Work It: Employment Update - March 2017

• Gender pay gap reporting: draft guidance now out
• Employee and worker status: Are your contracts watertight?
• Data subject access requests: Can an employer refuse to comply with a request which is made for the purposes of litigation?
• On the horizon…
• Howard Kennedy Employment: news and events

Gender pay gap reporting: ACAS guidance now released

With the gender pay gap reporting regulations due to come into force in April this year, we now have the draft guidance which accompanies the Regulations.This is available on the ACAS website. 

Please note that a number of the worked examples of calculations contain errors, which will hopefully be corrected before the guidance is finalised.

The guidance provides helpful clarification in a number of areas, including:

• Transgender staff: There had been some debate about how employers should deal with transgender staff. The guidance clarifies that the Regulations should not result in employees being singled out and questioned about their gender and that if gender identification provided for HR or payroll purposes is regularly kept updated, employers can use that information. Where that information is not available or may be unreliable, the guidance encourages employers to inform employees that gender pay gap reporting is taking place and invite employees to update their recorded gender if required. If an employee does not identify as being of either gender, the guidance states that they may be omitted from the calculations (although this is not reflected in the Regulations).
• Pensions: The guidance clarifies that employer pension contributions are not included in any of the calculations.
• Contractors: The Regulations contain an exception in relation to individuals who are not employees but who are engaged under a contract personally to carry out work for the business. Details of such contractors can be excluded from gender pay calculations if it is not reasonably practicable for the employer to obtain the data and they do not already hold it. The guidance clarifies that when entering into new contracts with individual contractors, the business should seek to include a term in the contract requiring the contractor to provide the information needed for compliance with the Regulations.
• Overseas staff: Unfortunately, the guidance provides little clarity about which overseas staff should be included in the calculations. It states that an employee based overseas should be included if they would be able to bring a claim in the Employment Tribunal under the Equality Act 2010. As the guidance states, this is not a straightforward question and involves looking at multiple factors. Employers should consider this issue carefully and if necessary should seek legal advice to ensure that communications about this point are subject to legal privilege. Conceding expressly in any internal documentation that an overseas employee would be able to bring claims in the Employment Tribunals could potentially undermine the employer's ability to dispute jurisdiction if that employee did later bring such a claim.

Employee and worker status: Are your contracts watertight?

Employee and worker status continues to be a hot topic for 2017. The latest development is that Gary Smith, a self-employed plumber working for Pimlico Plumbers, has succeeded in establishing that he was a "worker" and thus entitled to paid annual leave, among other rights. His claim succeeded despite his contract describing him as an independent contractor, and despite him being registered for VAT, submitting invoices to Pimlico Plumbers as a contractor and filing tax returns on the basis that he was self-employed.

The case was considered by the Court of Appeal, which agreed with the Employment Tribunal that Mr Smith was a worker.

There were two key issues:

1. whether Mr Smith was required to carry out work personally (if not, he would not be a worker); and
2. whether Pimlico Plumbers was his client or customer (if so, he would not be a worker).

On the first point, although he was in practice allowed to swap shifts with other plumbers, this was still regarded as consistent with the overall requirement under the contract that Mr Smith provide his services personally.

On the second point, the court held that the degree of control exercised by Pimlico Plumbers over the plumber was consistent with him being a worker rather than genuinely self-employed. Key factors included the requirement to wear a uniform and drive a branded van, the requirement for him to be available for a minimum of 40 hours per week for work and restrictive covenants which prevented him from working as a plumber in Greater London for three months after termination of the contract.

As with all decisions in this area, this case is fact-sensitive.There is very little in the decision which is new or surprising.However, it highlights the fact that self-employed staff are increasingly willing to challenge their status in the Employment Tribunals and the courts can and do look behind the written contractual documentation to establish how the relationship actually operates.

Data subject access requests: when can employers refuse requests?

The Data Protection Act allows individuals to request details and copies of the personal data which a data controller (such as an employer) holds about them (called a subject access request).This is very often used as a tactic in employment disputes in order to secure copies of relevant documentation long before an employer would be required to disclose those documents in Employment Tribunal litigation.

