Employment Law Newsletter – January 2020

We give you a round up of some of the big issues of 2019 in employment law, and what to expect in 2020, including a brief look at what’s likely to be covered by the Employment Bill 2020 and what happens next when the UK leaves the EU.

What were the big issues in 2019?

Equality, sexual harassment and discrimination

Looking back over the course of 2019, in amongst the omnipresent Brexit headlines (we got a new prime minister and a Brexit date was finally agreed, let’s just leave that there for now), several linked issues kept arising. The #MeToo movement has put a spot light on the treatment of women in the workplace and so it is not surprising that the topics of equality, sexual harassment and sexual discrimination should have continued to surface. In June, The Women and Equalities Committee published a report on ‘The use of non-disclosure agreements in discrimination cases’ tackling the perceived ‘cover up’ culture, which was followed by the Law Society publishing NDA guidance summarising both the things employers cannot stop workers from doing and explaining the restrictions commonly imposed on workers prior to signing the NDA. The government responded that it would review this as well as opening a consultation to address sexual harassment in the workplace.

The government also produced ‘Gender equality at every stage: a roadmap for change’. The plan is to financially empower women from school to retirement, by including measures such as improved information for parents around family friendly entitlements. This seems much needed after UNICEF published a report last year showing the UK is one of worst countries in Europe for paid parental leave, and yet figures gathered by the ONS show the number of mothers in the workforce is up by 75%. The Gender Roadmap also includes a consultation on strengthening measures to tackle sexual harassment, and a review of the enforcement of the equal pay legislation and the effectiveness of the gender pay gap reporting system. In fact, the gender pay gap figures from 2019 (for 2018) show a widening gap in favour of men. Perhaps naming and shaming is simply not enough, who would have guessed that?

Meanwhile ACAS produced guidance for employers on the sensitive handling of menopause symptoms whilst at work. The government also backed a ‘Lead the Change’ board which was set up to encourage business leaders to promote diversity and inclusion – it is an independent review board to ensure that talented women at the top of business are recognised, promoted and rewarded.

Mental Health and Stress

Quite rightly, mental health and stress are key areas that are really starting to occupy people’s focus, after all, an unhealthy workforce leads to sickness, absence, low morale, and inefficiency. In July, the government launched a consultation entitled  ‘Health is everyone’s business: proposals for reducing ill health-related job loss.’ There were various reports published in 2019 looking at mental health: the CIPD reported on the increasing number of stress-related absences from work; Nuffield reported on the impact of flexible working and working from home on workers’ health and how it should be carefully managed; and a TUC report that showed that Britons have some of the longest working hours in Europe.

Modern working practices

In the gig economy and with more focus on mental health and family life, the way we work is changing rapidly, with the CV-Library reporting last year that the number of remote workers has doubled in the last 4 years, which is challenging the government to keep pace.  In 2018, the Supreme Court finally ruled the Pimlico plumbers were workers rather than independent contractors. Having received that decision, one of them made a claim to the tribunal for holiday pay, only to be told it was out of time, however given he didn’t know at the time he was entitled to it, he will likely be appealing this decision.  After a number of holiday pay dispute cases in recent years, BEIS published online guidance and a calculator to help calculate holiday pay for workers whose hours or pay are not fixed. Meanwhile, the government seems to be trying to clamp down on the tax aspects of flexible working arrangements by announcing changes to the so-called ‘IR35 rules’ (those which affect the private sector are due in April 2020) concerning those individuals who provide services to clients via a service company. Whilst this may indeed lead to an increase in income tax and National Insurance payments for the government, it may simply lead to more inventive ways to get around the tax rules, whilst the tribunals and courts are left to battle it out over the true meaning of what constitutes a worker, an employee or an independent contractor.

What should we expect in 2020?

Employment Bill 2019-20

This is expected to apply in the main to England, Wales and Scotland and include the following measures:

