It seems employment law never stops changing. What will change in 2016? A month in and some of the 2016 reforms and developments are coming into sharper focus while others are still developing.

Industrial action reform, the national living wage, gender pay gap reporting, as well as the old favourites of holiday pay and redundancy consultation will feature this year. Here are our top pick of anticipated legislative and judicial trends for 2016.

Trade union reform

The Trade Union Bill - the industrial battle lines

The controversial Trade Union Bill continues its journey through Parliament. If passed, the Bill will introduce significant changes to the voting requirements in industrial action ballots which will have a huge impact on the unions concerned, particularly in all key areas of the public sector.

As the law currently stands, provided the union allows all those being called upon to take action to vote, they need only a simple majority of those who do vote to be in favour to validate the action. This can and has allowed action to be called on a very low turnout with, say, only 10% of the actual membership voting in favour. The proposed changes will:

  • Impose a new minimum turnout threshold of 50% of the electorate.
  • Ballots will only sanction action for a limited period of up to four months post ballot.
  • A clear description of the trade dispute and the planned industrial action will be required to be set out on the ballot paper including the period within which the industrial action is expected to take place.

In the key public sectors of health, education, fire, transport, border security/border force and nuclear decommissioning sectors there will be an additional threshold of 40% of support from all members eligible to vote to take industrial action. This means required turnout of 50% + of those who can vote AND 40% of those who can (as opposed to who do) vote in support of the action.

On 21 January, the Government announced two significant changes to the originally proposed scope of key public sector workers:

  • The original proposal included ancillary staff (those who support the front-line staff). The additional 40% threshold will now only cover those actually delivering the services.
  • In the original proposal, for the health and education sectors, it was proposed that the 40% threshold would apply equally to public and private sector workers. Private sector education and health will no longer be included unless they are delivering specified publically-funded health services.

The Bill also proposes new legal requirements on unions for the supervision of picketing, new powers to control facility time in the public sector, the abolition of check-off in the public sector and 'opt-in' rather than the current 'opt-out' system to making contributions to the to a union's political fund.

Will all the provisions of the Bill make it through Parliament unscathed as much needed "modernisation of outdated industrial relations laws" or fall as "an unlawful brutal attack on the right to strike"? Will industrial disputes be fought even harder by unions to ensure the necessary higher level of support? The industrial battle lines are drawn!

Replacement workers

Related to the reforms contained in the Trade Union Bill, the current restriction which prevents employment businesses from supplying an employer with agency workers to perform the duties normally performed by a striking worker, or other worker who has been assigned to cover the striking worker, is to be removed. At the moment, breaching this rule carries a criminal sanction.

This can be done simply by way of secondary legislation (thereby avoiding Parliamentary debate) by amending the existing Conduct of Employment Agencies and Employment Businesses Regulations 2003 rather than by inclusion in the Trade Union Bill itself. The Government's response to last summer's public consultation on this change, originally promised for mid-October last year, is still awaited.

Sweet-heart unions

In 2014 the Employee Appeal Tribunal (EAT) held in R (on the application of Boots Management Services Ltd) v CAC, that an existing agreement with a union to collectively consult over facilities for union officials and consultation machinery blocked another union's application for statutory recognition. It made no difference that the existing agreement expressly excluded bargaining on matters to do with working conditions, terms of employment, hours, pay and holiday.

An appeal to the Court of Appeal originally scheduled for last year, but bumped due to lack of court time, is now scheduled for the end of November this year.

Not so 'sweet' unions

The Court of Appeal will also consider in October the scope of the statutory negotiation mechanism contained in Schedule A1 (statutory recognition) of the Trade Union and Labour Relations (Consolidation) Act 1992. Once a union has obtained statutory recognition, the employer and union need to agree a 'method of collective bargaining'. Where agreement cannot be reached, the Central Arbitration Committee will impose a method taking into account the 'statutory method'. But just what is in scope, in particular does it extend to rostering arrangements? (British Airline Pilots Association v Jet2.Com Ltd).

Gender pay gap & equal pay

Made in Dagenham

In 1968, women sewing machinists at Ford's Dagenham plant went on strike over a re-grading demand, arguing that their work required the same amount of skill as work carried out by cutters and paint spray operators whose jobs had been graded more highly. This led to further equal pay strikes and campaigns.

