In the Pipeline
A Guide to Future Employment and Immigration Law
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Date Summer 2017 onwards
January 2019 onwards
Topic Employment Status
The Government commissioned the Independent Review of Employment Practices in the Modern Economy (known as the Taylor Review) in 2016. The report was published in July 2017 and made various recommendations in relation to worker rights. The
Government carried out a number of consultations on proposed reforms during 2018. In December 2018, the Government published a policy paper, the Good Work Plan, setting out a number of reforms aimed at improving
the position of workers including: - a right for zero-hours workers to request a more stable contract - refining the employment status test and developing an online
employment status tool - making it easier for casual workers to establish continuity of
employment (by increasing the gap required between contracts for breaking continuity from one week to four weeks). Some of the changes do not yet have an implementation date, but those which do are detailed below. A number of measures to reform corporate governance and pay take effect in 2019. The changes apply to financial years beginning on or
after 1 January 2019, so the first reports will be published in 2020. Quoted companies with more than 250 UK employees will be required
to report pay ratio information in their annual directors' remuneration
reports. The pay ratio information will need to compare the total remuneration of the company's CEO with the remuneration of
employees at the 25th, 50th and 75th percentiles of the workforce, and provide an explanation of the ratios.
1 April 2019 6 April 2019 6 April 2019
National Minimum Wage and National Living Wage Employment Tribunals Pay Records
Large private companies will be required to include a statement about
their approach to corporate governance in their directors' reports, including which corporate governance code the company has applied
(if any), how it did so and the reasons for any departure from that code. The Financial Reporting Council has consulted on new
corporate governance principles for large private companies which can be used for this purpose, with a report expected in December
2018. The requirement will apply to companies that have either more than 2,000 employees or a turnover of more than 200 million and a
balance sheet of more than 2 billion. All companies with at least 250 UK employees will be required to
report on employee engagement as part of their annual directors'
reports. The report will need to describe what measures were taken during the financial year to introduce or develop arrangements for
providing information to employees and consulting with them about decisions likely to affect them. Directors will also need to explain how
they engaged with employees and had regard to their interests, and how this has impacted on key decisions of the company. The Corporate Governance Code for premium listed companies has been revised and changes include: - new measures for employee engagement at board level - a specific requirement for effective whistleblowing procedures
and reports to the board - additional measures to promote culture and diversity. All employers are required to enrol their UK workers automatically
into an occupational or personal pension scheme and make minimum
contributions. The minimum contributions required to be paid to a defined
contribution pension scheme used for automatic enrolment (or for contractual enrolment as an alternative to automatic enrolment) will
increase again in April 2019. This applies to all employers but it is most likely to require action by those employers who pay only the
minimum required contributions or have a contribution structure with low contribution rates for some workers (e.g. matched or age-related
contributions). Our briefing note "Automatic enrolment: minimum DC contribution rates" contains more detail. In addition to the ongoing automatic enrolment duties (see our
briefing note "Pensions: Automatic enrolment"), all employers of UK workers are required every three years to re-enrol workers who have
opted out of their automatic enrolment pension scheme. This is to be done on a date selected by the employer that falls within a six month
window period set out in the legislation. An employer's first window period begins three months before the third anniversary of the
employer's original automatic enrolment "staging date" and ends three months after the third anniversary. Our briefing note
"Automatic re-enrolment" contains more detail. The hourly rate of the national living wage (which applies to workers
aged 25 or over) will increase from 7.83 to 8.21. The hourly rates of the national minimum wage will increase as
follows: - from 7.38 to 7.70 (for workers aged 21 to 24) - from 5.90 to 6.15 (for workers aged 18 to 20) - from 4.20 to 4.35 (for workers aged under 18) - from 3.70 to 3.90 (for apprentices). Employment Tribunals may award penalties against employers for
aggravated breaches of employment law, to a maximum of 5,000. This limit will increase to 20,000 from 6 April 2019, as part of the
Good Work Plan (see above). All workers will be entitled to receive itemised payslips, which must
include (for hourly paid workers) the number of hours paid for.
Currently the right to itemised payslips only applies to employees, and
6 April 2019
Unfair Dismissal and Statutory Redundancy Pay
6 April 2019
Statutory Sick Pay
7 April 2019 9 December 2019
Statutory Maternity, Paternity, Adoption and Shared Parental Leave
Financial Services and Insurance Regulation
6 April 2020
National Insurance Contributions and Termination Payments
6 April 2020
Information and Consultation
6 April 2020
6 April 2020
6 April 2020
Tax and Contractors
does not need to detail the hours being paid. This change is being made as part of the Good Work Plan (see above). For dismissals occurring on or after 6 April 2019, the maximum compensatory award for unfair dismissal will increase to the lower of 86,444 and a year's pay (currently the maximum award is the lower of 83,682 and a year's pay). The maximum amount of a week's pay, for calculating the unfair dismissal basic award and statutory redundancy pay, will increase from 508 to 525. The weekly rate of statutory sick pay will increase from 92.05 to 94.25. The weekly rates of statutory maternity, paternity, adoption and shared parental pay will increase from 145.18 to 148.68.
