What is on your agenda for the coming year? 2018 will be another year dominated by Brexit's large shadow. Nevertheless, the fast pace of employment law developments is showing no signs of slowing down. Whether it's the new data protection regime, gender pay gap reporting, employment status or working time, the year ahead is certainly going to be significant for employment law. In this article, we offer our pick of 2018's top 10 employment law hot topics that employers need to have in focus.
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- Gender pay disparity: Reporting deadlines are nigh: 4 April for private and voluntary sectors and 30 March for public sector; spotlight on possible equal pay concerns
- Employment status: Government response to Taylor review on modern working practices; Supreme Court to hear Pimlico Plumbers Ltd v Smith appeal (Feb), and Uber BV v Aslam appeal pending before Court of Appeal
- Data protection: The new General Data Protection Regulation (GDPR) regime in force 25 May 2018 with new UK Data Protection Act also likely to be in force
- Shared parental leave: Employment Appeal Tribunal (EAT) to resolve conflicting tribunal judgments (Hextall v Chief Constable of Leicestershire and Ali v Capital Customer Management Ltd) on whether failure to match enhanced maternity pay sex discriminatory towards men taking shared parental leave (early 2018); Parental Bereavement Bill; and new statutory family pay rates in April
- Pregnancy discrimination & redundancy: Select Committee calls for greater protection from redundancy for pregnant workers; Court of Justice of the European Union (CJEU) ruling expected to extend 'suitable alternative employment' trump card to all pregnant workers (Porras Gisado v Bankia SA)
- Disability discrimination: Court of Appeal judgments on knowledge of disability (Donelien v Liberata) and long hours culture amounting to a PCP (Carreras v United First Partners Research) both expected early 2018; Supreme Court judgment on meaning of 'treated unfavourably' (The Trustees of Swansea University Pension & Assurance Scheme v Williams), expected late 2018
- On call time: Court of Appeal guidance on sleep-in shifts for Working Time Regulations (WTR) and National Minimum Wage (NMW) purposes (Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad - March); Court of Appeal to consider on-call time for Uber drivers; CJEU ruling on at home on-call time under the Working Time Directive (Ville de Nivelles v Rudy Matzak early 2018)
- Rest breaks & holidays: Court of Appeal guidance on compensation for breach of WTR rest break provisions (Gomes v Higher Level Care Ltd - to be heard February). The Court of Appeal will also consider holiday back-pay claims where employer denied worker entitled to paid annual leave (Sash Window Worksop v King - sometime 2018and Shannon v Rampersad - March 2018)
- Whistleblowing: Court of Appeal to consider potential non-executive directors' liability for detriment resulting in dismissal in July (International Petroleum Ltd v Osipov and the Supreme Court's pending appeal on manipulation of decision maker (Royal Mail v Jhuti)
- Termination: Supreme Court guidance on postal delivery of termination notice expected early 2018 (Newcastle upon Tyne NHS Foundation Trust v Haywood); taxation of termination payments April changes.
1. Gender pay disparity
Gender Pay Gap reporting has begun with all large private or voluntary sector organisations (those with 250 or more employees) obliged to calculate and publish their pay gap by 4 April and large public sector employers by 30 March.
Gender pay gap reporting and equal pay are not the same thing. A gender pay gap is a basic measure of the average differences in pay between male and female employees. Equal pay, on the other hand, is a specific legal concept that requires that men and women are paid the same for equal work.
Unlawfully discriminating, by failing to comply with existing equal pay laws, may be one factor impacting on an organisation's gender pay gap. In practice, though, a wide range of other factors is likely to influence the figures, such as the underrepresentation of female employees in senior management roles and the fact that many of the traditionally lower paid occupations are still predominantly carried out by women.
Will the reporting duty drive forward gender pay equality? Well it certainly is attracting headlines. As evidenced by the BBC pay disparity row, a published pay gap may shine a spotlight on the potential of an organisation having an equal pay issue. The BBC finds itself in a unique position in having to name individual earners and their salary bands under the corporation's new Royal Charter, a critical feature in the Carrie Gracie dispute. This specific requirement is not a requirement under the Gender Pay Gap Reporting duty generally. Nevertheless, queries about equal pay are now on the increase with employees questioning the reasons for any reported pay gap.
What is certain is that organisations with large pay gaps and those reporting statistically improbable (in some cases impossible) results, will face adverse publicity. Employers are well advised to understand the reasons behind any pay gap that exists and if any equal pay issues are found address them head on.
For more see 'Gender Pay Gap reporting: Are you ready for the big reveal?'
2. Employment status
Like last year, determining worker status in modern workplaces will continue to be a hot topic in 2018. Will the Government finally show its hand on possible legislative reform of employment law to strengthen the rights of people working in the so-called gig economy.
