Employment law outlook for 2019

  • Posted

The employment law outlook for 2019 indicates that there are some major changes in the rights of employees and workers to be getting to grips with. There is a general push towards “fairness” which extends existing employment law rights such as unfair dismissal and creates increased liabilities for those employers who do not comply.  The law is changing independently of Brexit.

We look at:

Pay gap transparency

  • At the moment smaller private companies are not impacted. But the political climate is changing and this will undoubtedly have an impact on questions workers in all businesses are asking themselves.

There will be activity this year on the transparency of pay. The second round of gender pay gap reporting will be required during 2019 for those companies with 250 employees or more. There will now be comparison data being built up as the years start to build up. This will be extended to CEOs pay reporting with a comparison to the average worker in that company. Many large companies have already supplied their statistics on what was deemed “Fat Cat Friday” and the statistics have shown a huge disparity in salaries between the average worker and CEO (some CEOs earning the average worker’s entire annual salary in just three days).

What will be done with these statistics, time will tell but we can only assume the focus will be on companies to justify the disparity in the salaries. Do the skills, experience, responsibility or other factors justify the pay?

Another major development is the close of the period for consultations regarding ethnicity pay gap reporting at the end of January 2019.

The gig economy

  • The chances coming on board will apply to private companies in equal measure to other employers. There are no planned exemptions for small employers.  This is a rapidly expanding area of uncertainty and complexity and the Government will be chipping in.

The Taylor Review

The Taylor Review was published in February 2018 and called for an overhaul of employment practices in the UK. The result was the Good Work Plan published by the Government and heralded as the largest workplace reforms for over 20 years.

The Taylor Review also called for clarity in the gig economy arguing that there should be clear guidelines between the genuine self-employed and the ‘dependant contractor’ (currently titled ‘worker’). There was a call for fairness in the quality of work and flexibility within the work place. It recommended rights for workers to request more stable and predictable contracts. Some protective rights were recommended such as a prohibition on deductions for tips.

The Taylor Review wants to see the time required for there to be a breaks in continuity of employment extended to four weeks – this change would see more employees protected under the employment law legislation with rights such as the right to claim unfair dismissal.

April 2019 will see the introduction of a right to itemised pay statements and written statements of terms for workers. Agency workers will also be entitled to equal pay with comparable employees.

The Good Work Plan

The Government agreed all but one proposal set forward in the Taylor Review and, in December 2018, published its Good Work Plan in response. The Good Work Plan promises to protect and give more clarity and rights to atypical workers, including continuity of employment, minimum pay, pensions, parental leave, particulars of work and holiday pay.

The Good Work Plan will implement increased penalties for employers who maliciously breach their employment law obligations, quadrupling the fine from £5,000 to £20,000. We are told there will be an improvement to current employment status tests with the potential of harmonising employment and tax status.

Stopping exploitation of the National Minimum Wage regulations

The Government have opened a consultation as to whether “salaried hours work” (which involves complex rules allowing companies to ‘average out’ pay over the course of an entire year) is effectively protecting the exploitation of workers.

The consultation also includes questions on “salary sacrifice schemes”.

Whilst it is long established that deductions from wages for a benefit is still a deduction that is not included in a national minimum wage calculation, many companies are falling foul of the rule. Iceland have been made an example and now face potential fines. HMRC will continue to fine employer’s if an employee is put below the national minimum wage threshold because of a deduction for a benefit such as a salary sacrifice scheme.

Tax and IR35

In Spring 2018, the government announced that it was considering extending the end-user rule to the private sector (whereby the end client-user of an individual working off-payroll through a personal service company was responsible for his PAYE and NICs). Consultation ended in August 2018 and 2019 is likely to bring a decision on this.


Sexual Harassment Code

Consultations closed in late 2018, the Government agreeing to introduce a new Code of Practice regarding sexual harassment in the workplace in response to the Women and Equalities Select Committee report. The Government have also promised to carry out awareness raising work with ACAS and the Equality and Human Rights Commission to guide employers to address and ensure that action is being taken to prevent sexual harassment in the workplace.

The Government will also commission surveys to try and gage the prevalence of sexual harassment at work.

NDA Spotlight

It is expected that the review of non-disclosure agreements in the workplace will be completed and issued in 2019. Originally used to protect the employer’s intellectual property rights over former employees, non-disclosure agreements are now much more often used to silence claims of unfair dismissal, discrimination, harassment and bullying. We are likely to see employment law legislation restricting or banning the use.

The Law Society have also issued a practice note giving the Law Society’s view of good practice in negotiating and advising on settlement agreements and NDAs, this follows from a notice issued by the SRA in 2018 focusing on the importance of exceptions to duties of confidentiality.

Recent employment law cases that will have an impact in 2019

  • The courts have been active and yet again the employment law landscape is changing.  The law catches all employers and again there is no exemption for smaller employers.

The holiday pay calculation conundrum

The Employment Appeal Tribunal have have clarified the overtime calculations on voluntary overtime.  It had been established in earlier cases that guaranteed, compulsory overtime and non-guaranteed overtime (where the employee is obliged to do the overtime but the employer is not obliged to offer it) fell into the holiday pay calculation.  It is now confirmed by the Employment Appeal Tribunal that calculations of holiday pay should now include voluntary overtime, on-call allowances and out-of-hours payments on principle. The Tribunal considered that whether overtime could be regarded as normal would depend on whether such payment was made over a sufficient amount of time to make it regular.  So expect some debate on that point.

Further, the ECJ held that the minimum holiday pay (and the leave itself) must be calculated based on and cannot be less than the average of the normal remuneration received by a worker during periods of work, in Hein v Albert Hotzkamm GmbH & Co. KG EU:C:2018:1018, 13 December 2018, the employer was taking into account periods of short-time working (where a person has a relationship with the employer but has no work) when calculating annual leave entitlement. Whilst their contract provided for 30 days’ annual leave, the calculation taking into account periods of short-time working meant that the entitlement fell below the minimum level (calculated on the normal remuneration received by a worker during periods of work).

Direct discrimination on perceived disability

The Equality Act 2010 allows claims where there is no protected characteristic but the discriminator perceives there to be a protected characteristic and discriminates on that basis. This has caused problems in relation to disabilities because of the requirements that would have to be perceived to satisfy the test. For example the perception that a disability affects that person’s day to day life is enough to fall under the statutory definition. Both the Employment Tribunal and the Employment Appeal Tribunal agreed that the test was satisfied and that there was direct discrimination. The decision has been referred to the Court of Appeal. If the Court of Appeal agrees we could see an opening up of discrimination claims.

UBER appeals… again

The Court of Appeal held up the ET and EAT’s decision that Uber drivers are workers under the Employment Rights Act and are therefore entitled to claim for failure to pay national minimum wage, holiday pay and unlawful deduction of wages. This also opens up claims for discrimination and harassment to such groups of people. Permission has been granted for Uber to take the claim to the Supreme Court, which will likely occur in 2019.

We work with both employers and employees. If you have a problem and could benefit from some ideas please do get in touch with any one of our employment team: Alex Kleanthous; Matt Gingell; John Deane or Charlotte Jackson. You can call on 0207 438 1060.