Ringing in the employment law changes in 2017

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Ringing in the changes: employment law – what to look out for in 2017

As we finally dust the last mince pie crumbs from our fingers, and push our New Year’s detox resolutions back to February, or possibly even March, we also take a look at the year ahead for employment law.

What are the key developments scheduled for 2017? What will be the impact on HR? How can we prepare for what we know is coming, as well as brace ourselves for the, as yet, unknown? Remember – few predicted in January 2016 that by June the UK would have voted to leave the European Union!

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Brexit - the beginning of negotiations?

2017 should be the year we begin to get some idea of what, "Brexit means Brexit", might actually look like in practice. This is of course assuming the Prime Minister is able to adhere to her previous promise to trigger article 50 by the end of March, and the Supreme Court don’t throw a further spanner in the Brexit works (see - Cases to watch out for in 2017 below).

Clearly, the outcome of Brexit negotiations will have major ramifications for UK Plc across the board. In particular, from a pure HR perspective, the future of the free movement of labour is high up there on the negotiating priority list. Will UK employers still be able to recruit EU nationals? What about EU nationals already working in the UK? There is also the question of UK nationals working in the EU.

Whilst the future shape of UK and EU immigration rules remains under discussion, EEF will continue to closely monitor the situation and make representations on our members’ behalf. See our latest report on what manufacturers think of Brexit.

Apprenticeship Levy

The Finance Act 2016 included the legal provisions for the introduction of the Apprenticeship Levy (the 'Levy') with effect from April 2017. The Levy, introduced as part of the Government’s initiative to fund three million new apprenticeships by 2020, will be payable at a rate of 0.5 percent on pay bills of £3 million or more. It will be collected via PAYE (alongside income tax and national insurance).

EEF has been very active in lobbying the government about members’ concerns regarding the impact and proposed operation of the Levy. For further guidance on how the Levy will work in practice and EEF’s on-going work on this issue – see our Apprentice Levy webpage.

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You can also watch on our free introductory webinar: "Managing your Digital Apprenticeship Service (DAS) account".

To learn more about EEF’s own extensive apprenticeship training and consultancy offering, see our dedicated Apprenticeship website.

Gender pay reporting

The Gender Pay Reporting Regulations will come into force from April 2017, requiring organisations with 250 or more employees to report on their gender pay gap. First reports must include a snapshot from the pay period that covers 5 April 2017 and be published within 12 months of the snapshot date on both the company website and a designate Government website.

Members can find more information on the gender pay reporting requirements on our website here.

Changes to taxation of salary sacrifice benefits

The Government will make changes to the tax status of salary sacrifice benefits with effect from April 2017, with most such benefits becoming subject to the same tax as income. The changes follow the plans set out in the Government’s 2016 Autumn Statement. Arrangements in place before April 2017 will be protected until April 2018 or April 2021, depending on what they cover. The changes will affect different salary sacrifice arrangements in different ways but only a few salary sacrifice arrangements will continue to benefit from tax and NICs relief: pension contributions, childcare, cycle to work schemes and ultra-low emission cars

Our EEF Advantages partner, Salary Exchange, produced a briefing for EEF Advantages clients on these changes when they were announced. You can access this briefing here

National Living Wage (NLW) and National Minimum Wage (NMW) increases, and alignment of future rate increases

The NLW, the legally required minimum level of pay for workers aged 25 and over, will increase to £7.50 an hour with effect from 1 April 2017 (up by 4.2% on its current rate of £7.20 an hour).

Other increases to NMW rates from April 2017 include, the NMW rate for 21- 24 year olds rising to £7.05 an hour, (currently £6.95 an hour); the rate for 18-20 year olds rising to £5.60 an hour, (currently £5.55 an hour); the rate for 16-17 year olds rising to £4.05 an hour (currently £4.00 an hour). The apprenticeship rate will rise to £3.50 an hour (10p up from its current rate of £3.40 per hour).

Going forward, changes to the NLW and NMW rates will be aligned so as to take place on 1 April each year.

In addition, the government has confirmed that it will be investing an additional £4.3 million a year into national minimum wage enforcement, enabling HM Revenue and Customs teams to review employers considered most at risk of non-compliance.

Tax-free Childcare scheme

The Government has confirmed that its new Tax-Free Childcare scheme will be rolled out from early 2017. For eligible families, Tax-Free Childcare offers to cover 20% of childcare costs (up to £2,000 per child, per year), for children up to the age of 12. Once the scheme is in place, employers will no longer be able to establish new childcare voucher schemes, or accept new entrants into established schemes.

Trade Union Act 2016 coming into force

Although the Trade Union Act – which amongst other things provides for new balloting requirements before a trade union can take lawful industrial action – was passed by Parliament at the end of last year, many of its provisions are yet to come into force. It is expected that they will do so in the early part of 2017. For further information see our briefing – Trade Union Update: striking the balance.

Data Protection

During the course of 2017, employers will need to prepare for the introduction of new European data protections standards. Notwithstanding Brexit, the new EU General Data Protection Regulation (GDPR) will apply directly to the UK from May 2018. And the UK’s Information Commissioner has confirmed that, even once we have left the EU, the UK’s data protection standards will need to continue to be on a par with those of the EU.

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Obligations under the GDPR are significantly more demanding than those under the UK’s existing data protection regime governed by the Data Protection Act. For example, the new regime will require organisations to be far more transparent and provide more specific information to employees about the information they hold and what they do with it. Individuals will also enjoy new and increased rights in relation to their personal data.

