Unusually there are few employment law changes taking place this October other than an increase to the National Minimum Wage; however, there are a number of key developments that have now reached or are approaching their implementation dates, together with new or proposed consultations that employers need to be aware of. There are also a number of key cases where we are awaiting a decision from the courts.
National Minimum Wage
From 1 October increases to the National Minimum Wage become effective. The new National Living Wage of £7.20 per hour which applies to workers aged 25 and over is unaffected. Our checklist contains the new rates and other key payments and limits for 2016/2017.
New whistleblowing rules in the financial services sector
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have published new rules on whistleblowing for firms operating in the financial services sector. These are part of a wider policy of reforms designed to improve individual accountability in the regulated sector. The rules are intended to build on and formalise the good practice already in place in many firms in the sector and came into full effect on 7 September.
Our blog provides a summary of the key changes
Under the Modern Slavery Act 2015 introduced last October, it became a legal requirement for organisations with a global turnover of £36million or above to prepare a slavery and human trafficking statement for each financial year. The first organisations that needed to produce a statement were those whose financial year ended on 31 March 2016. Their statements relating to the current year (2015-2016) are expected to be published no later than six months after the financial year end to which it relates. Working to this suggested time frame, the first target date is 30 September 2016.
Guidance from the government states
“…we expect organisations to publish their statements as soon as reasonably practicable after the end of each financial year in which they are producing the statement. Organisations may well choose to publish the statement alongside any other annual or non-financial reports they are required to produce. In practice, we would encourage organisations to report within six months of the organisation’s financial year end.”
For further information read our guidance
Gender pay gap
The government’s consultation on gender pay gap reporting closed in September 2015 and the Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 are expected to be laid before Parliament this autumn and commence in April 2017. Employers in the private and voluntary sector with 250 or more employees will be required to publish gender pay gap details highlighting the differences in gross pay and bonus payments between male and female employees.
The government has also consulted in relation to gender pay gap reporting in the public sector. The consultation closes on 30 September and indicates that the public sector reporting will follow the same requirements as the private sector. The consultation can be viewed here
For further information download our gender pay gap guide
Public sector exit payments
The Repayment of Public Sector Exit Payments Regulations 2016 require a high earning public sector worker to repay an exit payment if they are re-employed in the public sector within a 12 month period. The threshold for a ‘high earner’ is set at £80,000 and tapering provisions will apply. The government has indicated that the new rules will come into force ‘shortly’ but we have no definite date.
Additional changes in the public sector include the capping of exit payments at £95,000. The cap will apply to the vast majority of payments such as voluntary and compulsory redundancy, special severance payments and pay in lieu of notice. We currently have no implementation date.
Trade Union Act
Key reforms under the Trade Union Act relate to strike ballots and include:
• A requirement for a minimum turnout of 50% of those entitled to vote before a ballot will be lawful.
• The support of at least 40% of those eligible to vote (as opposed to those actually voting) in the case of industrial action affecting essential public services such as health, fire and education.
• A limit of six-months on a strike mandate (or a nine-month limit if agreed with the employer); after this point another ballot will be required.
• The minimum notice of industrial action that must be given to employers has increased to 14 days (or seven days if both parties agree).
The Act received Royal Assent in May 2016 but we currently have no date for implementation.
For further information on trade union reforms read our blog
From April 2017 the current apprenticeship system will be replaced by funding on an ‘electronic voucher’ system, where the full cost of external training for apprentices will be met from funds held on a ‘use it or lose it’ basis in an employer’s electronic apprenticeship account:
- Small employers will receive a credit of £15,000 to their apprenticeship account which can be used for training without cost to the employer.
- Larger employers will be obliged to pay 0.5% of their gross pay bill to HM Revenue and Customs through PAYE (less a £15,000 allowance) – the apprenticeship levy. The 0.5% contribution will then be available to spend through that employer’s electronic apprenticeship account.
Both small and large employers will need to use the funding in their accounts within a two year period, otherwise it will lapse.
(Note the position in relation to employing apprentices in Scotland and Northern Ireland is different from England and Wales).
Consultations and inquiries
Taxation of termination payments
In the 2016 budget the government announced that it would make significant changes to the taxation of termination payments. In essence, payments in lieu of notice will be taxable and subject to NIC in all circumstances and employer’s NIC will be charged on deals above £30,000. Following consultation which took place this summer, the government has now published a follow-up consultation on draft legislation.
Changes are proposed to be effective from 6 April 2018. The consultation can be viewed here
The government has announced that it will undertake a 12 week consultation on the issue of caste and the Equality Act 2010.
A key aim of the consultation will be to obtain the views of the public on whether additional measures are needed to ensure victims of caste discrimination have appropriate legal protection and effective remedies under the 2010 Equality Act.
We will update you as soon as a consultation date is announced.
Corporate governance reform inquiry
The Business, Innovation, and Skills Committee has launched an inquiry on corporate governance, focusing on executive pay, directors duties, and the composition of boardrooms, including worker representation and gender balance in executive positions.
This follows an earlier announcement by Theresa May that changes to the way big businesses are governed would be a key driver in her role as Prime Minister.
The case of Lock v British Gas Trading Ltd was heard by the Court of Appeal back in July. By way of reminder, this case concerns whether employers are obliged by the Working Time Regulations 1998 (WTR) to take into account commission payments when calculating holiday pay.
The previous decision of the Employment Appeal Tribunal was that commission should be included in calculating holiday pay and British Gas appealed. This case has been watched closely by employers and workers alike and is likely to have implications for many other employers and workers who are paid commission. We are currently awaiting the Court of Appeal’s decision.
Read all our holiday pay blogs here
In July 2013 tribunal fees were introduced with the aim of parties settling disputes more speedily and relieving the burden on the tax payer. Unison challenged the introduction of tribunal fees on the basis that the fees made it difficult for employees to exercise their employment rights. Although to date the challenge has been unsuccessful Unison has now been given permission to appeal to the Supreme Court. The case is due to be heard in December.
The cases of Samira Achbita v G4S Secure Solutions NV and Bougnaoui v Micropole SA address the controversial issue of religious dress in the workplace. Both cases were referred to the European Court of Justice and the Advocate-Generals have given conflicting opinions on whether the ban imposed by employers on Muslim employees wearing a headscarf was discriminatory.
In Achbita the Advocate General stated that it was not direct discrimination to ban the wearing of a Muslim headscarf when there is a policy of neutrality. Whereas in Bougnaoui the employee’s dismissal for wearing an Islamic headscarf at work, in breach of an instruction prohibiting this, was directly discriminatory on the grounds of religion or belief.
We are now awaiting a decision from the ECJ.
For further information on any of the topics addressed in this blog please Get in Touch