The Government promised a response to the recommendations of the "Good work: the Taylor review of modern working practices ' published last July by the end of 2017, but alas Brexit priorities have resulted in delay. Headline recommendations include:
- the burden of proof should fall on employer where status disputed;
- workers on zero-hours contracts should have a right to request a contract that guarantees their hours after 12 months in post: and
- higher NMW rates for those on zero-hour contracts.
There is also a recommendation for the use of 'rolled-up' holiday pay currently unlawful under EU law.
The House of Commons Work and Pensions and BEIS Select Committee's response in November indicates that many of the recommendations may indeed be followed up. Calls for even more radical measures such as those contained in the Workers (Definition and Rights) Bill, a Private Members Bill sponsored by SNP MP Chris Stephens, are unlikely to be taken up.
While legislative reform struggles to climb the Government's priority list, judicial development will continue apace, albeit not as fast as Uber would like. In February the Supreme Court will consider the appeal in Pimlico Plumbers Limited & Anr v Smith on whethera plumber who was self-employed for tax purposes was nonetheless a worker for employment law purposes. So far the tribunal, EAT and Court of Appeal have all held 'worker' status.
Uber is also continuing to challenge the findings of the tribunal and EAT that its drivers are indeed workers (Uber BV v Aslam). Hoping to bypass the Court of Appeal altogether and be joined with the Pimlico Plumbers case in February, the Supreme Court said no. When the Court of Appeal will hear Uber's appeal is not yet set, but expected late 2018.
See the 'Cake Boss' section of our 'Employment law 2017 review: another year over...' for more on the Pimlico Plumbers and Uber cases.
3. Data protection
The new General Data Protection Regulation (GDPR) regime will be in force from 25 May 2018. The frightening consequences of non-compliance (a fine of up to €20 million or 4% of the offending company's worldwide turnover) and some material changes from the current Data Protection laws in the UK, mean preparation for its implementation is a priority for employers this year.
The GDPR will be supplemented by a new UK Data Protection Act. The new Act will allow for the continued application of GDPR standards in UK law post-Brexit and also introduces a distinct regime for national security data processing.
Key areas employers should be looking at by now include data mapping, reviewing documentation, staff training including what to do if there is a breach, dealing with data subject access requests, and the role of the data protection officer. For detail see our podcast 'What do HR professionals need to be doing now to have compliant HR practices ready for the GDPR?'
4. Shared parental leave
Should employers match enhanced maternity pay under Shared Paternal Leave? Whether an employer, who fails to match maternity pay enhancements, will face a successful discrimination claim from a man on Shared Parental Leave (ShPL) has been the elephant in the room for some time. There is no express obligation on employers in the voluminous Shared Parental Leave legislation to match enhanced contractual maternity pay. Indeed, Government guidance is that employers are not so obliged. But the question remains whether employers might be obliged to do so under the Equality Act 2010. At what point is maternity leave no longer designed to protect a woman's biological condition following pregnancy, or the special relationship between mother and baby, and instead becomes akin to childcare?
We currently have conflicting employment tribunal decisions on this question. In Hextall v Chief Constable of Leicestershire Police the tribunal held the employer's policy of giving mothers on maternity leave enhanced contractual maternity pay (18 weeks' full pay), but only statutory shared parental pay, is not discriminatory. It followed the traditional view that difference in treatment was permissible as the Equality Act allows special treatment for women in connection with pregnancy or childbirth.
However, in Ali v Capital Customer Management Ltd a different tribunal held that the employer did directly discriminate against a male employee when it offered enhanced contractual maternity leave pay to female employees but only offered him statutory ShPL pay. The Tribunal accepted that the disparity was founded on an assumption that mothers are best placed to undertake caring for a baby, but that assumption was no longer valid in today's society.
The Employment Appeal Tribunal (EAT) heard the appeal in Mr Ali's case in December 2017 (judgment awaited) and will hear the appeal in the case of Mr Hextall on 16 January 2018.
Should the EAT agree with the tribunal in the case of Mr Ali, will we see a real societal change with more men wishing to take up Shared Parental Leave or will we see employers adjust downwards existing generous enhanced maternity pay schemes?
For more see Should employers match enhanced maternity pay under Shared Paternal Leave?
On the legislative front, the Parental Bereavement (Pay and Leave) Bill is making its way through Parliament. This is a Private Members' Bill, but has attracted Government backing so is likely to become law. If passed, the Secretary of State will have power to make regulations to give at least two weeks paid leave to employees who lose a child below the age of 18 (including a still birth after 24 weeks).
And finally, the weekly amount for statutory family pay rates will increase from £140.98 to £145.18 in April 2018. This rate will apply to maternity pay, adoption pay, paternity pay, shared parental pay and maternity allowance. The increase normally occurs on the first Sunday in April, which would be 1 April 2018, although the Ministerial statement announcing the increase suggests the increases will take effect from 9 April 2018, we await clarification.
