The new gender pay reporting requirements came into force in April 2017. They require employers with 250 or more employees to publish a report containing prescribed gender pay gap data. The Government has published final regulations that provide a long-stop date of 4 April 2018 for employers to make their first gender pay report. An employer must report on a ‘gender pay snapshot’ taken on 5 April 2017.
Details of ordinary pay and bonus pay made in the 12 months leading up to 5 April 2017 will, therefore, form part of an employer’s gender pay calculations. The Government has also consulted on gender pay reporting in the public sector and it is likely that the private and public sector requirements will be aligned.
In November 2016, Matthew Taylor was asked by the Government to conduct a review into how the gig economy is affecting workers’ rights. He was expected to announce the results of his review in June. A number of claims regarding worker status are also progressing in the courts off the back of an employment tribunal decision to award Uber drivers worker status rather than self-employed. This meant that they were entitled to basic worker rights such as the national minimum wage and paid annual leave.
The Court of Appeal decided in the Lock holiday pay case that results-based commission must be included in statutory holiday pay calculations. Employers must also bear in mind that regular overtime forming part of normal remuneration may also now be required to be included in statutory holiday pay. Failure to include these payments in future holiday pay entitlements could result in claims under the Working Time Regulations or the deduction from wages provisions in the Employment Rights Act 1996. The Supreme Court has refused an appeal to the Court of Appeal decision in Lock and we are currently awaiting the case returning to the Employment Tribunal, where it is hoped more guidance will be provided on how results-based commission should be dealt with in holiday pay calculations.
Funding of apprenticeships changed from April 2017. Employers operating in the UK have to pay a levy, calculated at 0.5% of an employer’s pay bill, although a “levy allowance” of £15,000 per year will mean that in practice only employers with an employee pay bill of over £3m will be caught. An employer’s levy payments will be paid into the Government’s new Digital Apprenticeship Service (DAS), from which they will be able to access the funds (plus a Government top-up) to fund approved apprenticeship training. Employers should start planning how they will use this levy as it is paid into the DAS on a ‘use it or lose it’ basis, i.e. if an employer does not use its funds within its DAS account within a specific period, they will be made available to another employer.
Taxation of termination payments
It is anticipated that changes to the taxation of termination payments will be introduced from April 2018. The main changes involve: removing the distinction between contractual and non-contractual PILON clauses, to treat both as fully taxable earnings (subject to income tax, employer and employee NICs); and levying employer NICs on other termination payments above the £30,000 limit.
Personal Service Company (PSC) engagement in the public sector
Rather than being able simply to accept the assurances of PSCs engaged by the public sector about tax and IR35, as had been the case, public sector engagers now face a new ‘duty’ to ensure all PSCs they use pay enough tax. Liability to pay the correct employment taxes has moved from the worker’s own company to the public sector body or agency/third party paying the company.
Employment law reform
A number of employment law reforms are in motion and may well come into force during 2017/2018, including:
- corporate governance reforms, focusing on executive pay, directors’ duties and the composition of boardrooms, including worker representation and gender balance in executive positions; and
- we are awaiting the outcome of a Government call for evidence on post-termination restrictions in employment contracts.
In focus: Personal liability
Discrimination, harassment and victimisation
While from an employment law perspective, litigation tends to be brought against employers, it is worth remembering that employees can be held personally liable for acts of discrimination, harassment or victimisation carried out during their employment and, as such, may be joined as individual named respondents in Employment Tribunal proceedings for such claims. An individually named employee will not escape liability even if their employer has successfully defended the litigation against them on the basis that as an employer they had taken all reasonable steps to prevent the discrimination or harassment occurring.
It does not matter that an employee did not know he or she was breaking the law. The only defence to this is if their employer has told them that doing the act was not a contravention of any law. Employers could be faced with a fine of up to £5,000 for making a false statement in order to induce an employee to carry out unlawful conduct.
Negligence and breach of statutory duties
Employees also risk claims of professional negligence being made against them personally (and consequently many employers take out professional indemnity insurance to cover their employees against the risk of such claims) and may also be personally liable under other statutory provisions such as health and safety and criminal laws.
It is also worth noting that directors and senior employees may be required to ‘sign off’ on certain reports that an employer is required to provide under statute. Recent examples of this include the requirement to provide a statement on modern slavery and the duty on an employer (with 250-plus employees) to report each year on their gender pay gap.
Dates for the diary
Summer 2017 – Report coming out of the Taylor Review of Employment Practices in the Modern Economy expected to be published.
During 2017 – New tax-free childcare scheme being rolled out.
By the end of 2017 – Final report on e-balloting to be laid before Parliament.
2018 – Reforms extending shared parental leave to grandparents were previously announced to be introduced in 2018. However, no further information has been forthcoming on this.
April 2018 – Potentially changes to the taxation of termination payments may be introduced.