Current hot topics in UK employment law
What a difference the Brexit vote has already made. This time last year we were anticipating, with some certainty, various employment-related proposals from an established government. Now, what lies ahead is much less predictable, given a different prime minister, the prospect of Brexit and renewed calls for increased delegation of powers amongst the devolved governments, if not independence. In addition, the drain on government resources caused by Brexit preparations is already resulting in delays to legislation and consultations.
The outcome of last year’s EU referendum did not result in any immediate changes to UK employment law and is unlikely to do so for some two years. The prime minister has committed that “as we translate the body of European law into our domestic regulations, we will ensure that workers’ rights are fully protected and maintained”. However, whilst no employment law changes are envisaged in the short-term, of immediate concern to many employers is the impact Brexit may have on the movement of workers. It is currently unclear how immigration will be managed post-Brexit, although the indications are that new controls on European immigration will seek to accommodate an ongoing need for skilled and seasonal workers.
Gender pay reporting
Addressing a reducing but persistent gender pay gap has been on the government agenda for some time. Regulations taking effect in April 2017 require larger employers in the private sector to report on their gender pay gap. There are similar regulations covering public sector employers operating in England.
The regulations require employers to publish the difference between the median and mean average hourly rate of pay paid to male and female employees; the difference between the median and mean average bonus paid to male and female employees; the proportions of male and of female employees who receive bonuses; and the relative proportions of male and female employees in each quartile pay band of the workforce.
In the private sector, employers’ first gender pay reports will have to be published no later than 4 April 2018, based on hourly pay rates as at 5 April 2017 and bonuses paid between 6 April 2016 and 5 April 2017. The public sector regulations will require the first pay reports to be published no later than 30 March 2018, based on hourly pay rates as at 31 March 2017 and bonuses paid between 1 April 2016 and 31 March 2017.
For private sector employers, there is no specific penalty for non-compliance. A key incentive is the risk of adverse publicity and reputational damage. However, compliance is also not risk-free, depending upon the data collated and how it is presented. Employers concerned that publication could prompt negative perception may therefore choose to volunteer additional information, explaining the context of any pay gap and how they are responding.
Labour law developments
Changes affecting the way trade unions organise industrial action came into force on 1 March 2017. These Trade Union Act provisions are aimed at stopping unrepresentative strike action, such as where disruption occurs despite a low turnout for the strike ballot. A new 50% threshold for voter-turnout during strike ballots now applies. An additional 40% support threshold applies for industrial action in important public services (including some health, education, fire, transport and border security services) where the majority of those entitled to vote are normally engaged in the provision of such services. Accompanying these changes are steps to tighten the supervision of picketing, longer advance notice of strikes, changes to the ballot paper and the re-balloting of ongoing disputes.
The balloting changes are anticipated to result in more focused, and possibly fewer, ballots, as trade unions seek to ensure the new thresholds are met. It is conceivable, however, that alternative forms of protest may also manifest where a minority of workers harbour strong grievances which are not supported more widely by colleagues. In addition, unions may challenge some of the changes on human rights grounds and the Welsh government is also disputing the application of some to Welsh devolved services.
The way in which trade unions operate has also come under recent government scrutiny. The result is a series of measures which will introduce new public sector check-off arrangements (where the employer deducts union subscriptions from pay), reporting on public sector facility time and an extension of the role of the Certification Officer (a form of regulator for trade unions). A phased implementation of these changes will take place over this year and next.
Hot topic litigation
The calculation of holiday pay has been a significant and high-profile employment law issue before the courts over recent years. The critical question under review was whether UK legislation could be read to conform with EU requirements in terms of what elements of pay fall due during periods of statutory holiday.
In February 2017 the UK Supreme Court refused permission to appeal and we now know that representative results-based commission and non-guaranteed overtime (overtime which workers are contractually required to perform) must be included in the calculation of holiday pay for the first four weeks of holiday under the Working Time Regulations. However, the position with respect to truly voluntary overtime (overtime which workers are not contractually required to perform) remains unclear. Although there are a number of first instance tribunal decisions which do suggest that truly voluntary overtime should be included, there is no binding UK authority on the point.
The other emerging hot topic relates to the employment status of workers, typically in the gig economy. A tribunal has ruled that two Uber drivers who brought test cases against the company were ‘workers’, not independent contractors, and were therefore entitled to holiday pay and to be paid at least the national minimum wage while working.
In UK law, having ‘worker’ status is a passport to a range of employment rights such as the national minimum wage, holiday pay and access to a pension scheme, although the full array of employment rights, including statutory sick pay and protection against unfair dismissal, is reserved for the narrower category of workers commonly referred to as ‘employees’. Uber is appealing this decision.
Two further cases, one at first instance involving a cycle courier and the other in the Court of Appeal involving a self-employed plumber, were also successful in claiming ‘worker’ status.
At the same time, the government and MPs are conducting separate reviews into new forms of work, including the gig economy and worker status issues. There are also concerns that the growth in self-employment is reducing national tax revenue, which may result in a defensive response from the Treasury. Organisations reliant on contractors, freelancers, agency workers and the self-employed need to ensure that their staffing models keep pace with change in this area.
A national living wage
In 2016, the national minimum wage rate in UK increased significantly for workers aged 25 and over, with the introduction of a supplement the government termed, “the National Living Wage”. This increment was accompanied by a promise of further rises in the following four years, the first of which takes effect from 1 April 2017, raising the statutory minimum pay level to £7.50 per hour for those aged 25 and to £7.05 for 21 to 24 year olds.
Applying these revised minimum pay rates has been a challenge for many UK employers. Employers need to be careful if they plan to vary employees’ existing terms and conditions to absorb the higher rate national living wage. Depending on the approach taken, such actions could be challenged by staff as unlawful.
Employment tribunal changes
There is one aspect of employment tribunal practice that has dominated the headlines in recent years and that is the introduction of tribunal fees. There is no doubt that the government is coming under increasing pressure to justify current fee-levels. In January 2017 it revealed the outcome of its fee review and launched a consultation on new proposals to change the fees remission scheme. The planned changes are relatively minor and fall a long way short of satisfying those who have called for an overhaul of the fees regime. That fight continues on 27 March, when the Supreme Court hears Unison’s appeal against the rejection of its legal challenge by the Court of Appeal. Although the government acknowledges that “there does appear to be evidence that fees have discouraged some people from bringing proceedings” it states that there is “no conclusive evidence that anyone has been prevented from doing so.”
Of more immediate impact is the introduction of a new online database of employment tribunal decisions allowing new decisions of the tribunal to be viewed online. Previously, the fact a claim has been pursued and the names of the parties required a trawl through paper documents held centrally at Bury St Edmunds, meaning many cases passed unnoticed by the wider public. Employers and claimants should be prepared for increased press interest and the potential use of such information by both sides to support their own contentions.
Boosting apprenticeship funding
A high-profile manifesto pledge of the UK government on re-election in 2015 was the improvement and expansion of apprenticeships over a five year period. Pivotal to the government plans for apprenticeship growth is the question of funding and to generate greater financial support, from April 2017, an apprenticeship levy is to be introduced for employers with a payroll bill exceeding £3 million. The levy, of 0.5% of the salary bill, will be collected through the employer’s normal PAYE systems, alongside usual income tax and national insurance contributions. Employers paying the levy will have full access to their contributions to fund their apprenticeship needs but it also envisaged that many will not utilise their contributions in full, leaving a surplus the government can apply for the benefit of others, especially smaller, non-levy paying organisations.
In summary, while it is true that Brexit is diverting the government’s attention, it is also apparent from the above that there is still much to occupy employers and their lawyers in the interim.