Barbara Castle. the Employment Secretary at the time, brought in the Equal Pay Act of 1970, permitting equal pay claims to be made by women in the public and private sector if their work was deemed the same or broadly similar to the work of their male equivalents. Although the Act was passed in 1970, it was not implemented fully for another five years, allowing employers a grace period to make 'adjustments'.

Much progress has been made in the intervening years but the pay gap persists. The Office for National Statistics' "Annual Survey of Hours and Earnings, 2015 Provisional Results" released on 18 November 2015 states that the gender pay gap for full-time employees is now 9.4%, the lowest since the survey began in 1997, although the gap has changed relatively little over the last four years. However, when full-time and part-time employees are combined, the gap is unchanged, at 19.2%.

As we mark 40 years of equal pay legislation being in force, we have a further significant step in the legislative push to close the gender pay gap. Following the failure of the voluntary reporting campaign (only five of the 250 employers who signed up actually produced a report), the Government has committed to finally bringing into force section 78 of the Equality Act 2010 which will require (for the first time) private sector employers with over 250 employees to disclose pay gap information.

As one of its last employment law reforms before the 2015 general election, the Coalition Government included a provision in the Small Business, Enterprise and Employment Act (SBEE) 2015 (section 147) to require section 78 of the Equality Act 2010 to be brought into force no later than 25 March 2016. Over the summer the Government carried out a brief consultation and on 25 October, the Prime Minister tweeted a press release indicating that employers will be required to publish information about bonuses as well as salaries and the obligation will be extended to include the public sector as well as the private and voluntary sectors.

45 years on from the passing of the Equal Pay Act, and some things never change: section 147 SBEE 2015 clearly provides for the Government to make regulations on gender pay gap reporting by 25 March 2016 but section 147 has not yet been brought into force.

The Government's response to the July consultation is still awaited on the detail of the gender pay gap reporting. It is rumoured that the Government's response will be a second consultation on the actual content of draft regulations. There will then be a period of time for businesses to 'adjust' to the new reporting so it seems we are unlikely to see any reports being published until 2017 or 2018.

Supermarket sweep

Large-scale equal pay claims have traditionally been the reserve of public-sector workers. Things are about to change. We now have a high-profile private sector claim in Brierley v Asda Stores Ltd. The Manchester Employment Tribunal will hear claims by 400 female floor staff seeking equal pay with male distribution centre staff in June.

Hot on the heels of the Asda case, a similar claim by Sainsbury's female store based staff seeking equal pay with male distribution centre staff is currently pending before the Birmingham Employment Tribunal.

Wages

The Living Wage

1 April will herald the introduction of the National Living Wage (NLW). Under the National Minimum Wage (Amendment) Regulations 2016, the new NLW rate of £7.20 an hour for workers aged 25 and over will apply from 1 April.

The current adult National Minimum Wage (NMW) rate of £6.70 will continue to apply for those aged 21 to 24 as will the current development rate of £5.30 for those aged 18 to 20. The under 18 rate will remain at £3.87 and the apprentice rate at £3.30.

This year we should also get more details of Government plans to improve compliance with the NMW, including increased fines and potential disqualification of directors.

Termination payments

Perplexing taxation

As all employers know, the tax regime as it applies to termination payments is complex and often perplexing. Recognising this, last July HM Revenue & Customs launched a consultation: "Simplification of the tax and national insurance treatment of termination payments".

Proposals include removing distinctions between types of payment, replacing the current £30,000 allowance with an exemption for redundancy at a rate rising in line with length of service and new exemptions for wrongful dismissal, unfair dismissal or discrimination.

While the consultation closed mid-October, we still await the detail of how and when HMRC will proceed with the simplification. One to watch out for!

Public sector exit payments

From 1 April, there will be a requirement for public sector employees with annual earnings of £80,000 or more to repay exit payments where they return to any part of the public sector within 12 months of leaving.

Public sector employers should note the amendments announced at the end of last year to the original proposals. In particular:

  • individuals subject to the recovery provisions are those earning £80,000 or more, not £100,000 as originally proposed.
  • the exit payment recovery policy applies to returns to any part of the public sector, instead of only returns to the same part of the public sector.
  • the recovery amount will be tapered down depending on at what point the return within 12 months is made.
  • inclusion of employer funded pension top-up payments made under the Local Government Pension Scheme within the sums to be recovered.

