To help you with your HR planning for 2017, and keep you up to speed throughout a year of change, we have put together a short table summarising the new employment laws coming into force in 2017, together with a short Brexit Update highlighting events so far and on the immediate horizon.
We also discuss Employment Tribunal cases whose outcomes could have an impact on employment law and change HR practice in the coming year. We will keep you informed of the outcomes and what they mean for your business. Make sure you have subscribed to our updates, click the sign up now button in the column to the right of this article.
Some decisions which are already overdue (on Shared Parental Leave and the ban on Corporate Directors) may be further delayed as MPs and Courts are busy with Brexit.
Click on the headings in the table to find more details on the topic discussed later in the article. The “Next Steps” column highlights some initial actions you can take.
|Date||New Laws for 2017||Next Steps|
|Expected after 23rd June 2016||Shared Parental Leave extends to Grandparents
The government has plans to extend shared parental leave and pay to working grandparents by 2018.
|We will keep you updated on the date of implementation. Inform members of your workforce who are of an age to be grandparents.|
|Expected after 23rd June 2016||Ban on Corporate Directors
At present UK companies are allowed to have corporate directors – these are legal entities such as a company or an LLP – as a director, so long as one director is a real person. This is changing in 2017.
|If you have a complex company structure which includes corporate directors, you will need to remove these or replace them with a real person within a year of this law coming into force.|
|Hearing 17th January 2017||Employment status of workers
Pimlico Plumbers v Smith.
Update 10th February: Following Uber and City Sprint cases, in the latest case in this developing area of workers rights, the Court of Appeal upheld the decision that Plumbers employed by Pimlico Plumbers are workers not self-employed contractors.
|The trend of the courts towards finding for worker status when businesses are challenged on this looks set to continue. Do you have workers or contractors in your business? Make time to check and where necessary tighten contractual documents.|
|Early 2017||Tax Free Childcare Scheme
The government plans to remove the current system of childcare vouchers and introduce a new tax-free childcare scheme.
|This is so important to working parents. Ensure they know of the change and its effects.|
|Hearing due late March 2017||Employment Tribunal Fees
In 2016, The Court of Appeal dismissed Unison’s challenge to the introduction of these fees.
In early February 2017, the government published its long awaited review on ET fees. It concluded in favour of continuing the fee system whilst promising to address “areas of concern” primarily by extending the fee remission scheme and announcing an immediate exemption from fees for claims for redundancy payments where an employee is redundant.
|Watch out if this case finds in favour of Unison – the government will need to respond.|
|1 April 2017||National Living Wage rise
for all working people aged 25 +
National Minimum Wage rate rises, and associated rises for the other age bands. For an explanation of NLW, NMW and The Living Wage click here
|NLW for 25 yrs +
raised to £7.50 p.h
(up from £7.20)
|April 2017||The Apprenticeship Levy
From April 2017 all UK employers in the private and public sectors that have annual wage bills of more than £3million will have to pay an apprenticeship levy. All companies can apply for help with Apprentices’ college fees and grants are available to companies of less than 50 employees.
|Large Companies will need to pay the levy from May 2017, and notify HMRC each month if they are eligible to pay.All employers can apply for govt funding to cover 90% of their Apprentices’ College Fees.|
|April 2017||Changes to Statutory Sick Pay (SSP),Statutory Maternity Pay (SMP)
& Maternity Allowance. Statutory Shared Parental Pay (ShPP)
Statutory Adoption Pay (SAP)
For the first time since 2015, these Government set payments are increasing in April 2017.
|SSP raised to £89.35 (up from £88.45)
SMP raised to £140.98 (up from £139.58)
ShPP & SAP raised to £140.98
(up from £139.58)
|From April 2017||Salary Sacrifice Schemes tax changes
The government is withdrawing the tax benefits for company cars (except ultra-low emission vehicles) work-related training, workplace parking, private health schemes and health screening checks, mobile phone contracts, gym memberships and school fees. The government has preserved the following salary sacrifice schemes: pension contributions and advice, child-care, cycling to work and ultra-low emission cars.
|This will be unwelcome news for staff with salary sacrifice schemes in place who will lose these tax benefits from April 2017. Check your staff packages so you can explain the effects of these changes on individual employees.|
|6th April 2017 – for reporting End April 2018 – for publishing||Gender Pay Gap reporting
In mid-2015 the government announced legislation requiring large UK employers with workforces of over 250 to calculate and publish their gender pay gap, and to reveal the number of men and women in each pay range, to show where pay gaps are at their widest. Employers will need to start calculating from April 2017, 12 months ahead of the first tables being published in April 2018. See ACAS Gender Paygap reporting guidance.
|Look for the examples of best practice in this area. Although this new law only applies to employees with more than 250 workers, be ready for questions from your workforce thinking it applies to your business as well.|
|Use 2017 to get ready for 2018||Data Protection New regime coming in 2018
The EU General Data Protection Regulations (GDPR) which harmonises data protection rules across the EU including the UK will affect employers. See below for further details.
|Look out for our separate updates on GDPR (General Data Protection Regulations) during the year.|
|1 April 2017 – February 2018||Workplace Pensions
The rollout of pension auto enrolment continues and 2017 is the year when many businesses have their staging date – the date when they need to set up workplace pensions for their employees. We recommend 6-9 months of planning time for this. Companies with up to 30 employees have a deadline of 1 April 2017.
