UK – What’s new in employment law in 2019 – Lexology

This article summarises the most important developments anticipated in UK employment law in 2019.

Looking forward to the year ahead, the most significant reforms and cases in the pipeline are set out below.

Employment status

Uber has been given permission to appeal a ruling by the Court of Appeal (‘CA’) to the UK’s Supreme Court, on the vexed topic of whether its delivery riders are ‘workers’ and so entitled to basic rights such as paid holiday and the minimum wage. This is the latest in a series of cases on employment status, particularly in the area of casual work and the gig economy, the majority of which so far have ruled against the company and found that individuals are workers.

In the meantime, the Government has responded to recommendations on employment status made in the independent Taylor Review of employment practices (published in July 2017), in a document called the ‘Good Work Plan’. This promises to ‘bring forward detailed proposals’ on how the employment status frameworks for the purposes of employment rights and tax should be aligned, and there will also be legislation to ‘improve the clarity of the employment status tests’ although with no further information yet about what this will involve. The Government has commissioned further independent research on those with uncertain employment status to help inform its approach.

New tax rules for contractors

Changes to the operation of the tax regime for self-employed contractors (known as ‘IR35’ after the relevant tax legislation) are due to take effect from 6 April 2020. Private-sector businesses which engage contractors (defined as individuals who supply their services via their own personal service company or partnership and known as an ‘Intermediary’) – will become responsible for determining whether IR35 applies. If the business considers that IR35 applies, the person paying the Intermediary will be responsible for deducting tax and national insurance contributions on the fees it pays to the Intermediary. Small businesses will be exempt from the new rules, although no information has been released yet on which businesses will qualify as “small” for these purposes.

Pay reporting

Gender pay gap reporting by companies with 250 or more employees was introduced last year, and the second set of reports is due by April 2019. It will be interesting to see if any progress has been made towards improving the pay gap that was revealed in many organisations.

In a related move, the Government has introduced CEO pay reporting, requiring directors of a UK-listed company with 250 or more employees to report annually on the difference in pay between their CEO and average workers. The first reports will be due in 2020.

In addition, the Government launched a consultation on ethnicity pay reporting, in light of a recommendation in the 2017 report ‘Race in the Workplace’ and statistics indicating that there is a pay gap between many ethnic minority workers and white workers. The position is complex (with workers from some ethnic groups earning more than white workers), and there are also issues around the reliability of statistics based on small sample sizes and how to classify ethnic groups. The consultation looks in particular at the sort of information that employers should be required to publish. It seems likely that some kind of ethnicity pay reporting will be introduced this year, but the nature and extent of this obligation are not yet clear.

Discrimination and equal pay

The CA is due to decide some important cases in this area. We are currently awaiting its ruling in the appeal against the decision of the Employment Appeal Tribunal (‘EAT’) decision that workers in Asda’s retail stores (who were lower paid and mostly women) can compare themselves with distribution centre workers (who were higher paid and mostly men). In February, the CA is due to consider whether it is unlawful to discriminate against an employee because of a perceived disability, the EAT having ruled at the end of 2017 that this was unlawful even if the employee is not actually classed as disabled under the relevant legal test.

Good Work Plan

The Government has made a number of proposals for employment law reform in the aforementioned Good Work Plan in response to the Taylor Review, which are primarily designed to help those with non-standard or variable contracts. There is to be a new right to request a more predictable and stable contract, and a permitted break in service for the purpose of continuous employment rights is to increase from one to four weeks.

The so-called ‘Swedish Derogation’, a loophole which allows agencies to avoid matching pay for agency workers, will be removed from 6 April 2020. Also coming into effect on this date is the extension of the right to a statement of employment particulars for all workers from day one, and an increase in the reference period for calculating holiday pay from 12 to 52 weeks.

To help with enforcement of employment rights the Government is planning to introduce a ‘name and shame’ scheme for employers who fail to pay Employment Tribunal awards, linked to the current penalty scheme. From 6 April 2019 the limit on financial penalties which can be imposed by an Employment Tribunal for aggravated breaches of the law by employers will be increased from GBP 5,000 to 20,000, and there are plans for new sanctions in respect of repeated breaches by the same employer.

Brexit

With less than two months to go to the projected date for the UK’s departure from the EU, it is still impossible to predict how Brexit will unfold. This has significant implications for UK employment rights, particularly because so many of these laws are based on EU legislation:

  • If the current version of the withdrawal agreement is approved, we will be into the relatively straightforward territory of a transition period until 31 December 2020, during which the status quo would broadly be maintained and all EU employment laws will continue to apply.
  • If not, the European Union (Withdrawal) Act 2018 ensures that the UK will leave the EU at 23:00 on 29 March 2019. This sets out a series of complex provisions on how far EU law and decisions of the European Court of Justice will continue to apply after exit day, all of which will be relevant to EU-derived employment law on topics such as working time, acquired rights on a transfer of employment and equal pay. There is also an outside chance that Brexit may be postponed or even revoked altogether, which would involve amending or repealing this Act.
  • Adding to the complications, the Irish Backstop Protocol contains broad and strong commitments from the UK on employment law matters, which in essence mean that the UK would be prevented from introducing changes to any EU-derived employment laws until the backstop is dissolved.

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