Going forward, data protection safeguards will need to be built into all HR processes. Employers will not only have to comply with the new law but will also be required to demonstrate this compliance. The penalties for getting it wrong will also increase substantially.

There is still time to catch one of the remaining sessions of EEF’s popular national seminar programme – ‘New data protection law: impact on HR processes and employee records’. For further information, or to book, click here.

Taylor Review – Modern Employment Practices

The Taylor Review into Modern Employment Practices (‘the Review’), (see Gov.uk for further information), announced at the end of last year that it will be ‘touring the UK’ in the early part of 2017. The Review’s remit is to obtain a fuller understanding of how labour market practices vary across different sectors and industries and assess what impact technological developments and the growth of the so called ‘gig economy’ are having on working practices. In addition, the Review is looking at how these developments sit within the UK’s existing framework of employment regulation.

EEF will be making submissions to the Review in relation to working practices in the manufacturing sector. If you would like to contribute to these submissions, please contact Tim Thomas, EEF Director of Employment and Skills Policy, tthomas@eef.org.uk.

Cases to watch out for in 2017

Brexit - Gina Miller and Deir Tozetti Dos Santos v The Secretary of State for Exiting the European Union

Both ‘sides’ of the Brexit debate are waiting with bated breath for this decision of the Supreme Court as to whether the Royal prerogative allows the government to give notice to exit the EU under Article 50 without Parliamentary approval. This decision, impacting as it does on the expected speed of the Brexit juggernaut through 2017 and beyond, is expected very shortly. When delivered, it will no doubt dominate the headlines.

Employment tribunal fees – UNISON v Lord Chancellor.

Although Unison’s judicial review challenge to the 2013 introduction of employment tribunal fees was dismissed by both the High Court and the Court of Appeal, the union is fighting on and has appealed to the Supreme Court. The remaining issues in the appeal are due to be heard by the Supreme Court in March this year.

Worker status - Pimlico Plumbers Ltd v Smith

Later this month, the Court of Appeal will hear an appeal by Pimlico Plumbers against a finding of the Employment Appeal Tribunal that the manner in which plumbers provided services on its behalf meant they should be classed as ‘workers’ rather than self-employed. This was despite both parties having expressly agreed in contractual documentation that the plumbers would operate on a self-employed basis. This appeal follows on from the 2016 headline-grabbing case of Aslam and others v Uber BV in which an employment tribunal found Uber drivers, working in the so called ‘gig economy’, to be workers as opposed to self-employed. A decision which was also appealed and which is expected to be heard during 2017.

These decisions seem to suggest that tribunals are increasingly willing to be bold and pragmatic when it comes to determining employment status cases – even where there are contractual arrangements specifically designed to give ‘the appearance’ of individuals being ‘genuinely’ self-employed. We should probably expect an increasing amount of employment litigation in this area to come from the emerging ‘gig economy’.

The wearing of head scarves in the workplace - Bougnaoui v Micropole Univers, and Achbita v G4S Secure Solutions.

Whilst we remain part of the EU, the decisions of the ECJ continue to bind UK courts. This year, the ECJ is due to publish its judgment in two cases relating to the wearing of Islamic headscarves at work. Advocate Generals have previously given conflicting opinions on whether, in the circumstances of each case, the employer’s prohibition of headscarves was discriminatory on the grounds of religion and belief. It will be interesting to see how the ECJ deals with this highly controversial topic.

Equal pay - Brierley and others v Asda Stores

Last year, an employment tribunal ruled that for the purposes of presenting equal pay claims, a predominantly female group of employees working in supermarket stores could compare their pay to a predominantly male group of employees working in distribution depots. As the potential claims in this dispute are reported to worth in excess of £100 million, it was unsurprising that Asda appealed on this issue. Although equal pay claims are notoriously complicated, and involve many procedural twists and turns along the way, this case is likely to make some progress in 2017, and will be watched intently by some large private sector employers.

Whistleblowing - Chesterton Global Ltd (t/a Chestertons) and another v Nurmohamed and another

To be protected by whistleblowing legislation, individuals must show that their disclosures were in ‘the public interest’, but what does this mean?

This case, due to be heard by the Court of Appeal in June, will hopefully provide some guidance as to how many people must be affected by a disclosure for it to meet the ‘public interest test’.

Holiday pay - British Gas Trading Ltd v Lock

The holiday pay saga will inevitable continue to rumble on. In October 2016, the Court of Appeal determined that commission should be included within holiday pay. British Gas has lodged an appeal to the Supreme Court, which is likely to get a 2017 hearing date. However, given the direction of travel of the holiday pay cases, and the clear prior view of the ECJ in Lock, this appeal probably has fairly limited chance of success – but watch this space. See our briefing - Holiday pay – Lock v British Gas - Court of Appeal gives judgment.

So, as you can see overall 2017 is already set to be a fairly busy year for employment law. And, of course there will inevitably be other unforeseen issues, cropping up along the way for us to roll up our sleeves and grapple with. After all if 2016 has taught us anything, it’s probably that it’s best to prepare to expect the unexpected!

So how can EEF help?

As always, we will continue to update you throughout the year, and keep you on top of the ever evolving HR and employment law agenda. Dates for our popular Spring Employment Law Update will be released soon

In addition, keep an eye on our extensive and regularly updated programme of seminars & events - a great way to supplement your knowledge and really get to grips with the practical implications of legislative developments.

Author

Principal Legal Adviser

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