1 The latest changes in Employment Law & HR Legislation

March 2017 Edition

The latest changes in

Employment Law & HR Legislation (UK & Ireland)

2 The latest changes in Employment Law & HR Legislation

Contents HR and Employment Law

Current --- Recently Implemented or Due Imminently 3-4

Short/Medium Term --- Due 2017 5-6

Long Term --- From 2017 Onwards 7

Roundup --- Tribunal Cases of Interest/Recent Case Law/Topical Employment Law 8

Republic of Ireland --- Updates 9

Click on any link above to go to that section of the guide

About the Author: Tom Muirhead: Employment Tribunal Advocate

Tom represents organisations across the UK and Ireland, both at Employment Tribunal and in the Employment Appeal Tribunal. With a track record of success in employment litigation and a strong background in HR at senior level, Tom is adept at explaining the legal framework to businesses in a practical way.

Our Experts Lisa Gillespie HR Services Director

Ruth Deakin Policy & Consultancy Manager

Andrew Weir Employer Services Manager

Wendy Morris Insurance and Claims Manager

3 The latest changes in Employment Law & HR Legislation

Current Legislation Recently Implemented or Due Imminently

Legislation Due date Summary

NMW & NLW Low Pay Commission review

1st April 2017 A review of the National Minimum Wage (NMW) and the National Living Wage (NLW) will take place every April, beginning in 2017. The draft Regulations have been published and are expected to come into force on 1 April 2017.

The Low Pay Commission has recommended the following changes for 2017:

National Minimum Wage • From £6.95 to £7.05 for workers aged 21 or older • From £5.55 to £5.60 for workers aged 18 to 20 • From £4.00 to £4.05 for workers aged 16 to 17 • From £3.40 to £3.50 for apprentices

National Living Wage • Increase in the National Living Wage from £7.20 to £7.50

Further information on gov.uk website

4 The latest changes in Employment Law & HR Legislation

Legislation Due date Summary

Mandatory Gender Pay Gap Reporting

1st April 2017 The final version of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 has been published. The Regulations will come into force in April 2017, after which affected employers will have up to 12 months to publish the information.

In summary, the Regulations will:

• Apply to private and voluntary sector organisations with 250 employees or more.• Apply to England, Wales and Scotland (but not Northern Ireland).• Require employers to report specified information on their gender pay gaps by

April 2018 on a company website accessible by the public and on a yet-to-be-developed Government website.

• Retain the data on websites for a period of three years.

Public Sector Originally only intended to apply to private sector and voluntary sector employers, the Government has now published the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 – this extends the gender pay gap reporting requirements to public sector employers with over 250 employees as well.

The new public sector Regulations broadly reflects the private sector version, but there are one or two differences. For example the 'snapshot date' on which pay information will focus is 31 March, rather than 5 April for the private sector.

The public sector regulations apply to England only, to encompass relevant cross-border authorities and other authorities operating across Great Britain.

As a good illustration of how gender pay gaps operate in practice, the Government has published a helpful tool called ‘Find the Gender Pay Gap for your Job’.

Here are some gaps highlighted in the tool:

• 71% of Office Manager jobs are held by women, yet they receive on average14.7% less pay than men.

• 65% of Pharmacist jobs are held by women, yet they receive on average 6.5% less pay than men.

• 84% of Senior Care Worker jobs are held by women, yet they receive on average7.8% less pay than men.

Check the tool yourself here

No doubt the above examples form part of the driving force behind the Regulations, as Government attempt to help address some of the apparent imbalances in male/female pay.

5 The latest changes in Employment Law & HR Legislation

Short/Medium Term Legislation Due 2017

Legislation Due date Summary

Apprenticeship Levy

6 April 2017 The Government is set to introduce the apprenticeship levy on 6 April 2017.

The new legislation will:

• Impose a levy on all employers in all sectors with annual payroll bills in excess of£3m.

• Set the levy at 0.5% of employer’s payroll bill.• Allow employers to use the levy for funding apprenticeships.

Payment of the levy will be to HMRC through the employers PAYE process. Access to funding will be via a Service Account and employers will need to register in order to participate.

Commentators say that many employers are not prepared for the introduction of the levy in April.

A helpful guide is available for employers entitled 'Apprenticeship Funding How it will Work'.

Read the Apprenticeship Funding guide

Free Childcare Expected September 2017

Currently, working families with three and four year olds have the right to 15 hours free childcare each week. The Government plans to extend this to 30 hours from September 2017, subject to pilot schemes beginning in September 2016.

Tax Free Childcare Scheme

Expected 2017 If introduced, this scheme will see families with both parents working and earning less than £150,000 per year become eligible to receive 20% off their childcare costs (up to £2,000 per year for each child, £4,000 if the child is disabled).

Public Sector Exit Payments

Expected 2017

Regulations capping Public Sector Exit Payments at £95,000 were published in November 2015. They are expected to come into force in early 2017. The cap will apply to lump sums (including redundancy payments), the cost to the employer of funding early access to unreduced pensions, and other non-financial benefits such as additional paid leave.

They won't apply to pay in lieu of holidays, bonuses, or payments following a TUPE transfer.

There are also separate proposals to 'claw back' termination payments to public sector executives returning to the same area of work within 12 months.

6 The latest changes in Employment Law & HR Legislation

Trade Union Act

Expected 1 March 2017

The Trade Union Bill received Royal Assent on 4 May 2016 and becomes the Trade Union Act. The Act – which has been passed but is not yet in force – is aimed at limiting the impact of industrial action on employers. Provisions include:

• Industrial action requires at least a 50% turnout in votes. • In certain key public services, e.g. border security, health, education, fire and

transport, an additional safeguard requires 40% of eligible voters to vote in favour of industrial action.

