Emplaw Monthly - December 2017
New at Emplaw Online
All recent posts of articles at Emplaw Online are found at the News section of the site here. Links below may be to the original source for simplicity
Employment highlights of 2017 and looking ahead to 2018
From the gig economy to whistleblowing to holiday pay to discrimination, there have been some key developments in 2017. Click here for our annual essential summary of the year's employment happenings and to know what to look out for in 2018
The death of holiday pay has been greatly exaggerated, but has the King slain Bear Scotland?
Caspar Glyn QC from Cloisters (Emplaw Online authors) explains the holiday pay decision in C‑214/16 King v The Sash Windows Workshop Limited handed down on 27th November and considers whether it might be the decision that turns the claims for worker status from a trickle into a flood
Employment law news
Employment Tribunal claims on the rise
The introduction of fees led to a very substantial decrease in claims and hence, as might be expected, following the abolition of fees in July his year, claims are on the rise. Indeed the Quarterly Tribunal Statistics for the period July to September 2017 show single claim Employment Tribunal receipts are up 64%.
GEO toolkit on gender pay reporting
The Government Equalities Office has published a toolkit for employers on how to calculate their gender pay gap. The toolkit helps employers to understand and address their pay gaps.
Subscribers to Emplaw Online will find more information about gender pay gap reporting in the law card Equal Pay and Terms - Pay Secrecy
Work, health and disability - fit for work referral and assessment service ends but Governments paper kick-starts 10 years of reform for SSP and more
Fit for work
From 15 December 2017, Fit for Work no longer runs its referral and assessment service. All of the advice and guidance elements of Fit for Work remain in place. http://fitforwork.org/. It seems that this is due to the low level of take-up.
Improving lives: the future of work, health and disability
However, the government has published a paper on its plans for the employment of disabled people. The paper builds on the government’s Improving Lives Green Paper published in October 2016 and is intended to be the start of a ten-year programme of reform. It includes the government response to the Thriving at work: The Stevenson / Farmer review of mental health and employers, published on 26 October 2017 (annex c)
The document sets out actions focused on:
• Supporting people getting into and staying in work:
• Improving and joining up across the three key settings: the welfare system, the workplace and the healthcare system.
• Support for those who need it - whatever their health conditions
• Changing culture and attitudes
• Reform of the fit note to aid more people back to work as statistics shows that only 6.6% of fit notes used the ‘may be fit for work’ option. The paper includes comment that there has been very low take up of the Fit for Work Scheme (para 167 and following)
• A reformed SSP system which supports more flexible working – for example, to help support phased returns to work including spacing out working days during a return to work, managing a long-term health condition, or recovering from illness. Further consultation will be required on this (para 114 and following)
More free and open access to up-to-date legislation
In the course of 2017, a number of key statutes have been reviewed and are now being kept up to date at legislation.gov.uk, including
Draft legislation on worker status
The mantle of the Taylor Review has been taken up by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee who have joined together and produced a report called ‘A framework for modern employment’ which includes a draft Bill that it says would take forward the best of the Taylor Review recommendations as follows:
· The Government legislate to implement a worker by default model to apply to companies who have a self-employed workforce above a certain size.
· In order to compensate workers for uncertainty, the Government work with the Low Pay Commission to pilot, for workers who work non-contracted hours, a pay premium on the National Minimum Wage and National Living Wage.
· The Government extend the time allowance for a break in service while still accruing employment rights for continuous service from one week to one month.
· The Government creates an obligation on employment tribunals to consider the increased use of higher, punitive fines and costs orders if an employer has already lost a similar case.
· The Government extends the duty of employers to provide a clearly written statement of employment conditions to cover workers, as well as employees.
· People on worker contracts, as well as employees, be counted towards the 50 workers needed before a company is covered by the ICE regulations.
We must wait to see if the Committee’s recommendations will be adopted. Certainly the government’s proposals on how it intends to take forward the Taylor recommendations are still awaited.
