Employment Law Newsletter – January 2019

2018 Employment Law Round Up & What to Expect in 2019

We’ve taken a look back at 2018 to see what the biggest issues in Employment Law were, and to see what might turn up this year.

DATA PROTECTION AND THE GDPR

You couldn’t have missed it! The great General Data Protection Regulation went live across the EU on 25 May 2018. GDPR sent us all into a flurry of Privacy Notices and ‘Please tick here’ and probably a few ‘Unsubscribes’. The up-side is that now we are all thoroughly well versed on what and how organisations are able to do with our data. We have become more well informed about the value of our data and the extent to which it is used by organisations, whether with our consent or not, with revelations about companies such as Cambridge Analytica pushing it onto the news and political agendas too. The downside is that the sheer volume of it may have made many people sick to the back teeth of reading the carefully worded privacy notices causing them to tick any old cookie box that appears when opening another page on their internet browser. *Guilty*

The ICO has now published updated Data Protection Impact Assessments (DPIA) guidance which includes a published list of processing operations likely to result in high risk and also provides more advice on how to assess whether your intended use of personal data requires a DPIA.

At this stage it is anyone’s guess as to whether we will leave the EU with a deal or not, but organisations like the ICO have been busy considering the impact on businesses if we do end up with a No-Deal Brexit.

The GDPR will be absorbed into UK law at the point of exit, so there will be no substantive change to the rules that most organisations need to follow, but those organisations that rely on the transfers of personal data between the UK and the EEA may be affected. Personal information has been able to flow freely between organisations in the UK and European Union without any specific measures. That’s because we have had a common set of rules – the GDPR. But this two-way free flow of personal information will no longer be the case if the UK leaves the EU without a withdrawal agreement that specifically provides for the continued flow of personal data. In this event, the Government has already made clear its intention to permit data to flow from the UK to EEA countries. But transfers of personal information from the EEA to the UK will be affected.

Says the ICO.

To assist organisations, the ICO has therefore prepared the following:

• a ‘Six Steps to Take’ guide;
• broader guidance on the effects of leaving the EU without a withdrawal agreement, and
• a general overview in the form of Frequently Asked Questions. 

MODERN WORKING PRACTICES

In July 2017 the ‘Taylor Review of Modern Working Practices’ was published which made several recommendations about modern working. In February 2018, the government published its response to the ‘Taylor Review’ setting out its proposals to increase workers’ rights and their awareness of those rights, and the action it intends to take against employers who breach their workers’ rights. One of the areas they looked at was the definition of “worker”, stating that it needs to be clearer and more consistent across the legislation, and recommending that workers who are not “employees” should be renamed in the legislation as “dependent contractors”. The outcome was that four consultations were initiated:

• Employment status: consultation on Taylor Review conclusions and recommendations.
• Agency workers: consultation on recommendations made by the Taylor Review.
• Enforcement of employment rights: consultation arising from the Taylor Review.
• Measures to increase transparency in the UK labour market: consultation arising from the Taylor Review.

In December 2018, the government published ‘The Good Work Plan’, which builds on its previous response in February 2018 and reports on new and proposed legislation including the progress of the issues raised in the consultations. The government’s strategy is broken down into three main themes: fair and decent work; clarity for employers and workers; and fairer enforcement. Most of the new legislation will come into effect in April 2020 and includes:

• Written statement of terms and holiday pay reference period (all workers, not just employees, will have the right to a written statement of terms which must be given on or before the first day of employment, rather than within two months of employment starting, and that information must include information on the length of time a job is expected to last, the notice period, eligibility for sick leave and pay, other rights to leave, any probationary period, all pay and benefits, and specific days and times of work.)
• Repeal of the Swedish derogation (i.e. a model of employment where an agency hires a worker directly, rather than being the middleman between a worker and a client company. It’s a controversial model that avoids some of the rules of the Agency Workers Regulations 2010).
• Lower the threshold required for a request to set up information and consultation arrangements from 10% to 2% of employees, subject to the existing minimum of 15 employees.
• Increase the maximum penalty for an “aggravated” breach of employment law from £5,000 to £20,000 (this comes into force on 6 April 2019).

So, what’s next? Despite the government’s claim that this is the “largest upgrade in a generation to workplace rights“, it isn’t quite the sweeping overhaul they would have us believe. Critics say the government has failed to address one of the principal aims of the Taylor Review, which was to deal with the confusion around employment status for atypical workers in the gig economy, which we look at below. The complex issues of whether to codify case law on employment status (and if so, to what extent) and how to align the definition of employment status for employment law and tax purposes remain to be determined. Brexit, of course, may well hold this back given the huge legislative resources that will be pulling. We await further information regarding the remaining draft legislation required to enforce the rest of the Taylor Review recommendations. 