Some public sector bodies will be excluded from the new restriction, including housing associations, public financial corporations, armed forces and public broadcasters.

In addition to the recovery provisions, a cap of £95,000 on the total aggregate value of exit payments to most public sector workers is also to be introduced. At present, there is no confirmed implementation date for this additional change.

Employment tribunals

Non-payment penalties

Under section 150 SBEE, employers who fail to pay employment tribunal awards or sums due under an agreement following Advisory, Conciliation and Arbitration Service (ACAS) conciliation may have a non-payment penalty imposed upon them as well. An enforcement officer will be able to impose a financial penalty of 50% of the unpaid award subject to a minimum of £100 and maximum of £5,000. If an award remains unpaid after the appeal period has expired, a warning notice can be served giving the employer 28 days to pay the awards before a penalty is imposed. Penalties will be payable to the Exchequer.

To date, s150 has not been brought into force. The Government has now stated that the power to impose penalties will be brought into force in April.

Tribunal fees - the fight goes on

Following the introduction of tribunal fees at the end of July 2013, we have seen a very significant decrease in the number of tribunal claims. Unison has now failed in its challenge to the introduction of fees in the High Court twice, with its appeal to the Court of Appeal also failing last year.

But the story is not over yet! The Supreme Court will consider Unison's application for leave to further appeal in February. Also, a Government review of the fees and remission schemes is currently underway. The Court of Appeal expressly stated that if the review finds there are good grounds for concluding that the decline in the number of claims is accounted for by claimants being realistically unable to afford to bring proceedings, the level of fees and/or the remission criteria will need to be revisited.

Financial services reform

The dawn of a new regime

On 7 March the first phase of the Senior Managers and Certification Regime (SMR) will come into force for banks, building societies, credit unions and PRA-designated investment firms.

Under the new regime, senior managers will continue to be approved by the regulators, but now:

  • Senior managers' personal accountability for their respective business areas and functions will be brought into sharper focus; and
  • Firms will be responsible for assessing the fitness and propriety of their certified persons, needing to review this position at least annually.

New rules on regulatory references for the financial sector also come into force on 7 March. The new rules impose new minimum specific disclosure requirements covering the individual's employment history for the preceding six years. There will also be a duty to update a reference up to six years after it has been given if new information comes to light affecting the reference.

New rules on whistleblowing for the financial sector are also being introduced, including a requirement to appoint a whistleblowers' champion and for all UK-based staff and their managers to receive appropriate training on blowing the whistle. Firms have until 7 September to comply with the requirements, save for the requirement to assign responsibility to a whistleblowers' champion which will take effect on 7 March alongside the SMR.

Family friendly

Grand plans

Comedian Shappi Khorsandi once quipped, "I want to have children while my mother is still young enough to raise them".

Last October, George Osborne tweeted: "Grandparents shouldn't have to choose between helping with a new grandchild and staying in work. So we'll introduce grandparental leave." Government plans will extend the system of shared parental leave which came into full effect last April to cover grandparents, as well as the child's parents.

While the sharing of leave with a nominated grandparent is not proposed to be brought into force until 2018, this year we expect consultations on the plans. While sounding like a relatively straight forward extension of shared parental leave, the complexities of modern 'blended' families will no doubt make the legislative provisions equally complex.

Childcare vouchers are no child's play

Childcare vouchers: "remuneration" or a "non-cash benefit"? Last year an employment tribunal in Donaldson v Peninsula Business Services held that childcare vouchers are indeed a "non-cash benefit". So, on the one hand, the value of childcare vouchers should not be included when calculating the first six weeks of statutory maternity pay (SMP). On the other hand, the employee is entitled to receive the childcare vouchers during her maternity leave without sacrificing any SMP. As such, a provision requiring a pregnant woman to opt out of the scheme when on maternity leave amounted to unlawful maternity and sex discrimination.

At the end of January the EAT heard the appeal in this case. We await the first appellant level decision on this question which is viewed by many as a grey area.

