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What will the key employment law changes in 2018 be?

View profile for Emma Kemp
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As we move into a New Year, we look ahead to the upcoming changes in employment law legislation.  It is important employers familiarise themselves with the upcoming changes in adequate time to enable the necessary steps to be taken to avoid potential fines or claims being brought against them. The key employment law changes for 2018 are as follows:

Gender pay gap reporting obligations

The Office for National Statistics (ONS) has been monitoring the average pay gap between men and women since 1997. In 2016, the gap was 9.4% for full-time employees; the lowest since the monitoring began in 1997 when the gap was 27.5%.

The Gender Pay Gap Regulations came into force on 6 April 2017, and now require large private and voluntary sector employers (defined as those with 250 or more employees) to analyse their gender pay gap each April.  The deadline for the first reports to have been published is 4 April 2018.

Affected employers must publish:

  • Overall gender pay figures for relevant employees, calculated using both the mean and median average hourly pay.
  • The proportion of men and women in each of four pay bands, based on the employer’s overall pay range. This will illustrate how the gender pay gap ranges across the organisation, at different levels in the hierarchy of the organisation.
  • Information on the employer’s gender bonus gap (that is, the difference between men and women’s mean and median bonus pay over a 12-month  period).
  • The proportion of male and female employees who received a bonus in the same 12-month period.
  • A written statement, signed by an appropriate senior individual, confirming that the published gender pay gap information is accurate.

Employers have the option to include a narrative explaining any pay gaps and other differences that show up in the report. Furthermore, employers can also set out what action, if any, they intend to take in order to address the differences in pay.

Termination Payment: Taxation

2018 will see a series of reforms to the tax and National Insurance Contributions (NIC) treatment of termination payments. The government has introduced the new measure because they “clarify and tighten” the tax treatment of termination payments. By introducing these changes, the government aims to:

  • Treat all payments in lieu of notice as earnings (subject to tax and class 1 NICs). Effectively, employers will be required to subject to tax an amount equivalent to the employee's basic pay if notice is not worked. This change will take effect from 6 April 2018.
  • Subject all termination payments above the £30,000 threshold to class 1A NICs (employer liability only). Subjecting termination payments above the £30,000 to class 1A NICs will be implemented in a National Insurance Contributions Bill, which will be published in 2018. The change will take effect from 6 April 2019.
  • Permit HM Treasury to vary the £30,000 threshold by regulations.
  • Ensure that payments for injury to feelings fall outside the exemption for injury payments (in some situations where termination of employment was due to death, injury or disability of the employee), except where the injury amounts to a psychiatric injury or other recognised medical condition.
  • Abolish foreign service relief (except in relation to seafarers) for UK resident employees. The abolition of foreign service relief for UK resident employees is introduced in clause 10 of the Finance Bill 2018 and will take effect from 6 April 2018. 

Restricting employment allowance for illegal workers

In the budget of 2016, it was announced that from 2018 the Employment Allowance (which allows employers to claim a reduction on their annual National Insurance Contribution) would be removed for one year for those organisations who receive penalties for employing illegal workers. The Government is of the view that those who breach legislation by employing illegal workers should not benefit from the Employment Allowance. The purpose of this restriction is to ensure the allowance focuses on employers who are providing legitimate employment.

The effect of the change will only impact employers who have received a civil penalty from the Home Office for employing workers subject to immigration control and have exhausted their Home Office appeal rights in relation to that civil penalty.  Early estimates suggest that approximately 2,000 employers will be affected.

For example, an employer who is penalised by the Home Office in September 2017 for employing individuals subject to immigration control, and exhausts their appeals right by January 2018, will not be eligible to claim the Employment Allowance from April 2018. They will need to amend their payroll software to ensure they do not claim the allowance during the year in which they are not eligible.

General Data Protection Regulation

One of the most radical changes employers will need to prepare for will be GDPR.  This new legislation will be law on 25th May 2018.  Our Company Commercial team have written several articles on this area of law.  Find out more about the changes your business needs to make by attending one of our workshops; email to find out availability and book.

Grandparent leave

In March 2016, the government under Prime Minister David Cameron announced plans to extend shared parental leave and pay to working grandparents by 2018. However, a consultation planned for May 2016 did not take place, and Theresa May’s government has yet to indicate whether it intends to proceed with the policy. Shortly after the Brexit referendum, information was released that the proposal was still on the table but was on the hold due to other government priorities.  There has been no consultation paper and no further announcements have been made, however employers should look out for any changes that may be announced this year.

Parental Bereavement Bill

The Parental Bereavement (Pay and Leave) Bill was introduced into the House of Commons on 19 July 2017. Under the Bill, employed parents who have lost a child would be entitled to two weeks' leave (irrespective of their length of service) to allow them time to grieve away from the workplace. The Bill, currently progressing through Parliament, will entitle employees who lose a child under the age of 18 to two weeks’ leave, paid at the statutory rate if they have 26 weeks’ service.  Currently employed parents only have a day-one right to take a reasonable amount of unpaid time off to deal with an emergency involving a dependent, including dealing with a dependent’s death.  The government was originally foreseeing this to become law in 2018, however this is now looking more likely to be in force in 2020.

If you have any questions on these changes or other employment law matters, you can contact the Employment team on 02380 717717 or email


This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.