From gender pay gap to GDPR: what happened in employment law in 2018

2018 was a year dominated by Brexit, Donald Trump, the World Cup and a Royal Wedding, but it was also a busy year for employers and HR. We reflect on the key developments and what we learnt in 2018.

Taxation of termination payments

April is always a busy time for employment law changes and one of the main changes in 2018 was in relation to the taxation of termination payments.

Gone are the days of focusing on whether or not there is a Payment in Lieu of Notice clause in the contract, and instead employers are now having to grapple with applying the Post Employment Notice Pay (PENP) rules in practice.

When an employee receives a payment as a consequence of the termination of their employment (a “termination award”), it is now necessary to determine what proportion of that termination award represents PENP.

Gender pay gap reporting

April also saw the first mandatory gender pay gap reports published. The results were largely as expected but the obligation to report continues.

Employers in the private and voluntary sector with a headcount of 250 or more must publish their next report before 4th April 2019, based on data to 5th April 2018. The Government is also currently consulting on whether to introduce mandatory ethnicity pay gap reporting.

GDPR

GDPR was a real buzz word in 2018, and it is hardly surprising with substantial fines (up to 20 million euros or 4% of worldwide turnover, whichever is greater) for employers who get it wrong. The GDPR and Data Protection Act 2018 came into force in May, and apply to businesses and organisations of all sizes.

Employers should carry out audits of the personal data that they collect and process to ensure GDPR compliance. Employment contracts, policies and procedures (including privacy notices) should be reviewed and updated where necessary. Changes to data protection law impact on all stages of the employment relationship, from recruitment to post-employment references.

For more information, visit our dedicated GDPR hub.

Worker status and the gig economy

In June, the UK’s highest court handed down its judgment in the Pimlico Plumbers case, ruling that Mr Smith was a worker despite being VAT-registered, paying self-employed tax and working under a contract describing him as an “independent contractor”.

Workers such as Mr Smith (and the Uber, Deliveroo and Hermes drivers/couriers) are entitled to certain basic employment rights (such as NMW, holiday pay, whistleblower and discrimination protections).

It is more important than ever for organisations to ensure that contracts are well drafted and that the correct contract is used for the correct arrangement.

National Minimum Wage and sleepover

In 2017, we reported the EAT’s decision in Focus Care Agency Ltd v Roberts and that the workers in that case were entitled to the National Minimum Wage during the entirety of their sleepover shift.

2018's update is quite different. In Royal Mencap Society v Tomlinson-Blake [2018] EWCA Civ 1641, the Court of Appeal held that workers were to be treated as available for work during their sleep-in shift, rather than actually working. This meant that they were only entitled to the NMW for those hours during which they were required to be awake for the purpose of working.

A key question for employers now is whether the worker is ‘available’ to work or actually ‘working’. The answer to that question will depend on the facts. There is still a balancing act to decide which side of the line the case falls.

With civil and criminal penalties as well as potential wages claims from underpaid workers, not to mention the Government’s ‘naming and shaming’ scheme, it is more important than ever for employers to ensure that they are complying with the National Minimum Wage rules.

Philosophical belief and the equality act 2010

2018 was also the year in which the Glasgow Employment Tribunal held that a belief in Scottish independence should be recognised as a “philosophical belief” and therefore protected under the Equality Act 2010. We understand that leave has been sought to appeal this decision, so watch this space. The issue of whether veganism should be protected in the same way is due to be considered by the Employment Tribunal early next year. Will a similar claim by Brexiteers or Remainers be next?

Whether a belief is protected under the Equality Act will depend on the facts and certain legal tests. Nevertheless, discrimination claims can be costly (with potentially uncapped compensation and recent increases to the Vento bands used to calculate injury to feelings), and claims can be brought by job applicants, workers, employees and even ex-employees. Employers should take advice early, ensure that staff are well trained, and polices are in place and are well drafted and fit for purpose.

Parental bereavement pay and leave

The Parental Bereavement (Pay and Leave) Act 2018 received Royal Assent in September 2018. Likely to come in to force in 2020, the Act will entitle employees to have 2 weeks' bereavement leave and with pay (for those employees with the necessary qualifying service).

Vicarious liability

We also saw some interesting decisions in October in relation to vicarious liability. The Court of Appeal held that Morrison Supermarkets was vicariously liable for the actions of a rogue employee who disclosed the personal information of around 100,000 colleagues on the internet (despite his intentions being to harm the employer).

The Court of Appeal also decided (in a separate case) that a managing director's drunken assault on an employee was "in the course of employment" rendering the company vicariously liable. Employers should bear this in mind during the remainder the Christmas party season in particular.

Brexit

No look back at 2018 would be complete without at least mentioning Brexit. We are certainly further forward than the position this time last year, but there are still many unknowns.

We now have the European Union (Withdrawal) Act 2018 which ends the supremacy of EU law. Nevertheless, it is unlikely that many material changes will be made to employment law in UK (in the short to medium term at least). The main changes will be in relation to immigration law of course.

The settled status scheme is intended to be fully operational by March 2019. Employers should watch this space in 2019. We will keep you updated.

 

Overall, it has been another busy year for employment law and employers could be forgiven (although not by the courts and tribunals) for struggling to keep up.

It doesn’t look like 2019 will be any quieter. Eating more healthily and taking up a new hobby are perfectly good New Year’s resolutions, but for employers the resolution should be to keep up to date, review current practices and contracts, and ensure compliance.

GDPR & Cyber Security

Cyber security and key changes under the GDPR affect almost all businesses. Visit our hub to gain knowledge, insights and updates as the legislations are updated and take hold.

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