When it comes to the headaches that go along with running a business, employment law might top them all; always changing, always opaque and always incredibly costly when you get it wrong.
So we’ve done our best to keep things simple and picked out the ten key areas we think businesses need to be aware of when it comes to recent UK employment law changes. We’ll fill you in on what changed in 2018, what’s set to change in 2019, and share practical advice to help you stay compliant.
We know! There are more exciting things to read. But this stuff’s important.
Grab a coffee (a biscuit might help too!) and let’s get to it.
(Quick jump menu)
1. Brexit – It’s on everyone’s mind, but uncertainty still reigns. While employment law is likely to remain stable in the short term, employers should keep on top of any developments as they unfold.
2. The Good Work Plan – Workers are set to get a rights upgrade, but most law changes are planned for 2020.
3. Employment Status – The minefield of worker v self-employed continues. Despite numerous legal cases throughout 2018, and the promise of law changes, there remain no definitive plans for revised employment status definitions in 2019.
4. Employment Tribunals – Claims will continue to increase since the scrapping of employment tribunal fees making it more important than ever for businesses to get employment law right.
5. Holidays – Another minefield for employers. But 2019 could see laws passed to help clarify holiday entitlements.
6. Pay – Minimum and Statutory Pay and Pension contributions will increase from April 2019.
7. Data Protection / GDPR – It’s not going away, and the Information Commissioner’s Office has raised fines for non-compliance. Make sure you understand and comply with the minimum required standards.
8. #MeToo: Discrimination and Harassment – Right at the close of 2018, the government made promises to better regulate the highly topical issue of sexual harassment.
9. Shared Parental Leave – 2018 saw the government launch their ‘Share the Joy’ campaign to promote Shared Parental Leave. This has opened a can of worms in the courts, where it’s been hotly debated whether an employer needs to pay a man on shared parental leave the same as a mother on their enhanced maternity scheme. We expect to see an increase in court cases around this issue in 2019.
10. Tax and National Insurance – Good news for smaller employers. They’ll pay less in the apprenticeship levy and won’t have to deduct PAYE from self-employed contractors operating through a personal service company.
A deal has been brokered between Theresa May and the EU but we wait to see if the deal will be approved by Parliament. Whatever the outcome, though, employment law is likely to remain stable in the short term.
What we know:
If the current deal is passed:
- There’ll be a transition period until at least 31 December 2020
- There’ll be no major changes to existing employment law during the transitional period and our laws which are based on EU law will likely continue to be interpreted in accordance with EU court decisions.
- It’s expected that once the UK has left the EU, there will be trade negotiations. If the UK offer a lower level of protection to workers and consequently make it cheaper and easier for businesses to employ people. This will make the UK more attractive to businesses. The EU will not want this to happen and will therefore likely insist that the UK offers the same level of protection to workers as part of their negotiations.
- EU citizens who already lawfully reside in the UK, or who do so by 31 December 2020, will be allowed to live, work and study in the UK on an ongoing basis through the EU Settlement Scheme.
If we have no deal:
- The government’s recent technical notice indicates that there’ll be minimal change to UK laws and existing employment rights won’t be changed.
- However, there’ll be no reciprocal arrangements in relation to insolvency and European Works Councils. This won’t affect your business unless you operate in the EU or have UK employees working for you in the EU.
- We may see some law changes to help support the economy (for example, pension auto-enrolment, freezing minimum wages etc).
- The government has said it will guarantee to protect the rights of EU citizens and their family members living in the UK by 29 March 2019.
- All other options suggested by MPs (including further negotiations with the EU or planning for a second referendum / People’s Vote) involve delaying the Article 50 withdrawal date of 29th March 2019, or the option of no Brexit at all, in which case UK employment laws and the rights of EU citizens will be unaffected.
From 21 January 2019, the EU Settlement Scheme will enter the next pilot phase and will be open to EU citizens to apply for ‘settled’ or ‘pre-settled’ status. To minimise possible disruption and uncertainty, you can encourage EU national employees to make their application under the Scheme as soon as possible. To apply to the pilot phase, EU citizens will need to have a valid passport and applications can only be made via an app (accessible on an Android device only).
As the whole Brexit situation remains so uncertain for business, it can help to rely on a service like ours to keep you up to date with any employment law implications of Brexit developments as they happen.
