With 2017 in full swing, HR and in-house legal teams need to be looking ahead to key changes coming into force this year. Although the pace of change may have slowed somewhat, with the complexities of Brexit likely to consume significant Government time and attention, there are important changes ahead for which HR and legal teams will need to plan.
1 April 2017: The National Living Wage (for workers aged 25 and over) and the National Minimum Wage (for younger workers) will both increase. Previously, National Minimum Wage increases have taken place in October, but the timing of increases has been brought into line with increases to the National Living Wage.
The National Living Wage will increase to £7.50 per hour, while the National Minimum Wage rate for 21 to 24 year old workers will rise to £7.05 per hour, the rate for 18 to 20 year olds will increase to £5.60 per hour, and the rate for 16 and 17 year olds will go up to £4.05 per hour. The minimum hourly rate for apprentices will be £3.50 per hour. Our detailed guide is here.
6 April 2017: The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 are due to come into force, subject to Parliamentary approval, with the first reports due by 4 April 2018. Our detailed guide is here.
6 April 2017: the Apprenticeship Levy will come into force. Organisations with annual pay bills of more than £3 million (regardless of whether they operate apprenticeships) will be required to pay a levy equivalent to 0.5 per cent of their total annual pay bill to help fund additional apprenticeships. Levy-paying employers will receive an allowance of £15,000 to offset against the levy. Our detailed guide is here.
6 April 2017: Changes to salary sacrifice arrangements for certain benefits in kind will come into force. Employees will have to pay the same tax on the income which they sacrifice into these schemes as they would on any other income, and employers will have to pay the same National Insurance contributions. Pension contributions, employer-provided financial advice, childcare costs, bikes and bike safety equipment, and ultra-low emission cars will continue to be eligible for the tax and National Insurance savings. Mobile phone contracts, health screenings, gym memberships, school fees, accommodation, cars which are not ultra-low emission and white goods will no longer be eligible.
Arrangements made before April 2017 will be protected until April 2018, while arrangements for cars, accommodation and school fees will be protected until April 2021.
April 2017 – February 2018: The staging dates (by which, pension auto-enrolment needs to be in operation) for employers with fewer than 50 employees will take place by April 2017, while the staging dates for new businesses started on or after 1 April 2012 will fall between 1 May 2017 and 1 February 2018.
September 2017: Government proposals to double the amount of free childcare for 3 – 4 year-olds available to working families (to 30 hours per week) are expected to come into force.
April 2018: Changes to the taxation of termination payments will be brought into force, including the following:
- Clarification that the personal injury tax exemption does not apply to payments for injury to feelings
- Employers' National Insurance contributions will be payable on termination payments over £30K
- All payments in lieu of notice ("PILON" payments) will be treated as subject to tax and NICs, whether or not making a payment in lieu of notice is expressly permitted by the employment contract
- Foreign service relief will be abolished (except for seafarers).
Businesses will need to review their template settlement agreements ahead of these changes to ensure that they reflect the correct tax position.
May 2018: The EU General Data Protection Regulation (GDPR) is due to come into force. This will affect many UK businesses notwithstanding the UK's planned exit from the EU in 2019, particularly those which collect personal data concerning individuals living in the EU. Preparing for the GDPR will require a review of website terms, data collection and deletion practices, terms with third party suppliers and consideration of the employment aspects (such as employee consent for data collection and transfer). Businesses which have not already begun preparations for the GDPR will need to begin these in earnest this year, particularly if contracts are being renegotiated.
For more detailed guidance about preparing for these changes, please contact Jane Amphlett or your usual Employment team contact.
CitySprint: another blow to the gig economy businesses
Following the high-profile decision of an Employment Tribunal last year that two Uber drivers were workers, rather than being genuinely self-employed, a cycle courier engaged by CitySprint has won her similar claim, in the latest blow to "gig economy" businesses reliant on a self-employed workforce.
Margaret Dewhurst argued that it was artificial to regard her as being self-employed and that the Tribunal should disregard the contract she had signed with CitySprint to that effect. She argued that she had little control over how she performed her work: she had to wear a CitySprint uniform, comply with its detailed service standards and in practice was expected to accept delivery jobs once she had "logged on" to CitySprint's system. The Tribunal agreed and held that she was a worker.
