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2018 - Key Employment Law Changes Employers Need to be Aware of

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The festive period seems like a distant memory already and we are back into the swing of things.

The following are the main legal areas in employment law to be aware of this year:




National Minimum Wage / National Living Wage


These are two areas which will continue to increase in 2018, with the next raise coming on 1st April taking the National Living Wage up to £7.83 per hour for those over the age of 25.


Companies who fail to pay the National Minimum Wage have nowhere to hide – twice a year the government publishes its ‘name and shame’ list, so it’s important to make sure that you are fully compliant.


Statutory Rate Increases expected


Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay – ALL currently £140.98 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate) will rise to £145.18. The Statutory Adoption Pay rate will also increase by the same amount.


Expected with effect from 6 April - the rate of Statutory Sick Pay (SSP) will also rise from £89.35 to £92.05. To be entitled to these statutory payments, the employee’s average earnings must be equal to or more than the lower earnings limit.


The Lower Earnings Limit will be increasing from £113 to £116 in April.


Settlement Agreements


Changes to the taxation of termination payments are expected to take place from April 2018.

Employer National Insurance Contributions (NICs) will apply for all settlements above £30,000 whereas previously they were only subject to tax. 


All Payments in Lieu of Notice (known as PILON payments) will be taxable under the settlement agreement, even if there is no specific PILON clause in the contract. Previously, tax only applied if there was a PILON clause – now it’s whether or not there is such a clause, so those companies who used to consciously not have a PILON clause in the contract simply for tax reasons may wish to take another look at their contracts. In my opinion it was always a better strategy to have a PILON clause in the contract anyway.


Employment Allowance


From April 2018, employers will not be able to claim the Employment Allowance for one year if they have hired an illegal worker, been penalised by the Home Office or exhausted all appeal rights against that penalty. From an employment law stance, this reinforces the importance of always protecting your company by ensuring that you do right to work checks at the start of each employment. On the very first day of employment the first thing an employer should do is to introduce themselves and then take a copy of their passport, visa or other document that gives them the right to work. If an employee has a visa with an expiry date, a clear diary note should be made to seek an update when the visa is coming to an end. It is no longer good enough to say that you didn’t realise a visa had expired.


Gender Pay Gap Reporting


The first gender pay gap reports are due to be published in April 2018 for the payroll period including the snapshot date of 6 April 2017. Information on any bonuses paid also needs to be published at the same time for the 12-month period ending April 2017.


Only companies which employ 250 or more are required to publish this information so it’s not on the agenda for most SME’s but it will be interesting to see the outcomes nevertheless and the pressure it will bring to bear further down the line once this is info comes into the public domain.

There is no obligation for companies to explain the gender pay gap, nor any duty to address it if a company is complying with the Equality Act although, if you remember, when the BBC published the salaries of its top earners, there was a massive hullaballoo and there is the potential risk of reputational damage where a large gap is shown with no explanation. It may also not affect recruitment if the best candidates could be put off working for companies with a big gender pay gap if they feel that their gender will adversely impact their career prospects.




GDPR – The big issue for every Company / employer this year!


The General Data Protection Regulation (GDPR) will take effect from 25 May 2018. 


It was introduced by the EU in order to strengthen, modernise and harmonise data protection law across the EU, as well as addressing the export of personal data outside the EU.  And Brexit isn’t a deal breaker on this - GDPR WILL be applicable in the UK despite Brexit.


The main change companies should be aware of when the GDPR takes effect is that the liability that will come from breaching the regulations is huge; you can be fined up to 4% of your global turnover or €20 million, whichever is higher.  And that is the main reason why everyone is looking at this area so closely well in advance (contrary to the norm whereby for most other newly implemented laws most firms just wait until it happens and then start looking at it!) – the financial penalties could run to millions if the larger firms don’t get their data house in order.


People have more control over their personal data, including the right to be forgotten and it’s important that companies take all steps to protect personal data.  It is important to note that depending on the company data applies not only to employees and the HR function but across the whole business potentially, so this isn’t just an HR thing.


A main change in HR is Subject Access Requests (usually seen when potential litigants go ‘fishing’ and making their previous employers life more difficult) whereby access to data will be quicker and crucially free, instead of the current £10.00 an employer could charge.  However, a company can make a reasonable charge if the request is manifestly unfounded or excessive e.g. repetitive requests with a view to causing disruption. It’s essential that all staff who handle personal information understand the fundamental principles and requirements of GDPR.




‘Gig Economy’ - case law


The future of the gig economy remains up in the air as further clarification from the Supreme Court is due.


The EAT decision against Uber – who were refused permission to leapfrog the Court of Appeal and appeal directly to the Supreme Court on the question of worker status will be heard in the Court of Appeal. However, Pimlico Plumbers appeal to the Supreme Court and the eagerly anticipated ruling will have far reaching implications. This will give the Supreme Court a chance to carefully examine the law relating to worker status.


