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RMI Legal: Employment Law Update

RMI Legal: Employment Law Update

30 January 2017

In this employment law update we aim to keep you up to date on some of the latest developments in employment law, and although the bulletin is not intended to provide a comprehensive summary of all the changes to the law, we hope to highlight some key areas of change for motor industry employers.

Legislation

  • Final Gender Pay Gap Regulations published

The final version of the Gender Pay Gap Regulations, which come into force on 6th April 2017 was finally published on 6th December 2016 setting out how employers should calculate and report on the gender pay gap within their business from April 2017. The final regulations clarify some points such as: who is in scope; how to calculate pay and reporting obligations on bonuses.

What must employers publish?

In brief, under the Regulations employers will be required to publish the following:

1. The difference between the median and mean hourly rate of “full pay” for male and female relevant employees during the relevant pay period (which will include a pro rata proportion of any bonus paid in any relevant pay period);

2. The difference between the median and mean bonuses paid to male and female relevant employees in the year ending with the new snapshot date;

3. Proportions of male and female relevant employees who received a bonus; and

4. Proportions of male and female relevant employees in each pay quartile.

How will the regulations be enforced?

The previous draft had been criticised for having a lack of enforcement powers. The notes that accompany the new draft regulations now suggest any employer’s failure to comply with their obligations under the regulations will amount to an “unlawful act” and under which the Equality and Human Rights Commission (EHRC) could potentially take action. However, it is still not clear how much enforcement EHRC will actually implement due to a lack of resources.

  • New National Minimum Wage as of 1st October 2016

The minimum wage is increased from 1st October as set out below.


Recent case law developments

  • Are Uber Drivers employees, workers or independent contractors?

You may have seen widely reported in the press the recent decision concerning Uber drivers. The Employment Tribunal has ruled that two drivers who provided services to Uber are “workers” within the meaning of the Employment Rights Act 1996. This means they will be entitled to a limited number of employment rights including 5.6 weeks paid annual leave each year, a maximum 48 hour average working week and rest breaks, the National Minimum Wage (and the National Living Wage) and protection of the Whistleblowing legislation.

As with the British Gas v Lock case it is widely expected that this case will also be appealed and, eventually, potentially to the Supreme Court.

The Uber case is of interest to any employer who uses “contractors” for example drivers or valeters as they may in fact have worker status. Note: In the Uber case the drivers were simply trying to claim worker (not employee) status which under UK law grants them basic workers rights, though not to the same level of protection as afforded to full employees.

  • Protecting a disabled employee’s pay can be a reasonable adjustment

In the case of G4S Cash Solutions (UK) Limited v Powell the Employment Appeal Tribunal has held that an employer was obliged to continue paying a disabled employee his existing salary on an indefinite basis even though he had been redeployed into a more junior role due to no longer being able to carry out his normal duties as a result of his disability. The EAT ruled that it could not see any reason why pay protection should be excluded as a “reasonable adjustment” when an employer attempts to prevent disability discrimination.

Whilst this case is potentially problematic for employers, it is important to remember that each case will be decided on its own merits, taking into account various factors, and what is reasonable for one employer or employee will not always be reasonable for another. The EAT considered that pay protection would not be an “every day event” however, it should not be discounted. This will therefore need to be borne in mind by all employers when considering disabled employees’ pay and the question of reasonable adjustments.

In the News

  • Businesses unaware employment tribunal verdicts will be made public in 2017

Most employers have yet to consider major implications in the reporting of employment tribunal verdicts, and we anticipate companies could feel compelled to settle out of court, or might even introduce blacklists of litigants, as a result. Any member of the public will be able to search on line for tribunal judgments, by company name or topic, from a yet to be determined date in early 2017. At present, judgments are only available by request or in person from HM Courts and Tribunal Service (HMCTS). It will only apply to judgments this year when the system goes live.

There is real concern that employers may fear significant brand and reputational damage from verdicts being made available. This development is clearly something employers will have to bear in mind when deciding whether to consider comprising or settling potential or actual claims.

  • Brexit employment law briefing paper published

On 12th October the House of Commons published a paper on Brexit and employment law. It largely reminds us that EU employment law is found in both primary and secondary legislation as well as in European Court of Justice case law and that, accordingly, different mechanisms will be required to preserve or amend the law originating from these various sources. The paper also mentions the Government’s proposed Great Repeal Bill which, if passed, will turn all EU law into UK law.

Consultations

  • Proposed consultation on workers’ rights

Tony Blair’s former Head of Policy, Matthew Taylor, has been appointed by Theresa May to lead a review into the current working practices and employment rights offered under UK law. The review comes after recent investigations into the working practices of large companies like Sports Direct. The consultation will focus on job security, pay and workers’ rights.

  • Simplifying tax on termination

The Government has responded to its consultation on simplifying the taxation of termination payments and produced draft legislation which will be consulted on further. In summary it confirms that, from April 2018:

  • The distinction between contractual and non-contractual payments in lieu of notice will be removed and all payments in lieu of notice will be taxable as earnings and subject to national insurance contributions.
  • The exemption from income tax and national insurance contributions will be retained up to £30,000.
  • Employer national insurance contributions will be payable on payments over £30,000.
  • Foreign service relief will be abolished and injury to feelings will be expressly excluded from the exemption that applies to injury payments (unless it relates to a psychiatric injury or medical condition).

Guidance

  • New ACAS guidance on anxiety and seasonal issues

ACAS has published new guidance on anxiety for managers and employees which gives top tips on how to handle mental health in the workplace. Managers should be properly trained with the skills they need to support staff that may be experiencing anxiety at work. The advisory body has also produced guidance on winter workplace issues for employers, which includes advice on whether there is a requirement to pay staff if they can’t come to work because of flooding or snow. For further details please refer to the ACAS website.

If you need legal advice, please call the IGA member helpline on 0845 305 4230.