In March 2016, the Senior Managers and Certification Regime (SMCR) replaced the approved persons regime for employees in banks, building societies and other financial services organisations jointly regulated by the FCA and PCA. An equivalent regime was brought in for large insurers.
The SMCR was extended to all insurers in December 2018 and will be extended to all FCA regulated firms on 9 December 2019.
Where an ex gratia termination payment is made (on top of notice pay) the first 30,000 can be paid free of income tax and any amount above this is taxable. However, the entire ex gratia payment is exempt from National Insurance Contributions (NICs).
From 6 April 2020, the first 30,000 of any ex gratia termination payment will still be payable free of income tax and NICs, but any amount above this will be subject not just to income tax but to NICs as well. Our note Tax Treatment on Termination Payments contains more detail.
Currently, employers (with 50 or more employees) are required to set up a national works council for informing and consulting employees, if at least 10% of employees request this (subject to a minimum of 15 employees). This threshold is to be reduced to 2% from 6 April 2020, as part of the Good Work Plan (see above).
Currently holiday pay for a workers with variable hours or pay is calculated by taking an average of pay over the previous 12 weeks. This lookback period will be increased to 52 weeks, from 6 April 2020, as part of the Good Work Plan (see above).
Agency workers have the right to receive the same pay as comparable permanent employees after 12 weeks. There is an exception to this right, known as the "Swedish derogation", where the agency worker's contract provides for minimum pay between assignments. The Government has committed to abolish the "Swedish derogation" as part of the Good Work Plan (see above), and will do so on 6 April 2020.
The Government is consulting on an extension of the rules on taxing contractors. These rules already apply in the public sector and the extension will apply them to the private sector. The so-called "offpayroll working rules" were introduced in the public sector in April 2017.
Under the rules, where an individual contractor or consultant supplies their services to a public sector client via a personal services company, the client must decide whether the "IR35 legislation" applies. This broadly involves the client asking whether, without the personal services company, the individual would be regarded as an employee of the client for tax purposes. If so, the client (or the body responsible for paying the contractor's company) must deduct income tax and national insurance contributions from payments to the contractor's company.
April 2020 2020 No date No date
No date No date No date
Parental Bereavement Leave Grandparental Leave
Settlement and Confidentiality
Pregnancy and Maternity
The rules are designed to ensure that those who work through a
personal services company, who would be employees if they were
engaged directly, pay broadly the same tax as employees. The
extension of the rules to the private sector is due to take effect on 6
April 2020. All workers will have the right to a written statement of terms on the
first day of employment. Currently a statement of terms need only be
provided to employees within two months of employment starting.
This change is being introduced as part of the Good Work Plan (see
above). Parents who lose a child under the age of 18 will be entitled to two
weeks' statutory leave (paid if the employee has 26 weeks' service).
This new law is expected to come into force in 2020. In 2016 the Government announced proposals to extend shared
parental leave and pay to working grandparents by 2018. The
Government intends to consult on the details of this proposed leave
before it is introduced, but has not indicated when this consultation
might be published. In spring 2018, the Equality and Human Rights Commission (EHRC)
published a report, Turning the tables: ending sexual harassment at
work, which made a number of recommendations to strengthen the
protection for victims of sexual harassment. The Government responded in December 2018 and has committed to
develop a statutory code of practice on sexual harassment, and to
consult on: - how to tackle third party harassment - extending time limits for discrimination and harassment claims
from three to six months - how better to manage the use of confidentiality provisions and
NDAs (see below). The Government is consulting on the use of confidentiality provisions
in settlement agreements in discrimination and harassment cases
including: - whether a specific form of wording should be used - whether individuals should have to obtain specific advice on the
confidentiality obligation. The consultation closes on 29 April 2019. Employees who are made redundant during maternity leave must be
offered a suitable alternative vacancy if there is one. The Government is consulting on whether to extend this protection to
the periods before and after maternity leave, and if so whether to
extend the protection for other types of family leave as well. The consultation closes on 5 April 2019. In August 2018, the Equality and Human Rights Commission (EHRC)
published a report on disability and ethnic pay gaps and progression.
The EHRC plans to produce guidance for employers on collecting,
using and reporting data on employee ethnicity and disability. The EHRC also recommends that, by April 2020, employers (with over
250 employees) should have a legal obligation to report on ethnicity
and disability in pay, recruitment, retention and progression. The Government has also consulted on ethnicity pay gap reporting
and this is likely to be introduced in the future.