The Good Work Plan
Just before Christmas last year, the government published their Good Work Plan. If you missed talk of its arrival, you’re very likely to hear more about it over the coming year. The plan sets out the government’s vision for the future of the UK labour market and intentions for changes to employment law.
Some law changes have been put forward, but only one significant change has come into force so far
As of December 2018, employers who don’t pay employment tribunal awards on time will now be named and shamed in press releases on the government website which will also include details of the tribunal award.
From 6 April 2019, an employer who deliberately, maliciously, negligently or repeatedly breaches a workers’ employment rights may face a 50% uplift in tribunal awards. The maximum award is due to increase from £5,000 to £20,000, in line with the penalty for breaches of National Minimum Wage rights.
With many of the Plan’s proposals still at the consultation stage or requiring parliamentary approval, we don’t expect any significant law changes to take place until April 2020.
Uber, Deliveroo and Addison Lee were some of the big names and organisations making headlines in 2018 over legal battles around employment status. We are also aware of cases coming up next year that centre on the dilemma of whether those working in the gig-economy are workers or self-employed.
What we know:
The government recognises the need to provide clearer and more user-friendly definitions of what a worker and what a self-employed person is, and has committed to improving clarity on employment status by changing the law and providing an online tool to help determine status.
Until the laws change, we’ll continue to see legal debate arising around modern ways of working, and their incompatibility with our current employment status tests, especially within the gig economy.
We hope to see some progress in the coming year, but changes to the law will not be straightforward and are likely to provoke political debate. With the government’s attention focused on Brexit, however, it’s unlikely we’ll see any law changes in this area in 2019.
Many employers are now wary about using self-employed contractors, but with the right advice and written agreements, employers can minimise the risks of unwittingly employing someone on a worker status and subsequently facing bills to cover their taxes, holiday pay and statutory payments.
What we know:
Since the fees to bring employment tribunals were abolished in July 2017 we’ve seen a sharp increase in the number of tribunal claims.
This increase has put pressure on tribunals who’ve reported a shortage of judges to hear the claims. This has resulted in some cases taking 12-18 months to go to hearing. This leaves businesses with cases hanging over them and witnesses finding it difficult to remember the facts.
The tribunal service will continue to try to recruit more judges in 2019.
A large percentage of employment tribunal cases usually settle, but the scrapping of fees took away the leverage an employer may have had over an employee to settle before they had to pay the fees to either issue the claim or go to hearing. As such we’ve also seen an increase in the number of cases going through to a full hearing in 2018 and this is also expected to continue to increase.
The government is considering introducing a new fee scheme (which would need to be small enough to satisfy the courts that it doesn’t stop people bringing claims) but there are no immediate plans to do this.
We expect claims to increase again in 2019, but with the tribunal service continuing to recruit more judges, we hope to see claims dealt with more promptly.
With staff now able to bring claims at the touch of a button, we strongly advise a thorough review of your documents and procedures to make sure you’re as protected as you can be. Our consultants can help you with this.
What we know:
Getting holidays right is a minefield for employers.
This is largely due to the fact that two different sets of rules apply to holiday entitlement:
- The first set of rules is shaped mostly by the EU courts and relates only to the 4 weeks of holiday entitlement that EU law gives us under the Working Time Directive.
- The second set of rules relates to the extra 1.6 weeks, which was given to UK workers under the UK Working Time Regulations.
In light of all the EU and UK cases which have evolved over the last few years, the government has committed to providing detailed guidance on managing holiday and holiday pay.
There’s no indication as to when we might see this guidance, but it at least provides hope of an end to the confusion.
One particularly difficult aspect of calculating holiday pay relates to casual workers. Currently, the law stipulates that a 12-week reference period is used to calculate an average week’s pay. This is expected to change to a 52-week reference period from 6 April 2020, which should ease the calculation confusion for many.
Until the law changes, we expect to see the courts debating on holiday pay throughout 2019.
Review how you calculate holiday and holiday pay to ensure you’re compliant with current laws. If you’re unsure, or you’re struggling to apply the rules to more irregular working patterns, our consultants can help you. Our software can also help you to manage holiday allowances.
The government has proposed the following changes to pay from April 2019.
