Employment Law changes coming up this year that might affect your business

The following employment changes for 2016 we have chosen to highlight, is by no means an complete picture of all the changes happening this year, as there many amendments around trade unions and public sector workers coming into force.

We think it is, however, these headline changes that will have the biggest effect on small businesses and their staff.

National Living Wage

For workers at the lower end of the pay spectrum this is a significant introduction that will come into force on the 1st April 2016.  

It will apply to all staff over the age of 25 and will be introduced at £7.20 an hour. It will in effect act as a new top rate element of the national minimum wage. Any worker under 25 will still only be eligible for the national minimum wage.

This national living wage is not to be confused with the living wage, which is an independently calculated rate by the Living Wage Foundation, based on the cost of living. This hourly rate is set at £8.25 outside London and £9.40 inside London.

Pensions auto-enrolment

This is a big change that you may be well aware of, as it has been very prominent in recent television advertising and literature. As a business you may already be preparing for your staging date for auto-enrolment.
If not, or having a brief synopsis of what pensions auto-enrolment really means would be helpful.

Essentially it means that any employer with eligible staff will be required to ensure that they are all automatically enrolled in a qualifying pension scheme and contribute to it. Auto-enrolment also places additional obligations on the employer to monitor and maintain those pension records. Each company has been given a staging date of when they must comply with this new law.

The following list gives a breakdown of the most important aspects:

  • The first thing to ensure is you are aware of your company’s staging date
  • Secondly you will be required to assess your staff, to clarify who is eligible for pensions auto-enrolment:
  1. Workers will need to be between the ages of 22 and the state pension age to be automatically enrolled (workers between the ages of 16 - 22 and 65 - 74 and / or earn below this threshold will still need to be invited to join the pension scheme)
  2. Working in the UK
  3. Have earnings above the threshold of £10K
  • Having deemed who is eligible, as the employer you must make pensions contributions on behalf of those workers
  • If there are workers who are not eligible, they will still have a right to request from their employer, to be included in an auto-enrolment pension scheme
  • If your company doesn’t have a qualifying pension scheme, you will need to choose one
  • The employer will be required to monitor the company’s pension scheme, which will include the assessment of auto-enrolment for new employees, a triennial review of employees who have opted out or are not a member of a qualifying scheme, any employees opting out or postponing pension enrolment.

Bigger organisations have tended to have earlier staging dates, with small businesses coming later. The theory being that it gives them more time to prepare and adjust, as it will have a bigger impact on them.

Zero hours contracts

There has been a lot talked about in relation to zero hours contracts recently, most of it negative. The emphasis in a Small Business, Enterprise and Employment Act 2015 will be to give extra protection to workers on these contracts, instead of outlawing zero hours contracts completely. 

An employer will now be unable to enforce an exclusivity clause (often restricting workers to only working for that employer) in a zero hours contract, and an employee / worker can now expect not to receive detrimental treatment and or be unfairly dismissed as a result of not complying with an exclusivity clause. 

These new regulations have already come into force, having commenced on 11th January 2016.


A new Immigration Bill this year will place an increasing emphasis on employers to ensure they are not employing illegal workers.

Some of the main elements include:

  • It will not only be a criminal offence for an employer to ‘knowingly’ employ an illegal worker, but also to have ‘reasonable cause to believe’ they are doing so
  • Increasing the sentence to five years for employing an illegal worker. It is currently two years.
  • ‘Illegal working’, a new offence, means an illegal worker’s assets can be seized.

It would appear that enforcement of this bill wouldn’t be immediate, with October 2016 being a potential early start date.


The information contained in this article is only to be used as a guide and is in no way a substitute for professional HR or employment law advice. This article is a view and interpretation of BWA People Ltd of the topic(s) covered.

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