EMPLOYMENT STATUS & THE GIG ECONOMY

The gig economy (the collection of firms that rely on casual workers to carry out services typically organised through an app) has shown us that the typical and traditional forms of working are changing, and the legislation (and in particular taxation rules) appear to be having a hard time keeping up. Workers have fewer rights than employees, whilst the self-employed have very little in the way of protection, which means less burden for the “employers”. The main driver here is flexibility but minimising tax liabilities and other responsibilities on the “employers” are certainly a factor. 

Independent contractors v workers

The Uber business model means drivers, as independent contractors, sign up to an app which allows customers to use their services as a taxi, based upon carefully drafted contracts which seek to create an arm’s length commercial relationship. A number of drivers claimed they were in fact workers and therefore entitled to certain rights (protection from unlawful deductions from wages, entitlement to receive the national minimum wage, and entitlement to paid annual leave). The ET and EAT carefully considered the facts and the agreements but found these did not reflect the reality of the situation and declared the drivers to be workers, not contractors. Uber appealed.

In 2018, the Court of Appeal was split. There were two main questions – were they workers within the meaning of the legislation, and at what point did they start working (when they switched on the app, or accepted a fare)? The majority of judges (2:1) found for the drivers, agreeing with the ET and EAT that they were workers, and that there was a “high degree of fiction” within their documentation which essentially did not reflect the reality of the relationship. However, Lord Justice Underhill dissented and Uber has been granted leave to appeal to the Supreme Court.

Deliveroo has been having a similar traipse through the HMCTS system. The Central Arbitration Committee (‘‘CAC’’) had held that Deliveroo riders were not workers as they did not have a contractual obligation to perform work personally. The IWGB union wanted to represent Deliveroo riders to negotiate on issues of pay, hours and holiday with the company but, because of this ruling which confirmed the riders were self-employed, IWGB was unable to apply for recognition to be entitled to conduct collective bargaining on their behalf, so IWGB brought a judicial review of the CAC’s decision, however, this was dismissed by the High Court in December 2018.

And so the issue remains that the current legislation does not properly represent the current modes of working. The Taylor review looked at this issue and recommended that people in situations like Uber drivers and Deliveroo riders should be classed as “dependent contractors” rather than “self-employed” or “workers”. If the government were to proceed with this recommendation, “dependent contractors” will be entitled to holiday pay, sick pay and parental pay. They will also be paid the minimum wage – but only if they work at peak times. Under the proposals, minimum wage payments would be made on a “piece rate basis”, meaning gig economy workers would only be guaranteed the wage if they carry out jobs when demand is high.

The Taylor Review has clearly had an impact but the government’s reaction to it may be falling short, given that so many people are trying to move away from the traditional ways of working and move towards greater flexibility and ‘being their own boss’. The government needs to address this change to ensure any new measures are pro-growth. It’s hard to say at this point whether Brexit will cause delay in this being realised, or whether it will force an opportunity to re-evaluate the current legislation in light of other changes that may be required for the British workforce following an exit from the EU.

EQUAL PAY CASES

The case of Brierley and others v Asda has been dragging on.  Over 7,000 equal pay claims have been brought against Asda by retail employees, predominantly women. Most relate to a period before the Equality Act 2010 came into force and when the Equal Pay Act 1970 applied. The claimants seek to compare themselves with higher-paid employees in distribution depots, who are predominantly male. In the employment tribunal, the tribunal found that the largely female claimants were entitled to use the comparator of male distribution depot employees for the purposes of an equal pay claim of work of equal value. The EAT upheld this decision and held that the comparison was permitted under both EU and domestic law. Asda took the matter to the Court of Appeal on 23 October 2018 and the judgment is still awaited.

Asda took two separate questions to the Court of Appeal already – regarding jurisdiction, and a challenge to the EAT on the issue of including multiple claimants on a single claim form. It has been suggested that these proceedings could mean claim sums totalling over £100m so it is no surprise that Asda has applied to the Court of Appeal for permission to appeal the EAT’s decision. Case commentators report that we are likely to see a few more preliminary hearings on some of the complex issues involved and it may well go as far as the Supreme Court. It begs the question whether the legislation and claims handling system have been set up correctly as this matter is just one example of how long and complicated equal pay cases can get. Employers would be wise to heed the warning that whatever the outcome, equal pay for work of equal value is under scrutiny and should be properly evaluated within your organisation.

PAY EQUALITY OBLIGATIONS

The Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860) came into force on 1 January 2019, bringing in mandatory reporting of the ratio between CEO pay and average staff pay for companies with 250 or more employees, and a package of other corporate governance changes. The changes will be effective for accounting periods beginning on or after 1 January 2019 (meaning the first pay ratio reports will be published in 2020). The measures include the obligation to prepare an annual statement of engagement with employees for companies with 250 or more employees (including details of any information and consultation arrangements, and how directors have had regard to employee interests). 

