where that actually ends up. Does it go to the employee that you have personally tipped? Is it put into a pot and divided up among staff at the end of the day? Or, if it is paid by card, does it simply go to management?

With so much uncertainty surrounding the final destination of tips, it may leave some people uncomfortable and unwilling to leave them. Due to this ambiguity, the government is looking at whether the voluntary code of conduct, produced in 2009, needs a revival, particularly following the decision to prohibit tips to be used to fund minimum wage payments. Tips should, therefore, be ‘extras’ rather than ‘part ofs’.

While there have been discussions on introducing a legally-enforced cap on the administration charges attached to tips paid on card, the main focus should be placed on the transparency of the tipping process in businesses such as restaurants, hotels and cafes.

For more advice and information on employment law, contact one of our knowledgeable business dispute solicitors or employment lawyer team today on 01932 840111.