• A six month time limit on mandates for industrial action (which can be increased to nine months if both parties agree) so mandates are relatively current.

• A transparent process for subscriptions, so new members are able to make an active choice about paying into political funds.

• A clearer description of the trade dispute in question and the planned Industrial Action to be included on the ballot paper.

Some of the elements of the Act will be welcome news for employers who stand to be affected by industrial action.

7 The latest changes in Employment Law & HR Legislation

Long Term Legislation From 2017 onwards Legislation Due date Summary

Taxation of Termination Payments

Expected April 2018 The Government is consulting on changes to termination payments which will see a widening of payments which qualify for Income Tax and National Insurance. The proposals in brief:

• Presently, not all Pay In Lieu of Notice (PILON) payments are subject to Income Tax deductions. Currently, tax is only charged for PILON payments if there is a specific clause in the contract of employment which permits the employer to make a PILON payment. Under the draft legislation all PILON payments will qualify for Income Tax.

• Settlement sums which exceed £30,000 will be subject to NI contributions (they are not presently).

• Payments for injury to feelings will be subject to Income Tax (there are conflicting judgments on this point at present).

Employers may welcome the clarity which might follow from the amended law on termination payments. But the proposals, if implemented, may take away some of the benefits of the current system where, for example, giving an employee a PILON payment as gross can often be viewed as a sweetener to assist the negotiation of an agreed settlement.

Parental Bereavement Leave Bill

Implementation date to be decided, subject to Parliamentary process

Currently there is no entitlement to paid or unpaid bereavement leave in the UK, unless the contract of employment provides for it. This private members bill had its 2nd reading on 18 November 2016. If implemented, the bill will give parents who have lost a child the right to two weeks statutory bereavement leave, subject to payment of £139.58 per week or 90% of a week’s earnings, whichever is the lower.

8 The latest changes in Employment Law & HR Legislation

Roundup Tribunal Cases of Interest, Recent Case Law, and Topical Employment Law Issues Legislation Summary

Tribunal Fees The Government has recently published its review of the introduction of Tribunal fees. Encouragingly for employers, it proposes only marginal amendments and not abolishment of the fees as many employee organisations hope. The proposals – which will be the subject of a consultation – include an extension of the rules on fee remission (the circumstances in which those on low income can be exempted from fees). The Government has however announced an immediate exemption from fees for those claims which seek repayment from the National Insurance Fund (typically involving recovery of a redundancy payment from an insolvent employer). Separately, Unison's legal challenge to the introduction of the fees will be heard by the Supreme Court in March 2017. We will be watching the current wave of such cases with interest and report on any developments in future updates.

Employment Tribunal Judgments Online

For the first time, the Tribunal service has begun publishing Tribunal Judgments online. There has always been a facility to check Appeal Tribunal Judgments online, but this new development allows employees and employers to access first stage decisions. Some commentators suggest that this will give employers the opportunity to 'vet' prospective employees who may happen to have been the subject of a previous claim (and of course the converse for prospective employers). It will be interesting to see how this new online service is used by both parties, and will certainly be of interest to practitioners in the field of employment law.

Employment Status – Pimlico Plumbers & Charlie Mullins v Gary Smith

In what is considered to be an important Judgment on employment status, the Court of Appeal decided in this case that plumbers who provided work for the business were in fact workers and not self-employed as the business sought to argue. Key factors in the Court of Appeal reaching that decision were the degree of control the business had over the plumbers and the extent of the restrictive covenants contained in the contract between the parties. The Court of Appeal said: “This case puts a spotlight on a business model under which the operatives are intended to appear to clients of the business as working for the business, but at the same time the business itself seeks to maintain that.... there is a legal relationship of... independent contractor rather than employer and employee or worker.” Of particular note to the Court of Appeal was the restrictive covenant which prevented the worker from working as a Plumber in the Greater London area for a period of 3 months after the ending of his self-employed agreement. Employment status is always a tricky area for employers and this case highlights the importance of describing the relationship correctly in contractual documentation and ensuring that the description is representative of what happens in practice.

9 The latest changes in Employment Law & HR Legislation

Republic of Ireland (ROI) Updates Legislation Summary

Agency Workers and Disability Discrimination – Cahill v Arravasc Ltd

In a recent decision of the Labour Court in the Republic of Ireland (appealing against a decision by an Adjudication Officer), it was held that the agency worker had been discriminated against when Arravasc took the decision to replace the agency worker following his absence on long term sick leave. Although Cahill was not a direct employee of Arravasc Ltd, the Labour Court relied upon the terms of the Protection of Employees (Temporary Agency Work) Act 2012, which requires companies to ensure agency workers are provided with the same basic working terms and conditions as if they had been hired directly. The Labour Court said that Arravasc had failed to seek information about the worker’s medical condition, gave him no fair notice that his engagement might end because of his incapacity, and did not give him a fair opportunity to influence the company’s decision by providing medical evidence or arguments. Relying on earlier case law on agency workers, the Labour Court indicated that a failure to consider how a person with a disability can be accommodated is a breach of a company’s duty to that worker – and that applies equally to companies who provide work to agency workers. This case illustrates how the responsibility to provide equal treatment under the Act extends beyond basic terms and conditions. Indeed, the decision arguably extends the burden on employers in the Republic of Ireland who make use of agency workers. The requirements of fair procedures and natural justice apply to agency workers as well as employees. The award in this case, although reduced on appeal from €42,000 to €27,000, illustrates the potential cost of getting things wrong, particularly in cases where an agency worker suffers from a disability.

For further information or guidance on how this legislation affects your business, call us now on 0845 073 0260

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