Minimum wage: rates will increase to:
- Apprentices: £3.90 an hour;
- 16-17 year olds: £4.35 an hour;
- 18-20 year olds: £6.15 an hour;
- 21-24 year olds: £7.70 an hour;
- National living wage (workers aged 25 and over): £8.21 an hour.
Family-friendly pay: Statutory maternity, paternity, adoption, shared parental pay and maternity allowance is expected to be £148.68 a week (up from £145.18).
Sick pay: Statutory sick pay is expected to be £94.25 a week (up from £95.05).
Employee pensions: The minimum amount an employer will have to contribute to employee pensions will be 3% (up from 2%) and the employee contribution will increase to 8% (up from 5%). This completes the phased increase in contributions spread over the last 3 years.
Payslips: For those workers who are paid on an hourly basis, payslips will now need to itemise the number of hours worked as a single figure, or separate figures if they are paid different rates for different types of work.
It’s important to get these payments right and to make sure that you have factored these changes into your business operations from April. The consequences of getting them wrong include penalties, costly employment tribunal claims, the reputational damage of being named and shamed on the government websites and, in the case of pensions, criminal prosecutions.
HR admin software can help to alert you if any of your payments fall below the minimum wage when averaged out.
Data Protection / GDPR
What we know:
Under GDPR, employers are obliged to demonstrate greater accountability and transparency around the way they process personal information about their employees. This includes keeping records about the data they hold, data security, and informing staff effectively.
Many businesses have managed to get all the necessary documentation together to satisfy the data protection laws, but statistics from various sources show that not all businesses are implementing the procedures. In particular, promises to delete data after a certain period are not being met. Automatic deletion is the way forward.
While big names including Morrisons, BA and Facebook have made it into the news with their data breaches, the website for the Information Commissioner’s Office (the organisation in the UK responsible for enforcing data protection compliance) also calls out numerous smaller businesses and even individuals.
The risks of not complying with data protection obligations are now even higher, and fines apply of up to 4% of worldwide turnover or 20 million euros, whichever is the greater.
Due to increased public awareness of the individual’s rights under data protection laws, we expect a further increase in Subject Access Requests (SARs) and complaints. This will lead to investigations into company processes and procedures and the potential for significant fines for breaches of the rules. The naming and shaming culture of those who breach the data protection laws is also likely to continue.
We expect further clarification from the ICO, as they update their guidance on areas of uncertainty, and areas such as the protection of data out of the office and on personal devices (which are often not protected) is likely to be in the news as more and more people use their personal devices to look at work emails and documents which may contain personal data.
Store employee data using software that automatically deletes it within the appropriate time frame and keep up to date on guidance published by the ICO.
#MeToo: Discrimination and Harassment
What we know:
In July 2018, the Women and Equalities Select Committee (WESC) published its report on sexual harassment in the workplace. The report called on government, regulators and employers to take a more proactive role in relation to sexual harassment, and called for changes in the law in some areas.
On 18 December 2018, the government published its response to the report.
The main announcement is that the government agrees that a statutory code of practice should be introduced, and states that it will work with the Equality and Human Rights Commission to develop it.
Ministers have not yet agreed to introduce a mandatory duty on employers to protect workers from harassment and victimisation, or to increase sanctions for poor employer practices.
In the past, it’s been common for employers to clean up the mess by paying an employee off in return for the promise to keep the matter quiet. The government agrees these non-disclosure agreements require better regulation and a clearer explanation for employees about the rights that they give up when they sign a Non-Disclosure Agreement (NDA).
An employer can be held liable for sexual harassment or any discrimination carried out by a member of staff, but the damage can be limited if employers can show they’ve trained staff and made what constitutes unacceptable behaviour clear with an effective policy, and that harassment will not be tolerated.
The starting point, then, is to get key written policies in place and make sure your staff read and understand them.
An open culture where inappropriate behaviour is dealt with quickly before the situation escalates is also important in limiting claims.
Shared Parental Leave
What we know:
After the birth or adoption of a child, a couple can now choose who takes paid time off to care for that child. But statistics show that less than 2% of men take up this right to shared parental leave, and most employers have not even had one request. This prompted the government to launch their ‘Share the Joy’ campaign and issue guidance to men wanting to take up shared parental leave.