Statutory pay rates freeze

Due to a 0.1% fall in the Consumer Prices Index in the year to September 2015, there will be no April increase to the statutory parental payments (including statutory maternity pay). The weekly rate will remain at £139.58.

Statutory sick pay will also remain at £88.45 per week.

Discrimination

Indirect discrimination - when the 'why' just can't be explained

An employer indirectly discriminates against an employee if it applies a provision, criterion or practice (PCP) universally but the effect of that PCP disadvantages those who share one of the protected characteristics, and the PCP cannot be objectively justified.

Does this mean that for a claimant to establish a prima facie case, it is necessary for the claimant to establish both 'group' and 'individual' disadvantage. Last year, the Court of Appeal in Home Office (UK Border Agency) v Essop, overturned the EAT to say yes they do. This means claimants need to be able to show not only why the PCP had disadvantaged the group, but also why they as an individual have been so disadvantaged.

There may be some cases where it is clear why an individual was so disadvantaged. However, in other cases, as in Essop, there may beno clear explanation as to why an individual was affected by the interaction between the PCP and the protected characteristic. Essop concerned strong statistical evidence that older, ethnic minority candidates had a poor success rate in the civil service exam, but why that is the case is unknown.

The Supreme Court will now consider this issue on 9 November which will potentially impact personnel practices where there is evidence of a disparate impact on a group, but the actual cause cannot be evidenced.

Failing to protect the most vulnerable?

Under the Equality Act 2010, the definition of race includes colour, nationality and ethnic or national origin. But what is the scope of this non-exhaustive list?

What about vulnerable migrant workers? In 2014, the Court of Appeal held that unfavourable treatment on the ground of vulnerability for reasons including immigration status does not constitute race discrimination. While a worker's immigration status may contribute to their vulnerability, it was not the reason itself for the treatment (Taiwo v Olaigbe and Onu v Akwiwu). The Supreme Court will now consider this question in April.

The [Part time] World Is Not Enough

In December, the Court of Appeal will consider whether a disabled employee was treated unfavourably under section 15 of the Equality Act 2010 (discrimination arising from disability). In The Trustees of Swansea University Pension & Assurance Scheme v Williams, Mr Williams' ill health pension was based on the part-time hours he worked as a reasonable adjustment during the last two years of his employment rather than the full time hours he had worked during the previous 10 years of his employment.

The EAT has so far held that the operation of the ill health retirement scheme was not unfavourable treatment arising in consequence of Mr Williams' disability as the scheme inherently benefited disabled employees as it only applied to disabled employees. Also, it was not appropriate to compare Mr Williams' position with that of other disabled employees whose ill health retirement came on more suddenly at a time they were still working full time hours. Will the Court of Appeal agree?

Educating Rita

In May, the Court of Appeal will consider the interplay between the employment and the education provisions of the Equality Act 2010.

The Court will consider whether an employment tribunal had jurisdiction to hear an indirect sex discrimination claim of a university student who had her work placement withdrawn because, as a single mother of a young child, she could not comply with the shift patterns applicable to the placement.

Where training is provided through a higher education institution which "has the power to afford access", then complaints of discrimination associated with that power do not come within the employment provisions of the Equality Act. Instead, such complaints must be dealt with under the education provisions, for which the county court has jurisdiction. The draw back for claimants having to rely on the education provisions is that it adds a layer of complexity. A claimant will need to establish that the organisation that carried out the discriminatory act (in this case the NHS Trust who withdrew the placement) did so in the capacity of agent for the University - a potentially substantial hurdle to overcome.

We wait to see if the Court of Appeal agree with Ms Blackwood that the University did not have overall 'power to afford access' as the NHS trust had the ability to terminate the access and therefore her claim should be heard in the employment tribunal.

Whistleblowing

In the public interest

2013 changes to the protection afforded to whistleblowers mean that an individual must have a reasonable belief that the disclosure they are making, to whoever they make it, is "in the public interest".

A driver for this change was to prevent an individual from benefitting from whistleblowing legislation by relying on a self-serving disclosure of a breach of their own contract of employment. But what does "in the public interest" mean?