As with the Uber case, this case is fact-specific and does not break any new ground legally, but it highlights the following issues for businesses using self-employed staff:
- Written contract terms may not win the day: CitySprint's contract with Ms Dewhurst was carefully drafted to maximise the chances of her being treated as self-employed. However, the Tribunal was willing to look beyond the contract and examine how the working arrangements operated in practice. The Tribunal emphasised that in cases where one party's bargaining power is much weaker than the other's, and where there is apparent inconsistency between contract terms and working arrangements, the terms of the contract may be disregarded. Well-drafted contracts are still a useful starting point – but if they don't reflect the reality, prepare to see them ignored by a Tribunal in a status dispute.
- Beware your website and marketing materials: CitySprint's website and promotional materials referred to "our couriers" and described them as being "fully trained". The Tribunal commented that this was inconsistent with CitySprint's argument that the couriers worked independently. Businesses engaging self-employed individuals need to be very careful about how they describe their "staff" in communications with third parties; sloppy language could make a Tribunal more willing to find that they are not genuinely self-employed.
- Don't assume individuals won't bring claims: There is nothing new in businesses engaging self-employed individuals in circumstances where a Tribunal might well conclude that they are not genuinely self-employed. Historically, many businesses have taken the view that such individuals are unlikely to challenge their status, particularly as their tax position as self-employed persons is more favourable. However, the publicity which both the Uber case and this case attracted and efforts by trade unions to secure support among self-employed individuals may well make such claims more likely. HMRC has also announced a crackdown on false self-employment. Businesses cannot afford to be complacent about these risks and should review their contracts and working practices to assess whether changes are needed.
For more detailed guidance, please contact Jane Amphlett or your usual Employment team contact.
It is very common for individuals who are in dispute with their current employer (for example, if they are subject to disciplinary or performance management proceedings or have lodged a grievance) to claim that they are unable to return to work due to stress until the situation has been resolved to their satisfaction. The risk of a disability discrimination claim arising from the alleged stress can make it even more difficult to resolve the impasse, particularly in light of the duty to make reasonable adjustments to prevent disabled staff being disadvantaged.
Usefully for businesses, the Employment Appeal Tribunal has confirmed in a recent case (Herry v Dudley Metropolitan Council) that such work-related stress is not always a disability under the Equality Act 2010. The EAT confirmed that there is a difference between a mental health condition such as clinical depression, which will often amount to a disability, and a reaction to adverse circumstances or life events, where the effects tend to be much more short-lived (and hence will not meet the legal threshold for disability).
The EAT went further, stating that even in cases where the individual's reaction to their work situation becomes entrenched and may therefore have long-term effects on them, they will not necessarily be disabled for discrimination purposes. The EAT stated that "unhappiness with a decision or a colleague, a tendency to nurse grievances, or a refusal to compromise, are not of themselves mental impairments: they may simply reflect a person’s character or personality".
Businesses need to take care (and may need to seek legal and/or medical advice) when dealing with staff who may be disabled. If in doubt, it is generally safer to assume that the individual may be disabled and make adjustments accordingly. However, this case emphasises that merely being unhappy with one's work situation does not in itself amount to a disability and employers can, in appropriate cases, take action to resolve the situation without being liable for disability discrimination.
For further guidance, please contact Jane Amphlett or your usual Employment team contact.
Jane Amphlett and Alex Mizzi on workplace social media bans (Financial News - subscription)
HR Network Breakfasts for retail/leisure and real estate sectors: Our next HR Network Breakfast for the leisure and retail sector will take place on 8 February 2017 at 8.00am for an 8.30am start, and our first HR Network Breakfast for the real estate sector will take place on 29 March 2017 at 8.00am for an 8.30am start.
Our roundtable breakfasts create a network for those responsible for staffing/HR matters in particular sectors to discuss key current workforce issues. The aim is to connect attendees with ideas, knowledge and people who can share and discuss their views. The breakfasts take place at our offices in London Bridge, hosted by Howard Kennedy's Employment team. For more information or to reserve your place, please click here.