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Update – 2016 highlights and what to expect in 2017

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Now the Christmas decorations are well and truly down and the recycling from the New Year celebrations has been collected, it is a good time to reflect on 2016 and have a look forward into what to expect in the HR and employment law in 2017.

2016 Recap

Brexit

On 23 June, Britain voted to leave the European Union, a historical and momentous occasion regardless of how you voted.

Much of UK employment law is derived from European Union legislation and because of this there has, since that date, been a lot of debate about the implications of Brexit for employers and workers in the UK. For now the position remains as it is, until Article 50 is triggered (the official process for leaving the European Union),
we are yet to see the full impact of how this will impact businesses throughout the UK.

However, the common prediction is that any changes that we may see once Brexit is affected are likely to be minimal for HR and employment law specialists.

Happy Holidays

In 2016, employers were reminded that when it came to calculating holiday pay, the worker should receive their usual pay which would include the employees’ overtime (in some instances) and/or commission they usually
earned.

We saw a lot of case law around this but the one that stood out has to be the on-going case of Lock v British Gas Trading Ltd. Last year the Court of Appeal confirmed the Working Time Regulations can be interpreted compatibly with the Working Time Directive. This means that results-based commission payments should be
included in the calculation of holiday pay for the workers’ first four weeks’ annual leave.

The key note here and to learn from holiday pay claims, is that an employee’s holiday pay must reflect their usual salary. For detailed guidance, click here and download our update on Holiday Pay.

Employment Status

More commonly, people working in the UK’s labour market are now self-employed, with increased numbers carrying out casual work or working in the “gig economy”.

“Uber-Cool” Decision

The employment tribunal delivered its much awaited judgment in the Uber case. The tribunal decided that drivers engaged by Uber were not self-employed, but instead were ‘workers’ legally entitled to national minimum wage, paid annual leave, and whistleblowing protection.

The tribunal rejected Uber’s arguments that it was not a transport provider, but merely a technology platform providing an app which self-employed drivers could use. However as always is the case, the Courts delved deeper and identified that the contractual documentation did not reflect the reality of the situation.

A word of warning here is that you cannot always rely on your contracts, a tribunal will “look behind the label” and make their decisions on the reality of the situation in practice, not just on the paperwork. This could therefore be the time to review your employees’ and workers’ contracts.

No doubt, we will now expect to see more diverse business models in Tribunal over similar issues.

‘Off The Record’

Since July 2013, employers and employees have been able to enter into ‘off the record’ discussions and negotiations about leaving the business on mutually agreed terms, without fear that the negotiations will later be used in an unfair dismissal claim.

In its recent Judgment (Bailey v Faithorn Farrell Timms LLP), the Tribunal confirmed that this protection (sometimes called section 111A privilege) extends to the fact that the negotiations have taken place, not just the contents of those negotiations.

This suggests that it would be wise to consider thoroughly weather such conversations should take place before starting them in the first place.

What can we expect in 2017?

As you would expect, due to the ongoing uncertainty resulting from Brexit, we are expecting more significant changes to Employment Law in 2017.

General Data Protection Regulation (GDPR) Compliance

Under these rules, employers will have to carry out audits of employee personal data that they collect and process it to ensure that it meets GDPR conditions for employee consent. Whilst this isn’t technically an employment law field, our GDPR expert and Head of Commercial Contracts – David Miller, advises that these
changes can and will impact you running a business and what considerations are to be met. Further information on this topic will follow – for immediate advice or if you wish to discuss this, please contact david.miller@flintbishop. co.uk who will gladly steer you on how best to protect yourself ahead of these changes.

Although the Regulations do not come into force until May 2018, the scope of the changes under the new Regulation means that preparing for the GDPR will be high priority for employers in 2017.

New governance and record-keeping requirements mean that employers will also have to create or amend policies and processes on privacy notices, data breach responses and subject access requests.

As the GDPR will come into effect before the UK leaves the EU, organisations that are not compliant by May 2018 risk fines up to 20 million or 4% of annual worldwide turnover, whichever is higher.

Pay Disparity

Last February, the Government published and consulted on the draft Gender Pay Gap Reporting (GPGR) regulations requiring private employers with 250 or more employees to publish gender pay gap information by April 2018 and annually thereafter.

Employers will be obliged to release information relating to pay and bonus pay as well as information on the number of men and women in each quartile of the organisation’s pay distribution.

Gender pay gap regulations are still in draft form but the deadline for the first report is expected to be 4 April 2018, based on pay and bonus data from 2016/17. This is something we will be covering in our employment law
update seminars in the coming months – for more information please contact a member of the team.

Apprenticeships Levy

Employers with an annual payroll of more than £3 million will be required to pay a 0.5% levy on their total pay bill starting on 6 April 2017.

If you are coming into this new, the Apprenticeships Levy is a payment that will be collected from large employers in both the public and the private sectors. The payment is paid to HMRC via PAYE returns.

The purpose of the levy is to encourage employers to invest in apprenticeship programmes and to raise additional funds to improve the quality and quantity of apprenticeships.

The Apprenticeships Levy paid by businesses can be accessed by those same businesses to fund apprenticeship training in their business.

Large employers will be able to access levied amounts, plus a government top-up of 10%, to fund apprenticeships from accredited training providers.

Smaller organisations that are not required to pay the levy will also be able to receive funding for accredited apprenticeships by contributing 10% towards the cost of an apprenticeship, with the Government paying the remaining cost.

Government To Axe ‘Salary Sacrifice’

As announced in the autumn statement, employers may now need to reconsider the benefit offerings they provide as a tax saving method, as many salary-sacrifice schemes will be abolished from 6 April 2017.

Essentially, employees will have to pay the same tax on what they put into these schemes as they would on any other income, and employers will have to pay the same NI.

Schemes related to pension savings (including pensions advice), childcare, cycle-to-work and ultra-low emission cars, will not be affected.

Schemes in place prior to April 2017 will be protected until April 2018, while arrangements related to cars; accommodation and school fees will be protected until April 2021.

Tax-Free Childcare Schemes

Tax-free childcare schemes are due to come into force early this year. This will apply to parents where both parents work and have a minimum weekly income of 16 hours paid at the relevant national minimum/living wage, but earn less than £100,000 per annum.

If eligible, the government has plans to pay 20% of the parent’s yearly childcare costs (capped at £2,000) for each child.

Visa Levy

With Brexit still in discussion, the government has indicated that it will aim to reduce employers’ reliance on migrant workers by imposing what is called a ‘visa levy’.

This will be imposed on companies that sponsor workers from outside the European Economic Area and Switzerland.

The charges are expected to come in force later this year.

National Living Wage

The National Living Wage (NLW) is set to increase from April 2017 following the Autumn Statement.

The NLW will rise 4% from £7.20 to £7.50 an hour, in new plans set to go live on 1 April this year. On this date all other national minimum wage rates will also increase.

Balloting In A New Fashion
The wait is still ongoing for the implementation date for new balloting requirements under the Trade Union Act 2016.

Under the rules, a successful vote for strike action will require a 50% minimum turnout and a majority vote in favour of industrial action. This may be forthcoming this year.

Summary

We can see from the above that there are some important updates due 2017, some of which we will cover in more details during the course of the year.

More recently, the Government has also made advances in regards to a full employment status review, after the Uber case (and others). Should this flourish, we will update you in one of our upcoming articles

If you would like any further advice on any aspect of employment law, please contact a member of the team on 01332 227596 for a confidential chat.

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