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Law for Business

Knowhow - guidance - precedents

19 APR 2016

Employment Law Update Spring 2016

Pam Loch

Managing Partner


Employment Law Update Spring 2016

A look ahead to upcoming changes and potential challenges employers may face in 2016 and beyond.

Employment Law Updates:

April 2016

  • 1 April: The new National Living Wage of £7.20 per hour applies to workers aged 25 and over. These regulations also double the financial penalties for employers who pay less than the minimum wage.
  • 6 April: Some Employment Tribunal awards have increased. The cap on the compensatory award is now £78,962 and the limit on a week’s pay for the purposes of calculating redundancy pay and unfair dismissal awards is £479.
  • The Psychoactive Substances Act 2016 came into force prohibiting the supply and use of legal highs. Employers will need to extend their drug and alcohol policies to include legal highs.

June 2016

  • The EU Referendum on 23 June 2016 will determine whether the UK will remain in, or leave, the European Union. A number of important employment laws, introduced by European Law, could be affected by a decision to leave the EU.

October 2016

  • Mandatory gender pay gap reporting is expected to be introduced affecting private and third sector employers with 250 or more staff. The first reports must be published by the end of April 2018 with annual reporting after that.
    • A recent study found that men are offered more workplace benefits than women. Men are twice as likely than their female colleagues to receive a company car, and 17% of men compared to 12% of women are awarded annual bonuses.
  • National Minimum Wage rates will increase on 1 October:
    • aged 21 and over to £6.95
    • aged 18-20 to £5.55
    • aged 16-17 to £4.00
    • the apprentice rate to £3.40

2016 Employment Law Issues 

  • Counter-Extremism Bill This proposed legislation will enable employers to monitor employees lawfully in order to check whether an employee is an extremist. The aim is to prevent extremists from working with children, but practical details are yet to be released. Issues raised around this Bill include identifying who qualifies as an extremist, whether it is appropriate for employers to decide this rather than the police, and what redress employees who have been labelled as ‘extremist’ will have against their employer for deciding this is the case. It’s also not clear how this law will work with data protection or discrimination legislation.
  • Termination payments - Employers face increased cost, delay and complexity when ‘exiting’ staff if proposed changes to the taxation of termination payments are introduced. A consultation suggested that all termination payments should be taxable. Currently non-contractual termination payments under £30,000 are paid tax free, so there will be pressure on employers to ‘gross-up’ such payments if the changes go ahead.
  • At present employees do not pay tax on any contribution paid by their employer to legal fees when they are asked to sign a Settlement Agreement. The proposals also suggest removing this concession which, again, is likely to result in pressure on employers to increase any compensation payment to cover legal fees too.
  • Childcare and carers - A consultation is expected on government proposals for working grandparents to take shared parental leave to care for their grandchildren. The issue raises a number of logistical points for employers that will need consideration once further details are available. The government is also aiming to ease the burden on working parents by proposing 30 hours of free childcare for parents of children aged between three and four.
  • Gender pay equality - Employers with more than 250 staff will be required to report their gender pay gap figures, with the aim of eliminating the gender pay gap. Challenges for business include where and how often they should report such data, whether their existing systems can produce it, and whether providing further information on the context of the pay differences should be voluntary or compulsory. Perhaps the biggest issue is whether producing this information will make a difference in achieving pay equality.
  • Trade Union Bill - The key feature of this is the introduction of a new voting threshold to make strike action less likely in all sectors. A higher proportion voting for strike action will be required for those working in ‘important public services’, including transport and health, both of which have been the subject of strike action recently. Even if a vote does achieve the new voting thresholds, employers will be able to dilute the impact of strike action. The current ban on using agency workers to cover striking workers will go and the legislation will bring in a new four-month time limit on a strike mandate, after which a new ballot will be required.

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Predicted Workplace Trends

  • Millennials in the Workforce - By 2025 it is believed that Millennials will make up 75% of the workforce. Employers need to reassess and measure up their offering to top millennial talent, steering away from traditional benefits and into the realms of paid volunteering days, joining bonuses, a company holiday home for use by employees, birthday benefits, and wine clubs. PWC has assessed what millennials look for in jobs, and found that flexibility, autonomy, overseas secondments, customised benefits, and clear development and advancement opportunities are rated as highly important to this generation. Sabbaticals are also increasingly being offered to employees as a reward for a set number of years of service, and to reduce the risk of burnout of high performing, and highly valued, employees.
  • Childcare Voucher Changes - The tax-free childcare vouchers scheme has been pushed back to 2017. In a related issue, employers are waiting on the outcome of case-law relating to the provision of childcare vouchers during maternity leave in the case of Peninsula Business Services v Donaldson. Guidance states that childcare vouchers should be classed as non-cash benefits and continued throughout the whole of maternity leave, leaving the employer to pick up the tab when a woman is in a period of unpaid leave. While this has generally become the accepted legal position, it does not have the force of law and the courts are not required to follow it according to the Employment Appeal Tribunal’s decision in Peninsula. 
  • Maternity Discrimination - A recent study found that 77% of pregnant women and new mothers reported negative or discriminatory experiences at work. Furthermore, 70% of employers feel that women should declare at interview if they are pregnant, and a quarter felt that it was acceptable to question women at interview about their plans for children in the future. 3 out of 4 mothers who interviewed whilst pregnant, and were not offered the job, felt that this had affected their chances.
  • Technology and Hacking - The European Court of Human Rights has ruled that employers are able to lawfully snoop on employee’s private emails and messages. A Romanian engineer was dismissed after sending messages to his fiancée whilst working. The Court ruled that it was not unreasonable for an employer to want to verify that their employees are completing their professional tasks during working hours. Employers need to be clear on when an employee is permitted to make personal calls and emails.
Also on technology, there has been an increased prevalence of data leaks and system hacks reported in the news over the past 12 months. Is this a coincidence, or is the increasing technological capability of disgruntled employees playing its part? It has been suggested that up to 56% of SME employers risk IT vulnerability as a result of failing to shut down ex-employees system access soon enough. In 2014, an ex-employee with in depth system knowledge brought down Sony with the help of a group of hackers, and it is expected that similar incidents will occur in the future.

Pam Loch, Managing Director of niche employment law practice, Loch Employment Law, HR Advise Me and Loch Training.   

For more information on Loch Employment Law please go to www.lochlaw.co.uk, for Loch Training go to www.lochtraining.co.uk and HR Advise Me go to www.hradvise.me