  1. A single enforcement body for the labour market. As recommended by the Good Work Plan, a single enforcement agency to be set up dealing with non-compliance in the labour market, to replace the enforcement functions of the Employment Agency Standards Inspectorate (EASI), the Gangmasters and Labour Abuse Authority (GLAA), HM Revenue and Customs (HMRC) and the Health and Safety Executive (HSE). A consultation on these proposals closed on 6 October 2019; a response is awaited.
  2. Protecting tips and service charges for workers. Employers to be required to pass on all tips and service charges to workers and, supported by a statutory Code of Practice, to ensure that tips would be distributed on a fair and transparent basis.
  3. The right to request a more predictable contract. The government previously indicated its intention to legislate to introduce a right for all workers to request a more predictable and stable contract after 26 weeks’ service as part of the Good Work.
  4. Extending redundancy protection to prevent pregnancy and maternity discrimination. The Pregnancy and Maternity (Redundancy Protection) Bill 2017-19 was not granted Royal Assent in the 2017-19 Parliamentary session. The Bill was designed to extend the existing redundancy protection, effectively making it harder to make employees redundant during pregnancy and afterwards, until six months after they have returned from maternity leave. The Bill was believed to have cross-party support and the government is now intending to implement this measure through the Employment Bill.
  5. Extended leave for neonatal care. The government’s consultation on a new right to neonatal leave and pay, to support parents of premature or sick babies, closed on 11 October 2019; a response is awaited.
  6. A week’s leave for unpaid carers. This proposal was made in the Conservative Party’s election manifesto.
  7. Making flexible working the default. As set out in the Conservative Party’s election manifesto, the government intends, subject to consultation, to make flexible working the default position unless an employer has a good reason.
  8. Brexit-related provisions. The Employment Bill may contain provisions designed to safeguard workers’ rights derived from European legislation, after similar provisions were removed from the European Union (Withdrawal Agreement) Act 2020.

The Good Work Plan

A number of changes set out in the government’s Good Work Plan, published in December 2018, will come into effect on 6 April 2020:

  • The right to a written statement of terms for all workers (not just employees) on or before the first day of employment.
  • Additional information will need to be included in written statements of terms for employees and workers, including 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.
  • The removal of the “Swedish derogation” in the Agency Workers Regulations 2010, which allows employment businesses to avoid pay parity between agency workers and comparable direct employees where the agency workers receive pay between assignments.
  • The introduction of a Key Information document for agency work-seekers, including information on the type of contract, the minimum expected rate of pay, how they will be paid and by whom.
  • The threshold to request workplace information and consultation arrangements under the Information and Consultation of Employees Regulations 2004 (SI 2004/3426) will be lowered from 10% to 2% of employees, subject to the existing minimum of 15 employees.
  • The increase of the reference period for determining an average week’s pay (for the purposes of calculating holiday pay) from 12 weeks to 52 weeks.

The Conservatives’ manifesto did not mention resolving the complex issue of employment status and there has not yet been any response to the 2018 consultation on this, suggesting that it is not a high priority for the current government.

Off-payroll working rules

In order to address non-compliance with IR35 in the private sector, the government confirmed at the Autumn 2018 Budget that the off-payroll working rules would be extended to the private sector from 6 April 2020, but that small entities would be excluded from the scope of the new rules. This means that payments to workers supplied to large and medium-sized companies by personal service companies will be treated as payments of employment income and so subject to income tax and NICs. This shifts responsibility for tax compliance from the personal service company to the client or intermediary. However, as the legislation has not yet been passed, this measure remains subject to any further changes. During the election campaign, Sajid Javid, the Chancellor of the Exchequer, spoke about wanting to ensure that the proposed changes to off-payroll working were “right to take forward”. Some have suggested that there could therefore be a delay in implementation.

Taxation of termination payments 

From 6 April 2020 all termination payments above £30,000 will be subject to employer’s NICs. This measure is implemented in the National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019 which received Royal Assent on 24 July 2019.

Parental bereavement (leave and pay)

The Parental Bereavement (Leave and Pay) Act 2018, which entitles all working parents to two weeks’ paid statutory leave if they lose a child under the age of 18 (including a still birth after 24 weeks of pregnancy), is expected to finally come into force in April 2020, after a long wait. Secondary legislation is also awaited to implement the details of the scheme.

Non-disclosure agreements

In July 2019, the government published its proposals to prevent the misuse of confidentiality clauses or non-disclosure agreements (NDAs) in the settlement of workplace harassment or discrimination complaints. The government reiterated that confidentiality clauses can serve a legitimate purpose in both employment contracts and settlement agreements but confirmed its intention to bring forward new legislation “when Parliamentary time allows”.

The government has also stated that new requirements will be introduced for the limitations of a confidentiality clause to be clear to those signing them, as well as for mandatory independent legal advice on a settlement agreement to include the limitations of any confidentiality clause. Clauses that do not follow these new rules will be void.