Other cases against Deliveroo and City Sprint, among others, are still making their way through the tribunals and this could yet be the tip of the iceberg.


Employment status has long been the greyest area of employment law – is someone self-employed or are they really an employee or a worker?


To add to the confusion, there was also the Central Arbitration Committee (CAC)’s recent ruling that Deliveroo riders are self-employed, although it’s worth noting that this is not a binding authority. People are all watching with interest the Tribunal ruling in the claim brought by 45 Deliveroo couriers to see how it compares to the CAC decision.


Taylor Review implementation?


In July 2017, Matthew Taylor published his much-anticipated review of modernising working practices.


The Work and Pensions and BEIS committees then published their report, 'A framework for modern employment' in November 2017 encouraging the Government to build on and enact many of the Taylor Review recommendations, and have produced draft legislation.


Although we have mentioned these before, some of the proposed main areas for change are:


  • Legislative changes to make it easier to identify employment status.
  • Automatic assumption of worker status, leaving it to the employer to prove they are self-employed.
  • Pilot scheme whereby those without guaranteed hours get paid a premium on top of the minimum wage/national living wage.
  • Permitting a gap in service of a month without breaking continuity.
  • Introducing collective proceedings in tribunals dealing with status, wages and working time with a recommendation of punitive fines if an employer has already lost a similar case.
  • Workers get a written statement of terms and conditions and the current two-month time scale to provide one is reduced to one week.
  • The informing and consulting legislation should be amended to allow workers to be included and the threshold reduced from 10% to 2% of employees and enable workers to request to negotiate on business decisions which affect them. This would apply to workplaces where no union is recognised.
  • Ending the Swedish Derogation which allows agencies to pay agency workers employed by them under a contract of employment, 50% of their last earnings or the minimum wage, whichever is the higher, during any break between assignments.
  • Greater penalties, fines and naming and shaming.

Knowledge of Disability – case law


Two important cases were heard by the Court of Appeal in 2017 and are due to be handed down in 2018.


The first is whether there can be direct discrimination on the grounds of disability if the decision maker was not actually aware that the employee was disabled (Gallop v Newport City Council).


The second case (Donelien v Liberata UK Ltd) deals with the extent to which the employer must go to ascertain whether an employee is disabled or not.




For now, things will just continue as they do now and although it is still too early to tell how/ what employment law will change exactly following our exit from the EU, it’s important for employers to stay up to speed during the transitional period.


This transitional year requires enormous negotiation and, while there are uncertain times ahead, it is more a case of seeing how it all plays out rather than panicking about anything. It is business as usual at least until March 2019 when the 2 year process of withdrawing from the EU ends (although I dare say there will be further twists and turns!). At least until then all current employment laws remain in place and employers should simply continue to comply with all current legislation.


As we have stated before, there won’t be massive change even when we do leave – although the UK landscape will of course alter and everyone will be affected by the change, the UK will simply repeal all EU related law. Both the government and businesses want to avoid the legal and commercial chaos that would ensue where that to happen; instead we can expect a gradual repealing and restructuring of any areas of law (previously mentioned) which are currently less favourable to the UK over the course of time.




Grandparental Leave


It is anticipated that grandparents will be able to use the Shared Parental Leave system in order to help with childcare.  No final details have been published but the proposed legislation could mean that a grandparent could use any untaken Maternity Leave/Shared Parental Leave that has not been used by the parents. They could also be entitled to any Maternity Pay/Shared Parental Pay that has not been used by the parents of the child.  This is still at the proposal stage, so we need to keep an watch to see if the Government decides to pursue the proposed policy or not. At this stage, few people have used Shared Parental Leave since it was introduced so it’s unclear whether or not grandparents would actually use it, should it happen. Flexible working requests are likely to be a more popular choice.


Parental Bereavement Bill


The Parental Bereavement Bill is currently progressing through Parliament.  


This Bill will entitle employees who lose a child under the age of 18 to take two week’s leave which will be 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 in order to deal with an emergency involving a dependent, including death of a dependent.


The Government confirmed its backing for the Parental Bereavement (Leave and Pay) Bill in October 2017 but to be fair it’s unlikely to take effect in 2018, more likely 2019 or even 2020. Once it has passed all the parliamentary stages it will then require regulations to be made to define who gets the leave beyond just the mother and father in order to become law. We think this is one law is very fundamentally flawed many levels.


Caste discrimination


Caste is not currently a protected characteristic in the Equality Act 2010, although case law has confirmed that it may be covered by race discrimination where the two are closely aligned.


The Government commenced consultation on the issue in March 2017 and consultation closed on 18 September 2017.  Its response is awaited and, depending on its findings, we could possibly see amendments to the Equality Act 2010 to introduce caste discrimination as a separate protected characteristic.


We hope that provides a useful summary at the start of the year for you, but if you have any questions or want to know more about anything mentioned here then please don't hesitate to get in touch.

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