5. Pregnancy discrimination & redundancy
At the end of the summer, the Women and Equalities House of Commons Select Committee called for greater protections for pregnant women and new mothers. In particular, the Committee is calling for greater protection against redundancy in light of evidence that there has been a marked increase in the number of women suffering pregnancy/maternity discrimination in redundancy selection over the past decade. We wait to see if Government has any appetite for introducing legislative reform. In the meantime, the Court of Justice of the European Union (CJEU) may provide some comfort for pregnant employees this year.
The CJEU is expected to deliver its judgment in the Spanish reference, Porras Guisado v Bankia SA, early in 2018 concerning the interaction of pregnancy and collective redundancy provisions.
Back in September the Advocate General (AG), who advises the CJEU, recommended that inthe context of a collective redundancy, the dismissal of pregnant workers may only occur in "exceptional cases" not connected to the pregnancy and when there is no plausible possibility of reassigning them to another suitable post.
In Great Britain, if a woman's role is redundant while on maternity leave, she is entitled to be offered suitable alternative employment by her employer or associated employer if such a vacancy exists. Her right effectively trumps that of any other employee whose role is redundant at the same time. However, pregnant employees who have not yet gone on maternity leave by the time a redundancy situation arises are not entitled to this special protection. Should the CJEU follow the AG Opinion (likely), the special protection afforded to those on maternity leave will need to be extended to the period from the beginning of their pregnancy, (whether the employer already knows they are pregnant or not) to the end of the maternity leave.
For more see 'Redundancy and pregnant employees - one to watch' in our September 2017 Employment Essentials'
6. Disability discrimination
Employers and HR professionals should keep an eye out for three important disability discrimination judgments expected this year: two from the Court of Appeal and one from the Supreme Court.
Knowledge of a disability
Early in 2018 we should get the Court of Appeal judgment in Donelien v Liberata UK Ltd. This case concerns the extent to which employers need to investigate whether an individual has a disability. The case was dismissed by the EAT as although the employer had not taken every step possible, it had taken reasonable steps to ascertain the nature of the employee's illness despite a flawed Occupational Health Report. We await Court of Appeal guidance on just how far employers are expected to delve.
Long hours culture a PCP?
Can an expectation or assumption that a disabled employee would regularly work late amount to a provision, criterion or practice (PCP) triggering the duty to make reasonable adjustments? The Court of Appeal considered this question back in November in Carreras v United First Partners Research. The EAT has so far held that working late does not have to be presented as an instruction to cause a disadvantage. If the disabled employee can establish the existence of a long-hours culture, this may be enough to amount to a 'practice' under the Equality Act 2010. The Court of Appeal judgment is expected to be handed down early 2018.
Discrimination arising from a disability
Was a disabled employee treated unfavourably when he received an ill-health retirement pension based on his final part time salary, rather than the full time salary he had received before his working hours were reduced as part of a reasonable adjustment?
Last year, the Court of Appeal in The Trustees of Swansea University Pension & Assurance Scheme v Williams held the disabled employee was not unfavourably treated. There is a difference between being treated 'unfavourably' and 'less favourable treatment'. Treatment which is advantageous (ill health retirement was only an option for those with a disability) will not amount to unfavourable treatment merely because it could have been even more advantageous.
Discrimination arising from a disability is still a relatively new concept first introduced by the Equality Act 2010 and the Williams case is the first case to address the meaning of 'unfavourably' in this context. A Supreme Court judgment, expected late 2018, will provide some much needed guidance for employment lawyers and those in HR.
7. On-call time
How employers should treat on-call time for both Working Time Regulation (WTR) and National Minimum Wage (NMW) purposes has proved tricky recently. There appears to be growing judicial trend to find inactive on-call time to be working time for both WTR and NMW purposes. 2018 should bring some further guidance from the CJEU.
On the question of "sleep-in" shifts, recent judgments indicate that tribunals will find workers are 'working' the entire sleep-in shift even when sleeping for NMW purposes where:
- the employer is under a statutory or contractual duty to have a worker on the premises at all times;
- the worker is unable to leave the premises at any time during the shift; and/or
- the worker has a degree of responsibility for personally performing duties when needed and making judgments (as opposed to simply raising the alarm).
On 20 March the Court of Appeal will hear two separate appeals on "sleep-in" shifts: Royal Mencap Society v Tomlinson-Blake (EAT held the care worker's sleep-in shifts at a client's house were working time) and Shannon v Rampersad t/a Clifton House Residential Home (EAT held an emergency only care assistant who permanently resided in separate on-site flat was not).
For more see 'Sleeping on the job: National minimum wage and 'sleep-in' shifts'.