New employers have a few more months.
Read our guide to Workplace Pensions for SMEs and Recent Employers here
|All employers will need to have staff enrolled by February 2018.
-Choosing the right pension Scheme providers
-Amending the payroll
-Conduct test payments
– Remember to communicate to staff that this is in effect a pay rise for them.
Timetable of events:
24th January 2017
The Supreme Court rules that Parliament must must vote on triggering Article 50; the official notice from the UK to the EU that the country is leaving. Formal negotiations can begin once the UK has given this notice, which the Prime Minister has promised to do by the end of March 2017. The Judges rule that the government doesn’t need to ask the governments of Scotland, Wales and Northern Ireland to invoke Article 50.
26th January 2017
The European Union (Notification of Withdrawal) Bill 2016-2017, referred to in the media as the “Brexit Bill”, is introduced to UK Parliament.
1st February 2017
UK Parliament votes to allow the Prime Minister to start the formal Article 50 Brexit Process.
2nd February 2017
The government publishes its white paper
“The United Kingdom’s exit from and new partnership with the European Union” .
This sets out Brexit plans and the themes of the government’s goals for its negotiation with the EU. Further information on Employment related issues can be found in:
Section 5 “Controlling Immigration”
Section 6 “Securing rights for EU Nationals in the UK and UK nationals in the EU” and
Section 7 “Protecting Workers’ rights”
As we discussed during our very successful HR Network Seminar on this topic, the Brexit negotiations will produce many proposals and ideas about these areas:
From the government’s 12 point plan announcement on 17th January 2017, we do know its stated position, in italic quotes here, on the following Employment Law and HR related issues:
Point 5) “Control of Immigration coming from the EU: Brexit must mean control of the number of people who come to Britain from Europe”.
This will impact on business immigration and the new processes which will need to be followed for UK-based employers to hire workers from the EU. The UK may implement a Visa/Points system for EU Nationals along the lines of the one in place for Non-EU and EEA/Swiss nationals.
Point 7) “Protect workers’ rights: not only will the government protect the rights of workers set out in European legislation, we will build on them”.
We will continue to update you on the changes throughout the year including details on the proposed Great Repeal Bill when they emerge.
Monday 14th March
MPs and House of Lords Peers pass the European Union (Notification of Withdrawal) Bill. On Wednesday 16th March the queen gives the royal assent to the Bill, clearing the way for Theresa May to notify Brussels that the UK is withdrawing from the EU and to start negotiation talks.
Wednesday 29th March
Theresa May triggers article 50, officially notifying the EU – in the form of a letter from Ms May to Donald Tusk – of the UK’s intention to withdraw.
(Under the article 50 Process, talks on the terms of the withdrawal and future relations are not allowed until the UK formally tells the EU it is leaving).
In response to this news Donald Tusk, President of the Council for the European Union, stated that he expects to present the draft “Brexit” guidelines to the 27 EU member states “within 48 hours”.
Mr Tusk has called a Brexit summit on 29th April, exactly 1 month after the the UK’s notification to withdraw. At this summit, ministers from the 27 EU member states will meet to discuss their response and negotiating strategy.
At the same time, France is in the middle of it’s Presidential Elections, first round on April 23rd.
Theresa May calls a general election for 8th June 2017.
Expect to see the Great Repeal Bill introduced. France’s final Election May 7th.
Thursday June 8th
UK General Election
Getting back to the new employment laws coming in 2017:
The following 3 cases will impact Employment law going forward and must be on your radar.
In October 2016, the London Employment Tribunal ruled that Uber drivers can be classed as workers and are not self-employed. This gives Uber drivers the entitlement to holiday pay, rest breaks and the national minimum wage, among other benefits. The case was brought by GMB trade union following claims that Uber had disregarded it’s drivers’ basic employment rights. Uber has always maintained that its drivers were self employed and so not eligible for these rights. The ET disagreed and in its ruling hit out at what it saw as the company’s attempt to counter the drivers’ arguments, quoting shakespeare “The lady doth protest too much, methinks”. Uber is appealing against the decision but may have to give drivers back-pay for unpaid benefits in the UK and pick up the cost of future benefits. The current low costs of fares (a key usp for Uber) are likely to go up as a result.
