Employment law developments for 2019 – what do employers need to have on their radars?

Rowena Summers, an employment lawyer in our employment team, looks at key developments in employment law for 2019 and beyond.

Whilst 2019 is likely to be dominated by Brexit developments, it is also set to be an eventful year for employment law. A number of new laws will be coming into force and we can expect to hear further detail about forthcoming employment law reforms. So, what do employers need to know?

The Good Work Plan and employment law reform

The government published its “Good Work Plan” in December 2018, setting out what it described as “the biggest package of workplace reforms for over 20 years”.  It sets out commitments to improve working conditions for agency workers, zero-hour workers and other atypical workers. As the year progresses, we can expect to see more draft legislation implementing aspects of the plan, but it is likely that most of the changes will take effect in 2020.

The measures include:

  • A right for workers to request a more stable and predictable contract after 26 weeks in post. Note that there is no proposal to ban zero-hours contracts.
  • An increase in the period required to break continuity of employment, from one week to four weeks. This could mean that someone intermittently working once a month could gain continuous service.
  • A ban on deductions from staff tips.
  • A reduction in the threshold to request information and consultation arrangements. The Government wishes to encourage higher levels of employee engagement in businesses and has issued draft legislation reducing the threshold required to request information and consultation arrangements from ten percent to two percent of the workforce, with effect from April 2020.
  • A commitment to improve the clarity of the employment status tests, accepting the Taylor Review’s recommendation that differences between the status tests in employment law and tax law should be reduced to a minimum.

Ending the “Swedish derogation” in the Agency Workers Regulations 2010, which excludes agency workers from the right to equal pay with permanent employees in the same role if they have an employment contract which guarantees pay between assignments.

Extending the right to a written statement of terms to workers and expanding the information which must be provided in such statements.

The plan also proposes new measures designed to improve enforcement, including a process for publishing the names of employers who fail to pay tribunal awards on time and significantly increased financial penalties for employers who commit an “aggravated breach” of employment rights. Currently, a tribunal can award an aggravated breach penalty of £5,000. However, the proposal is to increase this to £20,000.

New Corporate Governance measures

A package of new corporate governance measures will begin to take effect in 2019, increasing the reporting requirements for large companies. Under the Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860) there will be a new requirement for companies with 250 or more employees to publish the ratio between the Chief Executive Officer’s pay and average staff pay.  The package of corporate governance changes will take effect for financial years beginning on or after 1 January (so the first pay ratio reports will need to be published in 2020).  Affected companies will need to start collecting data and putting systems in place now to facilitate the publication of these reports in 2020.

Right for all workers to receive an itemised pay slip

All workers must be provided with an itemised pay statement from April 2019.  The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 is will require itemised payslips to contain the number of hours paid for where a worker is paid hourly.

Ethnicity pay gap reporting

In October 2018, the government launched a consultation on mandatory ethnicity pay gap reporting which closed in January 2019. The government’s response to the consultation is now awaited but it is thought that it would take effect in much the same way as gender pay gap reporting.

New statutory code of practice on sexual harassment

Following various reports and inquiries into sexual harassment in the workplace, the government has announced 12 broad action points. These include asking the Equality and Human Rights Commission to develop a statutory code of practice on sexual harassment. It is suggested that observing this code will help employers demonstrate that they have taken reasonable steps to prevent sexual harassment taking place. The government will also be consulting on a mandatory duty to protect workers from sexual harassment; how best to tackle third-party harassment; protection of interns and volunteers; the possible extension of time limits; and the better regulation of non-disclosure agreements.

Possible reintroduction of employment tribunal fees

The government has noted that the Supreme Court judgment in R (on the application of Unison) v Lord Chancellor (i.e. the case that held that the previous fee regime was unlawful) leaves open the possibility of a new scheme which would strike a balance between increasing employment tribunal funding and safeguarding the delivery of justice. In November 2018 it was suggested in evidence given to the House of Commons Justice Committee that a new fee regime was in development.  No timescale has yet been announced for this.

Tips and service charges

The government has announced plans for new legislation to prevent employers from keeping tips and service charges intended for workers. These plans were reiterated in the government’s Good Work Plan (see above), although there was no indication of when legislation can be expected.

On the horizon and beyond 2019….

Abolition of the “Swedish derogation”

The draft Agency Workers (Amendment) Regulations 2019, which are due to come into force on 6 April 2020, will remove the Swedish derogation from the Agency Workers Regulations 2010 to give agency workers a right to pay parity with direct employees after 12 weeks. These measures were introduced by the Good Work Plan.

Written statement of terms and holiday pay

The Employment Rights (Employment Particulars and Paid Annual Leave (Amendment) Regulations 2018 are due to come into force on 6 April 2020. These regulations:

-Bring in a right to be provided with a written statement of terms on the first day of employment, rather than within the first two months as required by the Employment Rights Act 1996.

-Add to the amount of prescribed information which a written statement must contain.

-Amend the Working Time Regulations 1998 to increase the reference period for determining an average week’s pay (for the purposes of calculating statutory holiday pay) from 12 weeks to 52 weeks. This will protect workers with no normal working hours whose pay fluctuates.

Off-payroll working in the private sector

As announced in the Autumn 2018 Budget, the public sector off-payroll working rules will be extended to the private sector from 6 April 2020. From this date, large and medium-sized private companies will be required to follow the IR35 rules and take responsibility for operating PAYE (deducting income tax and NI at source) in relation to any contractor they deem to be within the new IR35 rules.  This is a significant change for companies engaging private contractors which will need to be planned for.

The Parental Bereavement (Leave and Pay) Act 2018

This is expected to come into effect in April 2020 and give all employed parents a day-one right to two weeks’ leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy.

If you would like any further information about any of the topics in this article or a general employment law ‘health-check’, please contact info@haddletonlegal.com and we’ll be happy to talk it through with you.  

Written by Rowena Summers, an Employment Solicitor at Haddleton Legal
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