However, 2018 saw legal cases where men argued that they’d been discriminated against because their employers paid enhanced maternity pay but did not pay enhanced shared parental leave pay.
There is also a call from some MPs to extend the concept of shared parental leave and pay to self-employed workers and allow the mother’s statutory maternity allowance to be shared with her self-employed partner.
We expect to see continued debate around shared parental leave and pay throughout 2019 and a continued increase in legal cases in this area.
If you offer enhanced maternity pay you may want to extend this enhancement to shared parental and adoption pay so as to protect yourself from potential discrimination claims.
Tax and National Insurance
From April 2019, businesses liable to pay the apprenticeship levy will be able to invest up to 25% of the levy to support the training of apprentices in their supply chain.
For smaller employers who are not liable to pay the apprenticeship levy, the “co-investment rate” for apprenticeship training will be reduced from 10% to 5%. This means that smaller employers will contribute 5% towards the cost of apprenticeship training, and the government will pay the balance.
Self-employed and PAYE
There’ve been plans to introduce new tax rules for businesses using self-employed people who are paid through a personal service company. The new rules will require businesses to deduct PAYE in some circumstances. This is already in place in the public sector, but these changes have been put off for a year (until April 2020) in the private sector and small businesses will be exempt.
What more do we know:
In 2018, we saw a change to the taxation of termination payments (payments made to an employee or worker in return for a promise not to bring any claims against the employer). We had expected to see a further change: the introduction of employer Class 1A National Insurance contributions on termination payments over £30,000. This has now been delayed until April 2020.
We had also expected to see the abolition of Class 2 NICs for self-employed workers, which was supposed to simplify the taxation of the self-employed, but these plans have been scrapped for now.
Your 2019 employment law action plan
1. Brexit – Consider the impact of both a deal and no deal Brexit on your business and start to prepare plans for both scenarios.
2. The Good Work Plan – Keep this one on your radar as there’s likely to be further developments in the coming years.
3. Employment Status – Review the terms and conditions you currently have in place for any self-employed contractors you work with. Seek professional HR advice if you’re unsure whether your written agreements are compliant.
4. Employment Tribunals – Protect yourself by reviewing your documents and procedures with an HR professional to make sure they meet current guidelines and standards.
5. Holidays – Review how you calculate holiday and that you comply with the current laws.
6. Pay – Ensure your staff payments meet the new minimum requirements coming into force in April 2019.
7. GDPR – Ensure you’re storing employee data in accordance with the new minimum requirements set out by GDPR. If you’re not already, consider storing all your employee data on software that automatically deletes it after a pre-determined time period, saving you the job of needing to remember years down the line.
8. Discrimination and Harassment – Review your discrimination and harassment policies, seeking expert advice if you’re at all unsure if your procedures are up to scratch. Also ensure you know what to do should an employee make an allegation.
9. Shared Parental Leave – If you offer enhanced maternity pay, consider extending this enhancement to shared parental and adoption pay so as to protect yourself from potential discrimination claims.
10. National Insurance and Tax – No action needed, but smaller employers offering apprenticeships can breathe a small sigh of relief!
Ways we can help
Expert HR Advice
Uncertainty abounds in the world of employment law as we enter 2019, particularly surrounding Brexit and the impending implementation of the government’s newly published Good Work Plan. Keeping up-to-date with changes as they occur is undoubtedly the best way to avoid any nasty surprises.
Our employment law experts have their finger on the pulse when it comes to Brexit, GDPR, modern working practices, worker’s rights and employment law changes generally. They’re also skilled at interpreting new guidance and translating complex legal issues into clear and practical advice to suit your business.
Each month, citrusHR customers receive comprehensive legal updates, with a straightforward summary, so they can quickly assess what’s relevant to them and whether any changes are needed to keep their business on the right side of the law.
And our HR Consultants are available whenever you need them to offer tailored advice, specific to your business needs, by phone or by email.
Simple to use software
Our user-friendly HR software can help you to stay compliant with a whole range of HR admin, from calculating holiday to getting payments right. It’ll alert you to any payments that fall below the minimum wage when averaged out, for instance. It also means you can keep all data about your staff in one place, and automatically deletes information, helping you to meet your GDPR obligations.
The software also holds a library of our management guides, which are constantly updated when employment law changes, giving you easy access to up-to-date HR best practice.