6th January 2017
Given the recent pace of changes to the employment landscape, the first quarter of 2017 will see no slowdown for HR departments across the UK. Developments such as Brexit, worker status claims, gender pay reporting and the imminent General Data Protection Regulation place the focus for 2017 on assessing exposure and setting strategy. Our employment team have prepared a checklist of 6 essential HR tasks for the New Year.
The recent Employment Tribunal ruling that Uber taxi drivers are not self-employed but are, in fact, ‘workers’ (entitled to employment rights such as the national minimum wage (NMW) and paid holiday) sent shockwaves through many business sectors. Other ‘gig economy’ companies (e.g. Deliveroo and Citisprint) are facing a wave of new claims in the wake of the Uber decision. Companies who use the services of self-employed individuals or contractors need to assess their exposure in this field. To read our recent article please click here.
As the Uber case showed us, an Employment Tribunal will always consider the reality of the day to day relationship between the company and the ‘self-employed’ individual, rather than the label used to describe the relationship or the terms of any written agreement. This is business critical because once an Employment Tribunal has found that an individual who was previously labelled ‘self-employed’ is in fact a ‘worker’, they can claim for:
The company may also be exposed to regulatory issues including investigation by HMRC.
We advise that employers:
The cases of British Gas v Lock and Bear Scotland v Fulton confirmed that overtime and commission payments must be included in holiday pay calculations and the knock-on impact has been significant. Only this week, Argos is reported to have been hit with the threat of strike action over alleged unpaid holiday pay for its delivery drivers. The practical challenge for HR is in implementing this. Remember that because the EAT’s decision is based on interpretation of EU law, the requirement to include commission and overtime pay in holiday pay only applies to the 4 weeks ‘Euro-leave’ and not to the full 5.6 weeks holiday granted by the Working Time Regulations 1998. That said, some employers may find it too onerous to run two different holiday pay calculations for different periods and will therefore adopt a pragmatic approach of using the same calculation for the full 5.6 weeks.
Employers who operate commission based pay structures must continue to take stock and assess their position. There may be significant potential exposure to claims that will need to be accounted for. A strategy for calculating holiday pay (and reducing this cost) going forward will also need to be thought through.
The first gender pay gap reports (in respect of April 2017 pay data) will be due by 4 April 2018 and must be published for three years on the employer’s website.
The final draft of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has been published and will come into force on 6 April 2017. A number of important changes have been made since the previous draft Regulations published in February 2016. In particular:
In the current climate of pay scrutiny and public awareness (brought to the fore by the large scale equal pay claims currently being heard against major supermarket retailers), employers need to be aware of any gender pay gaps in their organisation and the reasons for it. This can form the basis of a strategy to address any issues.
Employers should be finalising their preparations for their first gender pay gap reports as soon as possible in 2017. Key preparations include:
The GDPR comes into force on 25 May 2018. This will introduce significant changes to current data protection laws and increased penalties for non-compliance. Businesses will need to invest time in preparing for the changes well in advance.
Under the GDPR, consent for data processing must be ‘actively and freely given’ and it is unlikely that standard consent clauses in employment contracts will be sufficient. The rules on subject access requests will also change and there will be increased obligations on employers to ensure that data processing complies with the new law. For further information on this topic please click here.
The Government’s Corporate Governance inquiry is shining the spotlight on executive pay, directors’ duties and the composition of boardrooms, including worker representation and gender balance in executive positions.
The inquiry follows the well-documented corporate governance failings identified by the inquiries into BHS and Sports Direct. The prime minister has made no secret of the fact that corporate governance is a priority for her government. Some key questions that will be looked at by the inquiry include:
Company boards may appreciate a ‘heads-up’ from HR on these issues given the current level of political scrutiny. This is certainly one to keep an eye on as the outcome of the inquiry is likely to inform future legal changes in this area. Click here to read our recent article.
2016 saw several key changes to immigration rules and employers need to stay one step ahead. The Immigration Act 2016 created a new criminal offence of illegal working. The existing offence of ‘knowingly employing an illegal migrant was widened to cover situations where an employer has ‘reasonable cause’ to believe that a person is an illegal worker. This change means that the burden of proof for prosecution has lowered significantly and conviction on indictment for this offence has also increased from two to five years imprisonment. The Act will also introduces a provision whereby, in the case of continued breaches, a notice can be issued to shut down a place of work for up to 48 hours where there is reason to believe that illegal workers are being employed.
From April 2017, employers will be denied the National Insurance Contributions employment allowance for a period of one year if they are subject to a civil penalty for employing illegal workers. April 2017 is also when the immigration skills surcharge of £1000 per sponsored employee comes into effect.
The ongoing Brexit negotiations will have an impact on free movement of labour and UK immigration rules generally and it is essential that employers affected by this stay up to date.
If you would like any advice or assistance with any of the above topics please contact David Smedley or Andrew Rayment.