Social care providers invited to join Compliance Scheme and avoid minimum wage underpayment penalties
Background: Social care providers have been reviewing their compliance with minimum wage regs, particularly since the Focus care decision earlier this year regarding whether workers are entitled to NMW for hours spend sleeping at the workplace; The issue turns on whether a person is working by being present and the court set out relevant factors in assessing this (e.g. whether the employer is subject to a regulatory or contractual requirement to have someone present)
Following the clarity provided in the Focus Care case, the Secretary of State issued a direction that a financial penalty would not be imposed for underpayment where it is attributable to the treatment of, or arrangements concerning, time when the worker was working and was, by arrangement, permitted to sleep; and that part of the underpayment occurred in a pay reference period that ended before 26 July 2017
Latest: In November, the HMRC launched The Social Care Compliance Scheme and, if an employer is accepted in to the scheme and declares any underpayment, it won’t:
· have to pay the financial penalty, currently 200% of the amount owed to workers, up to a maximum of £20,000 per worker
· be publicly named for underpayment of National Minimum Wage
ICO updates – blog on binding corporate rules applications and updated GPDR guidance
Binding corporate rules (BCRs) are one of the ways organisations can comply with data protection rules about ensuring adequate safeguards when personal data is sent outside the European Economic Area (EEA). BCRs will continue under the General Data Protection Regulation (GDPR)
The ICO has published a blog post which sets out some key facts for those planning to apply for BCRs and those who already have approved BCRs should be aware of as we get closer to the GDPR taking effect.
Meanwhile, the ICO has replaced its Overview of the GDPR with a Guide to the General Data Protection Regulation (GDPR) .The Guide remains a working document and includes guidance on consent and transparency following the publication of the Article 29 Working Party guidelines on those matters and is inviting comments on these until 23rd January 2017.
Apprenticeships falling – is it down to the levy?
The media has been awash with the statistic that the number of apprenticeship starts has fallen by 70% over the last quarter. Whist this is correct, there may be more than one reason. See the analysis here
Finance Bill 2017-19 published – employment provisions:what is in and what is out
What is in...
Exemption for armed forces’ accommodation allowances (clause 8)
Clause 8 introduces a new income tax exemption for allowances paid to or in respect of members of the armed forces for or towards the cost of accommodation. Regulations will set out the exemption in more detail.
Under their current accommodation model, the Ministry of Defence provides most members of the armed forces with accommodation. This accommodation is exempt from a benefit in kind tax charge by virtue of section 99 ITEPA. This clause is intended to allow the Ministry of Defence to pay members of the armed forces the accommodation allowance tax-free, to continue the existing treatment of the current accommodation model.
Benefits in kind: diesel cars (clause 9).
This clause provides for a one percent increase in the diesel supplement for company car tax and the car fuel benefit charge. This increase will apply to all diesel cars first registered from 1 January 1998 to 31 August 2017 but not to cars registered after 1 September 2017 if their certified NOx emissions meet new standards. The changes have effect from the tax year 2018-19.
Termination payments: Foreign Service (clause 10).
This clause removes foreign service relief on termination payments for UK residents. This will mean that all employees who are UK resident in the tax year their employment is terminated will be liable to income tax on their termination payment in the same way, regardless of whether they have worked abroad. Foreign service relief is retained for seafarers.The measure is intended to apply to those who have their employment contract terminated on or after 6 April and if the termination payment is received after 13 September 2017.
Employment income provided through third parties (clause 11 and Schedule 1).
These changes are part of a package of proposals announced at Budget 2016 to tackle existing and prevent future use of disguised remuneration avoidance schemes. They include changes to the new charge on outstanding loans from disguised remuneration schemes (the loan charge), which was legislated in Finance (No. 2) Act 2017.
What is out....
As confirmed in November's budget, the abolition of Class 2 NICs, reforms to the NICs treatment of termination payments, and changes to the NICs treatment of sporting testimonials will now take effect from April 2019 (one year later than anticipated).It was also confirmed that the the main rate of Class 4 NICs would be maintained at 9% and not increase to 10% in April 2018 and 11% in April 2019, as previously anticipated,
Note, with regard to other termination payment reform, The Finance (No. 2) Act 2017 finally hit the statute book in November 2017 and section 5 provides for treating all payments in lieu as earnings for tax purposes.and that payments for injury to feelings fall outside the exemption for injury payments, except where the injury amounts to a psychiatric injury or other recognised medical condition. The changes will take effect from 6 April 2018. For more inforation see the Emplaw Online law card on Post -termination tax issues
Change to Immigration Rules from January 2018
The government has published a statement of changes to the immigration rules.