Sexual harassment

In July 2019, the government launched a consultation on measures to address sexual harassment in the workplace. The consultation includes proposals such as introducing a mandatory duty on employers to prevent harassment in the workplace and increasing the time limit for bringing a discrimination claim from three to six months. The Equality and Human Rights Commission (EHRC) statutory code of practice on preventing sexual harassment in the workplace is also awaited and may well be published in 2020.

Ethnicity pay reporting

In 2018, the government launched a series of measures to tackle barriers facing ethnic minorities in the workplace, including a consultation on the introduction of mandatory ethnicity pay reporting, based on the model of mandatory gender pay gap reporting. A response to this consultation is still awaited and as there was no mention of this measure in the recent Queen’s Speech, it may be that this is no longer a priority for the current government. It is notable that the Conservative Party’s recent manifesto included a pledge to further investigate pay disparity in the UK, yet this manifesto did not refer to the possibility of introducing mandatory ethnic pay reporting.

Pay

The Conservative Party pledged in its manifesto to increase the National Living Wage (NLW) to two-thirds of average earnings (£10.50 an hour) by 2024 and to extend the NLW to over-21s.

Key cases:

On 12 and 13 February 2020 the Supreme Court will hear the appeal in Royal Mencap Society v Tomlinson-Blake, considering whether the correct approach to determine whether employees, who sleep-in in order to carry out duties if required, engage in “time work” for the full duration of the night shift, determining if they are therefore only entitled to the national minimum wage when awake for the purposes of working.

On 22 and 23 July 2020 the Supreme Court will hear the appeal in Uber BV and others v Aslam and others. The court will decide whether to uphold the Court of Appeal’s majority finding that Uber drivers are workers for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998.

We are currently awaiting the judgment in Various claimants v Wm Morrisons Supermarket which was heard in the Supreme Court on 6 and 7 November 2019. The court considered the High Court’s ruling that Morrisons are vicariously liable for a data leak by one of their employees. The breach resulted in around 5000 staff members having their personal data stolen and shared with the public.

A hearing date for the Supreme Court hearing of Ali v Capita Customer Management Ltd; Hextall v Chief Constable of Leicestershire Police is currently awaited. The court will consider whether it was direct or indirect sex discrimination, or a breach of the equal pay sex equality clause, for two employers to fail to pay two male employees enhanced shared parental pay.

The hearing date for another Supreme Court hearingAsda v Brierley, is also awaited. The court will decide whether workers in retail stores were employed under comparable terms and conditions to those working in separate distribution depots for the purposes of equal pay claims under the Equality Act 2010 and the Equal Pay Act 1970.

BREXIT:

This will come as no surprise to you, but, yes, we are expecting the UK to leave the European Union at 11.00 pm (UK time) on 31 January 2020. Whilst we cannot be sure what the long-term impact of Brexit on employment law will be, there are unlikely to be any significant changes happening in 2020. The UK will be in a post-Brexit transition period and most EU law (including as amended or supplemented) will continue to apply to the UK.

The European Union (Withdrawal Agreement) Act 2020 was recently given royal assent, implementing the withdrawal agreement into UK law. Under the withdrawal agreement, a post-Brexit transition period will run from exit day until 31 December 2020, during which time the UK will be treated for most purposes as if it were still an EU member state, and most EU law (including as amended or supplemented) will continue to apply to the UK. The transition period could be extended for up to one or two years, but only if the joint UK-EU committee agrees to an extension before 11.00 pm (UK time) on 30 June 2020. The Act includes a provision that prohibits the UK government from agreeing in the joint committee to an extension.

In the unlikely event that the UK and the EU do not conclude a withdrawal agreement by exit day (and there is no further extension of the Article 50 period, and the Article 50 withdrawal notice is not revoked), the UK will leave the EU on exit day with no agreement to govern the terms of withdrawal, and no transition period.

Once the UK leaves the EU, with or without a deal, formal negotiations on the future UK-EU relationship can start under Article 218 of the Treaty on the Functioning of the European Union. (Trade agreements are also governed by Article 207.) Assuming the UK and the EU agree a political declaration before withdrawal (in tandem with the withdrawal agreement), this declaration will form the basis for their post-Brexit negotiations on the future relationship. If the UK leaves the EU with a withdrawal agreement and transition period, the future relationship would ideally come into effect at the end of the transition period to minimise disruption, as many aspects of a no-deal scenario would again arise if relevant future relationship agreements are not in force by the end of the transition period.

Further Information:

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

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.