Lopez Ribalda v Spain (ECJ)
Tillman v Egon Zehnder (Supreme Court) Royal Mencap Society v Tomlinson Blake (Supreme Court) Capita Customer Management v Ali; Hextall v Chief Constable of Leicestershire Police (Court of Appeal) XvY (Court of Appeal)
Boxer v Excel/CitySprint (Employment Tribunal) Brierly v Asda (Employment Tribunal)
Subject Matter Employee Monitoring Restrictive Covenants National Minimum Wage Shared Parental Leave
Legal Privilege Employment Status
Issues Whether the employer breached employees' rights to privacy by
installing hidden cameras to monitor suspected thefts. Whether the courts can remove words from restrictive covenants
which are too wide, so as to make them enforceable.
Whether employees who "sleep-in" (e.g. care workers) are entitled to the national minimum wage throughout the sleep-in time or only whilst working.
Whether enhancing pay for maternity leave but not shared parental leave amounts to sex discrimination.
Whether email advice to an employer on redundancy could be withheld from the Employment Tribunal on the grounds of legal professional privilege.
Whether workers as well as employees transfer under TUPE.
Whether female supermarket workers in shops could compare themselves with male workers at the supermarket warehouses, for equal pay purposes.
We will report on these cases in Employment Update once the decisions are published
Date 21 January 2019 to 29 March 2019
30 March 2019
1 January 2021
Topic Brexit EU Settlement Scheme public test phase
EU Temporary Leave to Remain (no deal scenario only)
UK's future skillsbased immigration system
Electronic Travel Authorisations and digital immigration system
The new EU settlement scheme for EU nationals living in the UK is
now open as part of a public test phase. EU nationals (and their family members) with least five years' UK residence will be granted "settled
status" and EU nationals (and their family members) who have been resident in the UK for less than five years will be granted "pre-settled
status". The scheme is expected to be opened fully by 30 March 2019. Nationals of Norway, Iceland, Lichtenstein and Switzerland will be able
to apply only after the scheme opens fully from 30 March 2019 If the UK exits the EU without a ratified Withdrawal Agreement, EU
nationals arriving in the UK from 30 March 2019 onwards will be required to apply for leave to remain within three months of arrival. They will apply for EU Temporary Leave Remain, which will be issued valid for three years, with no possibility of extension or settlement. To apply, they will need to complete an online application involving proving their EU identity and declaring any criminal convictions. The Immigration and Social Security Co-ordination (EU Withdrawal)
Bill will, once it becomes law, end the application of EU free movement rules in the UK and make EU nationals subject to UK
immigration controls in the same way as non-EU nationals. The UK government intends to introduce a new single immigration
system covering both EEA and non-EEA nationals from 1 January 2021. A 12-month period of engagement and consultation on the
government's proposals for the new immigration system is ongoing. EU national applicants granted status under the new EU settlement
scheme are issued digital status, rather than a physical passport
endorsement or a residence permit. Applicants can access their UK immigration status online, and can share limited access to this portal
with prospective employers or landlords as evidence of their right to
remain in the UK. This is part of the streamlining and digitisation of the UK's visa system, with a move towards a digital immigration
system. UK visa applicants currently submit physical passports for
endorsement as part of their visa application process, and in future, visas will be issued electronically, and sent to applicants by electronic
format. New processes allowing applicants to scan and upload supporting
documents with applications are being rolled out as part of the digitisation programme for UK visa applications. The government intends to introduce Electronic Travel Authorisations
(similar to the US ESTA system) although no date has yet been announced for this to be implemented.
If you have any queries on this edition of In the Pipeline, please contact any member of the Employment Department
Sin Keall Partner
Tim Gilbert Partner
Ed Mills Partner
Adam Wyman Partner
Ailie Murray Senior Counsel
Alex Fisher Senior Counsel
Anna West Professional Support
Adam Rice Professional Support
Moji Oyediran Senior Associate
Charmaine Pollock Senior Associate
Zo Dearmer Associate
Sarah Baker Associate
Katy Matthews Associate
Elliot Roberts Associate
Clare Skinner Associate
Tessa Gilligan Associate
If you have a colleague or a contact in another organisation who would like to receive In the Pipeline, please send contact details to [email protected]
10 Snow Hill London EC1A 2AL T: +44 (0)20 7295 3000
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The information in this document is intended to be of a general nature and is not a substitute for detailed legal advice. Travers Smith LLP is a limited liability partnership registered in England and Wales under number OC 336962 and is authorised and regulated by the Solicitors Regulation Authority. The word "partner" is used to refer to a member of Travers Smith LLP. A list of the members of Travers Smith LLP is open to inspection at our registered office and principal place of business: 10 Snow Hill London EC1A 2AL. Travers Smith LLP also operates a branch in Paris.