The purpose of the main changes is to:
· Take account of the future commencement of the immigration bail provisions in Schedule 10 to the Immigration Act 2016.
· Provide for entry clearance to be issued electronically.
· Allow standard and marriage/civil partnership visit visa holders to transit using the same visa.
· Clarify and remove inconsistencies from the rules relating to indefinite leave to remain for main applicants and their dependants in work categories.
· Double the number of available places in the Tier 1 (Exceptional Talent) category to 2,000, and allow accelerated settlement for certain applicants.
· Consolidate and clarify the rules for Tier 1 (Entrepreneur) applicants.
· Make new Tier 2 provisions for research positions and for students switching from Tier 4.
The key policy changes will come into force on 10 January 2018.
Increases in SMP, SSP and other benefits rates
The government has announced the benefit rates to take effect in April 2018. The most significant for employment law purposes are:
· Maternity allowance £145.18
· Statutory adoption pay £145.18 (earnings threshold increases to £116)
· Statutory maternity pay £145.18 (earnings threshold increases to £116)
· Statutory paternity pay £145.18 (earnings threshold increases to £116)
· Statutory sick pay £92.05 (earnings threshold increases to £116)
FRC consultation on corporate governance code
Over the summer the Government announced changes to strengthen corporate governance. A critical part of the Government’s proposals was for the FRC to recommend revisions to the UK Corporate Governance Code which applies to listed companies. A consultation regarding those proposed changes to the Code has now been published by FRC.
Key aspects of the revisions include:
· Executive pay and pay ratios
· Workforce engagement and reporting on engagement
· Encouraging greater board diversity
· Other (including whistleblowing and the roles of senior personnel)
Response to call for evidence on taxation of employee expenses
In the autumn budget 2017 the government announced reforms to the taxation of employee expenses. The government will
· consult in 2018 on extending the scope of tax relief currently available to employees (and the self-employed) for work-related training costs
· remove the requirement for employers to check receipts when making payments to employees for subsistence using benchmark scale rates from April 2019
· place the existing concessionary accommodation and subsistence overseas scale rates on a statutory basis from April 2019
· work with external stakeholders to explore possible improvements to the guidance on employee expenses, particularly on travel and subsistence, and the process for claiming tax relief on non-reimbursed expenses
The response document highlights the issues raised in the call for evidence and why the government has decided to focus on these areas.
Consultations on transitioning firms to the senior managers and certification regime
The FCA and the PRA have published consultation papers on the following:
· FCA CP17/40 – transitioning FCA firms and individuals to the senior
managers and certification regime (SMCR)
· FCA CP17/41 – transitioning insurers and individuals to the SMCR
· FCA CP17/42 – the duty of responsibility for insurers and FCA solo-
· PRA CP28/17 – implementing the extension of the SMCR to insurers and other amendments
Consultation closes on 21 February 2018.
Vicarious liability under the Data Protection Act
Under the Data Protection Act 1998 (DPA) data controllers are required to take ‘appropriate technical and organisational measures […] against unauthorised or unlawful processing of personal data and against accidental loss or destruction of, and damage to, personal data’ (DPA principle 7).
Employer cannot seek to rely on comments made during a protected without prejudice conversation and also rely on privilege
The appeal concerns a challenge to a preliminary hearing judgment holding that a number of discussions during meetings held on a without prejudice basis between the Mr Graham and the CEO of Agilitas prior to the termination of his employment were protected pursuant to section 111A(1) Employment Rights Act 1996 and/or under the common law without prejudice rule.
Arrears of equal pay claimed against an employer who is insolvent is payable out of NI Fund
Two questions of construction arise in an employer insolvency context concerning rights of employees to arrears of pay under Part XII ERA 1996. Part XII sets out what employment debts will be paid out by the NI Fund.