4th January 2018
2017 has seen no let-up whatsoever in the pace of change to the employment landscape and HR professionals are as busy as ever ensuring that things don’t go wrong on their watch. To assist with your New Year planning, our employment team has prepared a checklist of 5 essential HR tasks for the New Year.
The General Data Protection Regulation (GDPR) comes into effect on 25 May 2018 and few in HR will be in any doubt about the seismic impact of this change. Potential fines for breaches will rise from £500,000 to the greater of 20 million EURO or 4% of global turnover. The Information Commissioner, Elizabeth Denham, has made it clear that data protection and privacy must no longer be viewed as an IT or ‘backroom’ function but squarely as a boardroom issue. The GDPR imposes significant changes to the way in which organisations must handle personal data and HR will need to be at the forefront of their organisation’s GDPR preparations as we hurtle towards the 25 May 2018 commencement date.
For more information on preparing for the GDPR click here.
2017 saw large numbers of employers (including well-respected John Lewis) falling foul of National Minimum Wage (NMW) regulations because of payroll errors rather than a deliberate attempt to short-change staff. For more information see our previous article.
‘Pay-averaging’ systems, failure to pay for time spent clocking in/out or undergoing security checks and bag searches, misrecording of shifts and overtime and payroll software errors were some of the common reasons for NMW non-compliance. Some employers engaging staff on ‘commission only’ contracts also fell foul. In addition to the risk of negative publicity, impact on morale and regulatory fines, payroll or time-recording errors that are not picked up internally for some time can lead to potentially significant back-payment liabilities. This can soon add up especially where a large workforce creates a multiplier effect.
The removal of Employment Tribunal fees combined with the increase in firms willing to undertake ‘no-win, no-fee’ litigation makes it as important as ever to guard against inadvertent exposure to under-payment claims.
As every HR professional reading this article will be fully aware, ‘self-employed’ contractors can very often turn out to be classified in law as ‘workers’ (as the recent cases of Uber, Citysprint and Pimlico Plumbers have shown), or even employees. Workers have certain employment rights such as the right to be paid the NMW, 4 weeks’ paid holiday per year and the right to be auto-enrolled in a workplace pension. Of course, employees have the full armoury of protections.
The recent Employment Appeal Tribunal decision in ‘Sash Windows Workshop v King’ raises the stakes yet higher. It held that a ‘self-employed’ contractor who was subsequently found to be a worker was entitled to be paid for all of the statutory holiday he had accrued during his time with the employer, but not taken because he didn’t think he was entitled to it (wrongly thinking himself to be self-employed)! This exposure could go back as far as 1998 when the Working Time Regulations were introduced in the UK.
For more information on the Sash Windows case click here.
As ever, forewarned is forearmed. If you think that you have some off-payroll individuals in your organisation who present a risk of being classed as workers later down the line then take advice. It may be possible to take steps to mitigate the exposure and, unpalatable as it may be, facing up to the risk now is far better in the long run.
This issue isn’t going to go away because the Government has realised that it is losing potential tax revenues as a result of ‘false self-employment’. There have been some loose indications that the Government may, in time, look to introduce to the private sector the changes to the ‘off-payroll’ rules it made in the public sector in 2017. These new rules have moved responsibility for deciding if the off-payroll/IR35 rules for engagements in the public sector apply, from an individual worker’s personal services company to the public sector body, agency or third party paying them. This measure also makes that organisation responsible for deducting and paying associated employment taxes and National Insurance contributions (NICs) to HM Revenue and Customs (HMRC). If this does transpire, it will have a massive impact on how organisations engage with contractors. This is an issue you may want to flag to your board as ‘one to watch’.
For more information on how to assess your exposure to ‘worker status’ claims click here.
The first gender pay gap reports (in respect of April 2017 pay data) are due by 4 April 2018 and must be published on the Government’s webpage and for three years on the employer’s website.
According to Government figures there are approximately 7,000 UK employers in scope (i.e. with 250 or more staff) but, at the time of writing, only  of them had uploaded their reports to the website. So, if you haven’t yet uploaded your organisation’s report you are certainly not alone. That said, many HR professionals will be wanting to spend most of their non-BAU time from now until April 2018 focusing on the huge task of preparing for GDPR (see above) so for many in HR, the sooner they can tick ‘publishing gender pay gap report’ off their to-do list the better.
For more information on this click here.
Whilst there may have been an encouraging ‘breakthrough’ in the Brexit negotiations, in terms of the safeguarding of EU nationals’ right to remain in the UK following the UK’s withdrawal from the EU, the position is still far from clear. It is important to stay up to date with the regular changes being made to immigration rules. In the interests of retaining good staff and keeping morale levels up, employers should recognise the stress that the current uncertainty puts on many EU nationals working in the UK and continue to offer support and guidance where possible. This could make the difference between keeping a good worker and losing them with the associated business costs involved.
Our business immigration team is able to advise on any questions that you may have in this area.