We also expect further Court of Appeal guidance on when gig economy workers are working for NMW purposes. This is an important feature of the Uber BV v Aslam worker status appeal expected to be heard late in 2018. So far, the tribunal and EAT have held any driver who has the app switched on, is within their authorised territory, and is able and willing to accept assignments, is working for working time and NMW purposes.
Also on the issue of inactive on-call time, we should have CJEU guidance early in 2018 on whether on-call time is "working time" for Working Time Directive (and therefore WTR) purposes, where the worker is not required to be on the employer's premises but must respond quickly.
The Belgian case of Ville de Nivelles v Rudy Matzak concerns a group of fire-fighters who are on call at home but had a duty to respond within eight minutes. To date, CJEU case law has focused on the worker's location during stand-by periods and whether it is at a place determined by the employer.
In this case, the Advocate General recommends that proximity to the workplace will not necessarily be the deciding factor in determining whether on-call time is working time. Equal emphasis should be given to the quality of the time and the degree of freedom that a worker may enjoy when on stand-by duty. This approach might mean that on-call time spent in a worker's home could qualify as working time where their freedom to engage in rest activities during that time is severely impacted.
For more see 'When standby time is 'working time' in our August 2017 Employment Essentials'.
8. Rest breaks & holidays
A claim for 'refusal' to permit rest breaks under the WTR can be brought where an employer fails to make provision for such breaks, even if the worker does not expressly request them. Employers must take active steps to ensure that their working arrangements enable workers to take the requisite rest breaks: workers cannot be forced to take rest breaks but they are to be positively enabled to do so.
Where a complaint for breach of rest break provision is upheld, the tribunal may make an award of compensation as is "just and equitable" in all the circumstances. In February, the Court of Appeal in Gomes v Higher Level Care Ltd will consider whether compensation for failing to provide rest breaks can include an injury to feeling award. If the Court of Appeal agrees injury-to-feelings awards are permitted, this will significantly increase the value of rest break breach claims.
On the holiday pay front, at the end of last year the CJEU in Sash Window Workshop Ltd v King confirmed that workers who are wrongly informed by their employer they are not entitled to holiday pay may carry their holiday rights over indefinitely and be paid in lieu on termination for any untaken holiday during their entire period of employment (employer wrongly classed individual as 'independent contractor' rather than 'worker'). This case is due to go back to the Court of Appeal for a further hearing of its particular facts in light of the CJEU's decision.
A similar issue also arises in the case of Shannon v Rampersad t/a Clifton House Residential Home, which is to be heard by the Court of Appeal on 20 March.
9. Whistleblowing
Back in June 2013, the Public Interest Disclosure Act 1998 was revamped. A change which has proved to have had a significant impact so far is the introduction of co-worker liability for victimisation with corresponding employer vicarious liability.
In July, the Court of Appeal will consider an individual's personal liability for detriment which they cause to a whistleblowing colleague resulting in the whistleblower's dismissal. In International Petroleum Ltd and ors v Osipov and ors, the EAT upheld a tribunal finding that the actions of two non-executive directors (NEDs) in giving an instruction to dismiss and implementing that instruction were actionable as a detriment claim (the NEDs falling within the extended definition of 'workers' for whistleblowing purposes).
Whether the statutory provisions allow a 'detriment' claim to be brought, where the detriment complained of is dismissal, is controversial. However last October the Court of Appeal in Royal Mail Ltd v Jhuti held that 'dismissal consequent on detriment' claims are possible. The NEDs therefore face an uphill battle in their appeal and may need to await a further appeal to the Supreme Court pending in the Jhuti case.
The pending appeal in Jhuti also concerns manipulation of the decision maker by a third party and is unlikely to be heard until late 2018. For more details see 'Master [behind the] chef' section of our 'Employment law 2017 review: another year over...'
10. Termination
Clarification on when a contract of employment terminates at common law is expected early this year. The Supreme Court heard the appeal in Newcastle upon Tyne NHS Foundation Trust v Haywood back in November with judgment awaited.
The Court of Appeal has so far held that in the absence of any specific contractual provision, contractual notice takes effect only when the employee personally takes delivery of the letter containing the notice. The notice triggering the counting down of a contractual notice period, is not effective on any earlier deemed service date or on delivery to the employee's address if he or she is not there (so not date the recorded delivery signed for by a family member). On the facts, the common law date of termination was relevant because it determined whether the claimant's notice period expired on or before her 50th birthday, which affected her pension entitlement.
On the tax front, from 6 April 2018, there will be changes to the way that termination payments are taxed. All payments in lieu of notice will be treated as earnings subject to tax and class 1 NICs. Effectively, employers will be required to subject to tax an amount equivalent to the employee's basic pay if notice is not worked. However, planned changes making termination payments above £30,000 subject to class 1A NICs (employer liability only) have been postponed until April 2019, which will be good news for employers.