The first Gender Pay Gap reports were published in 2018 (https://gender-pay-gap.service.gov.uk/search-results?). In April, the requirements revealed almost eight in 10 companies and public sector bodies paid men more than women. The data showed women were being paid a median hourly rate that, on average, was 9.7% less than that of their male colleagues. About 1,500 large British companies broke the law by failing to report their gender pay gap in time, but 10,000 employers – 100% of those within the scope of the new law – reported within 10 weeks of the deadline.

We expect 2019 will show a decrease in the gaps as companies feel the increased pressure from public scrutiny, employees and job candidates. The Confederation of British Industry (CBI) undertook the ‘CBI/Pertemps Employment Trends Survey 2018’ between August and September 2018. Its purpose is to provide insight into labour market trends and business sentiment and, in doing so, revealed that 93% of businesses are taking action to narrow the gender pay gap and increase their workforce diversity, which one may assume could be a direct result of the reporting legislation, given that the results for the same question the year before were only 62%. 

HARASSMENT

A report is expected sometime in 2019 from the Women and Equalities Committee regarding their enquiry into the use of non-disclosure agreements in harassment and discrimination cases. The deadline for submissions was in November but has been extended to the end of January 2019. 

In July 2018 the Women and Equalities Committee published a report on Sexual Harassment in the Workplace. 

In December 2018, the government published its response to their recommendations, which contained 12 broad action points, comprising recommendations that it has accepted and will start to implement straight away, proposals for consultation and various other action points. Some of the recommendations have also been rejected. There are no firm timescales for any of the announced measures, except for increase to the maximum limit of an aggravated breach penalty (see below). We expect to see further developments in this area over the next year or two.

FINANCIAL PENALTIES FOR EMPLOYERS

The draft Employment Rights (Miscellaneous Amendments) Regulations 2019are due to come into force on 6 April 2019. As part of the government’s response to the Women and Equalities Committee report on Sexual Harassment in the Workplace, it will quadruple the maximum penalty for an aggravated breach of employment law from £5,000 to £20,000.

FAMILIES

In 2015, the Chancellor announced plans to extend shared parental leave and pay to working grandparents by 2018. However, developments on this are still outstanding.

The Parental Bereavement (Leave and Pay) Act 2018 received Royal Assent in September 2018, and the government consultation closed in November 2018. The government will now prepare draft regulations, which are expected to come into force around April 2020. The Act creates a statutory right to time off work for employed parents, with pay where certain eligibility requirements are met, following the loss of a child under the age of 18 (including a stillbirth after 24 weeks).

MODERN SLAVERY

In July 2018, the Home Office announced an independent review of the Modern Slavery Act 2015. The report, which will assess the effectiveness of the Act’s provisions and make any recommendations, is expected in March 2019.

TRIBUNAL FEES

In July 2017, the Supreme Court declared that employment tribunal and EAT fees were unlawful on the basis that they prevented access to justice. Furthermore, it meant that the rejection or dismissal of any claim for non-payment of a fee was unlawful and so the claim should be reinstated, and though, whilst there has been no public announcement about how this will be dealt with, it is understood that the EAT and HMTCS is contacting affected appellants to see if they wish for their appeals to be reinstated.

Fees were thus scrapped, and all fees paid since 29 July 2013 are being reimbursed by the government through the MoJ and HMCTS refund scheme, which began in November 2017.  No fees are currently due when initiating a claim.

However, on 6 October 2018, the MoJ indicated that plans for the reintroduction of employment tribunal fees were in development. Permanent Secretary, Richard Heaton, noted that the Supreme Court’s judgment did not completely rule out tribunal fees, but said that any new scheme would need to allow exemption for those who could not afford to pay fees. No timetable has yet been forthcoming.

SKILLS SHORTAGE

Getting people with the rights skills is top of employee’s concerns for 2019, according to a recent ACAS survey. ACAS commissioned YouGov to conduct a survey to find out what UK employees identified as the most important workplace issues in the year ahead. The poll took place between 13^th December to 21^st December 2018 and surveyed 2035 employees below senior-manager level. Participants were asked to pick the three biggest issues faced by their current workplace in 2019. The full results were:

• Getting the right people with the right skills (53%)
• Productivity (36%)
• Technological change (36%)
• Fit and healthy staff (18%)
• Equality and fairness (17%)
• Other (16%)
• Not applicable – I don’t think there will be any issues faced by my current workplace in the next year (15%)
• Don’t Know (6%)
• Tackling sexual harassment (3%)

Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: advice@dixcartlegal.com.