Employers faced with the prospect of a time-consuming search for personal data (which may involve combing through thousands of emails) sometimes refuse to respond to the request on the basis that the request is an attempt to obtain early disclosure and not related to the purposes of the Data Protection Act, which is concerned with privacy and the accuracy of personal data.

However, a recent Court of Appeal decision indicates that refusing to respond to a request on this basis could lead to a successful legal challenge.

The key issues in the case were:

• Could the data controller rely on legal professional privilege to refuse the request? The data controller in this case argued that they did not have to disclose the documents sought because legal professional privilege applied. However, the legal professional privilege on which they sought to rely related to proceedings in the Bahamas. The court held that the exemption in the Data Protection Act for legal professional privilege applies only to legal professional privilege as recognised in court proceedings in England and Wales, not any wider protection against disclosure which may apply in foreign litigation.
• Disproportionate effort: The data controller argued that responding to the request would involve disproportionate effort. However, this argument also failed, as the data controller had not provided evidence of what they had actually done to try to identify the personal data covered by the request, or a plan of action setting out how they would approach responding to the request. An employer seeking to refuse a request on this basis is likely to be challenged by the employee to specify exactly what steps it has taken to identify the data and a plan of action.
• Motive for the request: The data controller argued that the individual had made a subject access request in order to obtain an advantage in separate litigation they were pursuing, and was not seeking only to enforce their privacy rights under the Data Protection Act. However, the court held that this was not a good reason for refusing to respond to the request and that a data subject did not have to show that they had no other motive for making the request.

Employers faced with data subject access requests should consider carefully whether documents requested genuinely contain personal data, the scope of the search required and whether any exemptions apply. Where appropriate, legal advice should be sought so that legal privilege will apply to discussions about how to respond to the request.

On the horizon….

National Minimum Wage: The timing of National Minimum Wage and National Living Wage increases is being consolidated so that they will now happen at the same time (April each year). The new rates from April 2017 will be:

• workers aged 25 or over: £7.50 an hour
• workers aged 21 to 25 : £7.05 an hour
• workers aged 18 to 21: £5.60 an hour
• workers under 18 : £4.05 per hour
• apprenticeship rate: £3.50 an hour.

Regulatory references: New FCA and PRA rules relating to regulatory references, which form part of the senior managers regime and senior insurance managers regime, came into force on 7 March 2017. The rules aim to ensure that individuals who have committed misconduct or regulatory breaches cannot move between firms without their new employer being aware of their history.

Holiday pay: The Supreme Court has refused permission to appeal in the long-running case Lock v British Gas, meaning that the Court of Appeal judgment (which confirmed that commission does need to be factored into holiday pay) remains in place.

Apprenticeship Levy: This comes into force on 6 April 2017. For more information, see our detailed guidance note.

Self-employment - NIC changes: The Government in its Spring Budget announced (controversial) increases to national insurance contributions for self-employed individuals. However, a subsequent announcement indicates that the changes will not take effect until this Autumn, after the Taylor review on modern employment practices has concluded.

Pregnancy and maternity discrimination:  The Women and Equalities Office published a report last August calling for stronger legal protection in relation to pregnancy and maternity, including an extension of maternity rights to workers, a longer limitation period for bringing claims, a reduction in ET fees and protection against being made redundant for six months after returning from maternity leave. The Government has now responded to the report. Overall, it rejected the report's recommendations, but it is reviewing whether employees returning from maternity leave, paternity leave and shared parental leave should receive enhanced protection against redundancy, in addition to the current protections for employees on maternity leave.

Public sector exit payments: The power to make regulations capping termination payments for public sector employees at £95,000 (including notice pay) has been brought into force.

Howard Kennedy Employment news and events

• Alexandra Mizzi on what employees can do when their employer goes into administration (City AM)
• Antonia Torr and Alexandra Mizzi on the immigration and employment implications of President Trump's executive order on travel restrictions  (Financial News - subscription)
• Our next HR Directors' Forum will take place on 11 May 2017, featuring guest speaker Carrie Birmingham discussing HR's role in crisis management. For more information, please contact Jane Amphlett.
• Our next HR Breakfast forums will take place on 17 May 2017 (tech, media and creative sectors) and 8 June 2017 (retail, hotels and leisure sectors). For more information, please contact Jane Amphlett.