In January 2017, a London Employment Tribunal found that Maggie Dewhurst, a bike courier with logistics firm City Sprint should be classed as a worker rather than self-employed, and as such entitled to basic rights afforded to workers, holiday pay, sick pay and the national living wage. Dewhurst, who was supported in her claim by the Independent Workers Union of Great Britain (IWGB) argued that she received all her instructions from the Company, was under their control and feared turning down work. The ET judge described City Sprint’s contractual agreements as “contorted”, indecipherable” and “window dressing”. City Sprint said it will review the ruling in detail.
These cases are the latest in an ongoing series in which the courts are taking a very close look at business models which aim to treat, and to present, their workforce as though they are employees or workers, whilst in fact paying (and taxing) them on a self employed basis. The cases also highlight the working practices and vulnerabilities of people working in the “gig” economy, where individuals are hired by companies on a job-by-job basis.
This trend of the courts towards finding for worker status when businesses are challenged may continue. Companies need to be aware of the willingness of judges to confirm that an individual is a worker. The signal is that Judges are wise to Companies “muddying the waters”. Complex contractual arrangements designed to make it appear as though an individual is self employed when in reality his/her work is controlled by the organisation, he/she spends all of the time performing duties for one organisation, an on a permanent basis, such arrangements are unlikely to succeed.
Pimlico Plumbers v Smith.
Also in January 2017, the Court of Appeal ruled against Pimlico Plumbers, finding that Gary Smith, who had been working with the Company for 6 years as a self-employed plumber, was in fact a worker rather than a self employed contractor. As a worker he would be eligible for the basic workers rights already mentioned and, depending on the terms of any health insurance policy, possibly for the Company’s health insurance. Mr Smith had suffered a heart-attack and was looking to reduce his working hours to 3 days a week.
In its judgment, which as a Court of Appeal ruling carries more weight that the Uber and City Sprint cases that were heard in Employment Tribunals, the Court considered in detail the contract under which Mr Smith worked at Pimlico Plumbers and noted the 3 month restrictive covenant in Mr Smith’s contract in an annex to the judgment. This is a strong hint that in future businesses which include these restrictions may be open to challenge on worker status.
2017 will see ET’s consider further cases brought by workers, currently classed as “self employed” against courier companies including Addison Lee, Excel and eCourier. It’s important to remember that each case will be determined on the facts in question. It’s equally important to check your contracts and practices to ensure you know if staff are either workers or self employed contractors, as the business requires, and make sure contracts reflect the reality. If in doubt, get in touch.
Hot on the heels of the first government commissioned enquiry into the scale of the ‘gig” economy and worker’s rights , November 2016 saw the launch of the Independent Taylor Review of modern employment practices : a regional tour to gather evidence of the UK’s labour market and the review to consider the implications of new models of working on the rights and responsibilities of workers.
Update: In March media reports announced that the Taylor review is expected to recommend that the government crack down on firms using self-employed workers to avoid paying sickness, pension and maternity benefits. The problem is known to be particularly acute in the delivery and technology service sectors, but the review is understood to have found evidence that the practice is spreading to other parts of the economy. The final report is due in June 2017. We may see much stricter rules, with companies banned from imposing “control” or sanction over workers who are classed as self-employed.
We have produced a quick reference slide showing a run down of the statutory rights of Workers compared to Self Employed Contractors. If you need this slide or the comparison of the rights of Workers v Employees, get in touch.
The new system will help support working families, as the government recognises the crucial role grandparents play in providing childcare. Evidence suggests that nearly 2 million grandparents have given up work, reduced their hours or taken time off to help cut down childcare costs.
Under this new scheme, working families will be able to claim 20% of qualifying childcare costs for children under 5yrs (and Children with disabilities under 7yrs) – in each case up to a cap of £2,000 per child, per year.
The Scheme will be available for all families in which parents in the household are earning £50+ per week. There are exceptions if one family member is an additional rate tax payer, the family won’t be eligible. Expect the scheme to be implemented in early 2017.
The consultation is expected to cover also options for streamlining the Shared Parental Leave and Pay system, including simplifying the eligibility requirements and notification system.
As part of the government’s initiative to increase transparency in determining who owns and controls UK companies, the Small Business and Employment Act 2015 introduced a ban on corporate directors which was expected to come into force from October 2016 onwards. The ban prevents UK companies from appointing any new corporate directors, with some exceptions, from the implementation date (expected October 2016 but still not implemented). Companies will have 12 months from the implementation of the ban to remove or replace their corporate directors with real people. It will be a criminal offence (punishable by a fine) to appoint a corporate director after the implementation date. The corporate director in question and any company officers can be personally liable for failing to comply.
