More regulation and less exemption is the key message for private employers in 2016, as they are treated more and more on a par with corporate employers and become a specific target for immigration and modern slavery checks. It is now more important than ever that employers of domestic/private staff are aware of their employer obligations and the raft of legislation that applies, regardless of numbers or familiarity.

Immigration and modern slavery
Private employers must comply with all necessary immigration requirements when taking on staff. Checks should be carried out of original documents evidencing the right to work in the UK before an individual commences employment, and also sometimes during employment, and copies should be kept.

It is unlawful to employ an individual who does not have the right to work in the UK or who is working in breach of their conditions of stay in the UK. The maximum fine for employers who do not comply with their duties is £20,000 ($29,750) per illegal worker. Those who “knowingly” employ an illegal worker are liable to up to two years’ imprisonment and/or an unlimited fine.

What’s changing?
The controversial Immigration Bill is working its way through parliament and amongst a whole host of changes it contains greater sanctions against employers of illegal immigrants. Current proposals include making it a criminal offence for an employer to employ someone whom it has reasonable cause to believe is an illegal worker (punishable by up to five years in prison). Final changes and timing is still to be determined but this is expected by April 2016. Overseas employers should also be aware of the strict six-month time limit on bringing domestic workers into the UK.

The recently appointed modern slavery commissioner has also identified migrant domestic working as a key priority area. This should not be dismissed by any private employer without first understanding what slavery means in a modern legal context, so as to avoid and correct breaches (however inadvertent) due to the circumstances and work conditions in their homes. One key proposal is the introduction of "spot checks" on wealthy foreigners who bring domestic staff with them from abroad (about 17,000 a year in the UK).

Paying staff
Private employers have to pay their workers at least the national minimum wage, which is prescribed by law and changes regularly. This includes workers employed overseas working in the UK for short periods (e.g. spending the summer holidays in the UK), and workers employed here who are temporarily working abroad (e.g. spending the summer holidays overseas).

There are some exceptions, including workers who live in the family home and are treated as a member of the family and are not charged for food or accommodation (e.g. could apply to au pairs). Also exempted are workers who participate in the running of the family business, provided that they are family members and live in the family home.

All employees and workers are entitled to 5.6 weeks' paid holiday in each holiday year (up to a maximum of 28 days) under the Working Time Regulations 1998.

What’s changing?
Wages - From April 2016 onwards the government is introducing the national living wage (essentially an increased national minimum wage) for workers aged 25 and over. The initial rate will be £7.20 per hour (50p more than the current full NMW rate). Private employers need to be clear on what payments count towards the minimum and what deductions can lawfully be made without breaching the legislation. Provision of accommodation and application of the accommodation allowance offset (see below) in particular can raise difficult issues.

Holiday pay - Various cases are also working their way through the court system which will determine whether voluntary overtime (in addition to compulsory overtime) and commission need to be included in holiday pay. The short answer is probably yes. Private employers therefore need to be aware of these developments as additional payments will likely need to be included in holiday pay calculations in order to avoid a legislation breach.  

Living-in
If an employee is going to live in, or is provided with accommodation as part of their job, for example a nanny, or a housekeeper etc., this needs to be properly documented in a written agreement to ensure that they do not attain tenancy rights to remain in the property once their employment/engagement has ended.

This benefit can be tax exempt if living in is necessary/essential to the job. Also, where accommodation is provided without charge this counts towards the national minimum wage, based on a government prescribed accommodation allowance offset.

What’s changing?
The government has started a consultation on the tax rules, which apply to employer provided living accommodation. The government in light of the increasing availability of technology, transportation and more flexible ways of working is reviewing current exemptions. Private employers need to be alert to changes that are likely to result in tighter exemptions and more tax/National Insurance to be paid.
 
Pensions
By 1 February 2018 all employers (no matter whether they have 1 or 100 employees) are required to automatically enrol eligible workers into a pension scheme and pay minimum pension contributions (initially at 1 per cent but gradually increasing to 3 per cent) for these workers (commonly known as “auto-enrolment”).

What’s changing?
Many smaller employers will be coming within scope of auto-enrolment in 2016. All employers will be caught by February 2018. Also, some recent amendments to the rules mean that even if staff are not eligible and will not receive this benefit, private employers may still be deemed to be an employer for auto-enrolment purposes and required to register. Private employers need to check their staging date, consider options for implementation and any amendments needed to contracts, and liaise with pensions advisors to get schemes/paperwork set up.