The Court of Appeal dismissed the appeal by Pimlico Plumbers and upheld the decision that the people working as plumbers are workers, not self-employed contractors. This case, commented the Master of the Rolls “puts a spotlight on a business model under which operatives are intended to appear to clients ….as working for the business, but at the same time the business itself seeks to maintain that..there is a legal relationship of …independent contractor rather than employer and employee or worker” . This judgement is at least as significant as the Uber case in terms of its implications on future business practice. A senior Court of Appeal decision carries more weight than any judgment of the Employment Appeals Tribunal in the Uber case, which is still to be heard.
The public sector union Unison has so far failed to persuade the UK courts that the fees introduced in 2013 for bringing a claim to an Employment Tribunal are unlawful. A further appeal of the judicial review proceedings is expected to be heard by the Supreme Court in late March 2017. Expect this date to be put back as time is taken up with more pressing Brexit issues.
The government is looking to big organisations to fund its drive to train 3 million new apprentices by 2020 and to redress the decreasing focus in recent years on employee training outside of the workplace. From April 2017 all UK employers in the private and public sectors that have annual wage bills of more than £3million will have to pay 0.5% of their total wage bill, minus £15,000, as a levy to fund Apprenticeships.
Companies who have registered and paid the levy will then be able to access funding for training though a “digital apprenticeship service account”.
Companies can use their vouchers to select and pay for government approved training providers and to post apprenticeship vacancies. For every £1 these companies put in, the government will put in £1.10. Businesses will have 24 months to spend their vouchers. Click here for details, or contact the National Apprenticeship Service helpline on 0800 015 0600.
The plan is to roll out this service to all companies by 2020.
There are extra funds available for business offering apprenticeships for the young (16 – 18 yr olds), for those with Special Educational Needs and for those who have been in care.
Before April 2017, all Companies employing apprentices can take advantage of the Government funding for Apprentices’ college fees.
The government currently funds:
100% of the college fees of apprentices between 16- 18yrs old, and
50% of the college fees of apprentices between 19- 27 yrs old.
Apprenticeship grants of £1500 are available for Companies who have less than 50 employees, who employ apprentices between 16 and 24 yrs old.
Employers must pay apprentices at least the minimum wage during their placement.
From April 2017 onwards the government will be revealing further plans, including a proposed £1000 bonus available for taking on an apprentice, but will reduce the funding for apprentices’ college fees from 100% to 90%. Watch out for our updates on this.
The Treasury is keen to claw back lost income tax and national insurance contributions as a result of Company salary sacrifice schemes.
The most popular benefits claimed by staff through these schemes are pension contributions, health insurance, gym membership, company car and bicycle schemes. If you have these schemes in place, your staff will be affected. Arrangements made before April 2017 will be protected until April 2018. Arrangements for company cars, accommodation and school fees will be protected until April 2021. As stated, ultra-low emission cars, pension savings and advice, childcare vouchers and the cycle-to-work schemes will all be excluded from the change. Other untaxed benefits – such as where salary is exchanged for extra annual leave or flexible working hours – also will not be affected by the change.
There will be new harmonised rate for Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay and Statutory Adoption Pay of £140.98 per week or 90% of an employee’s earnings if this is lower than the statutory rate.
The gender pay gap is not the same as equal pay or discrimination. It doesn’t mean ”women getting paid less for doing the same work as men”.
Whilst the gender pay gap and equal pay both deal with the disparity of pay women receive in the workplace, they are 2 different issues:
Equal pay means men and women in the same employment performing equal work must receive equal pay under the Equality Act 2010.
The gender pay gap is concerned with the differences in average pay between men and women across an organisation or the labour market over a period of time, no matter what their role is. This applies to companies with over 250 staff. For example, Gender Pay Gap reporting may show that on average men earn 10% more pay per hour than women, that men earn 5% more in bonuses per year than women, or that the lowest paid quarter of the workforce is mostly female.
Companies with over 250 staff must publish these results on their own website and a Government site. This means that the details of their gender pay gap will be publicly available, including to customers, employees and potential future recruits. As a result, employers should consider taking new or faster actions to identify, reduce or eliminate gender pay gaps within their organisation.
The government has said it will propose employee representation on company boards. As yet there are no real details and again we will report on this as they emerge.
Data Protection. New regime coming in 2018.
The EU General Data Protection Regulation (GDPR) which harmonises data protection rules across the EU including the UK will affect employers as follows:
There will be new rules which employers must follow before employees give consent to the processing of their personal data held for example by HR departments and Payroll.
The Data Subject Access Request procedure will also change.
There will be a new employee “right to be forgotten” which will allow employees to request deletion of their data.
There will be an employee “right to rectification” allowing employees to insist in certain circumstances on making changes to their personal data held by the employer.
There will also be increased fines for non-compliance.
Please contact me for more details on this area or any of the other topics in this article.
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