In October the Court of Appeal will consider whether the EAT in Chesterton Global Ltd (t/a Chestertons) v Nurmohamed was correct to set the 'public interest' hurdle very low. The EAT found that 'the public' can refer to a subset of the general public, even one composed solely of employees of the same employer. It did not matter even that the individual whistleblower was mostly motivated by concern about his own position.

Should the Court of Appeal agree with the EAT, it appears that workers are able to claim whistleblowing protection for disclosure of a breach of their own contract of employment as long as they can show some element of concern for colleagues in the same position.

Foreign workers

The Immigration Bill

The controversial Immigration Bill is making its way through Parliament. From an employment law perspective, the Bill contains provisions:

  • creating an offence of illegal working;
  • requiring all public-facing public sector workers to speak fluent English; and
  • introducing an immigration skills charge for employers using foreign workers.

We await the final version.

The Posted Workers Enforcement Directive

On 28 January the Government confirmed that regulations necessary to implement the requirements of the European Posted Workers Enforcement Directive will be published soon and brought into force by 18 June as required under the Directive. The key change to UK law is the introduction of the concept of "subcontracting liability" for the construction industry. This will mean that where a posted worker in the construction sector is not paid the minimum rates of pay by their direct employer (the subcontractor) the contractor immediately above their employer will also be liable. Liability will be limited to the balance of any national minimum wage due, rather than any higher contractual rate owed to the worker. The contractor will also have a defence if they had exercised due diligence in their choice of subcontractor.

Holiday pay

Earning commission on holiday

The hot topic of what constitutes 'normal remuneration' for calculating holiday pay continues to feature in 2016.

Following much highly publicised case law, workers are entitled to receive 'normal pay' when on the first four weeks of holiday leave. "Normal pay is that which is normally received". This includes regularly worked overtime. Likewise, commission that is regularly earned must also be included.

2016 brings the next instalment in Lock v British Gas Trading Ltd. In this case, the Court of Justice of the European Union (CJEU) ruled that commission which couldn't be earned due to a worker being on holiday must be taken into account in the subsequent pay period. But how you actually work out what the commission sum would have been where commission fluctuates from month to month is not easy.

Last year the case returned to the tribunal to consider whether the UK's legislation can (A) be interpreted in line with the CJEU decision and, if so, (B) how much holiday pay Mr Lock was entitled to.

In March 2015 we received the tribunal's decision on question A only. The tribunal found that there is no obstacle to interpreting the Working Time Regulations 1998 (WTR) so as to include commission payments in the calculation of holiday pay under regulation 13. The EAT considered the employer's appeal on this interpretation point at the end of last year. We are currently awaiting the EAT's judgment. Should the appeal be rejected, it will be back to the tribunal this year for argument on question B, in particular, what happens where the commission rate already includes an element of 'rolled-up' holiday pay and what was Mr Lock's actual loss?

Going over overtime

In 2014, the EAT in Fulton and Baxter v Bear Scotland combined with Wood v Hertel and Laws v Amec confirmed that in a deduction of wages claims for underpaid holiday pay where more than three months has elapsed between the alleged "deductions" they will not form part of a "series of deductions". This can significantly limit the potential value of such back claims (in any event, back claims are now limited to two years for claims brought on or after 1 July 2015). Just when you think the position as regards overtime payments has settled down...

Despite not appealing the 2014 EAT judgment, Mr Fulton and Mr Baxter are now attempting to challenge the three month gap principle following their case having been sent back to the tribunal last year. While the tribunal rejected the attempt to challenge the three month gap principle at this stage, permission to appeal the 2015 tribunal decision is currently being sought from the EAT.

What a carry on

It is now well established that the prohibition on carry-over of untaken annual leave contained in the Working Time Regulations 1998 does not apply where a worker is 'prevented' from taking their annual leave due to sickness absence or family related leave. Is a worker also 'prevented' from taking their annual leave in circumstances where an employer has wrongly classed an individual as an independent contractor, therefore denying any right to take paid holiday? Does carry over equally apply in such cases? These are questions the Court of Appeal will consider in February in Sash Window Workshop Ltd v King.

Collective redundancy consultation

Licence to kill (but not to close a military base without consultation)

Hopefully, 2016 will finally shed some much needed judicial light on the collective redundancy consultation trigger point: at what point does the employer "propose" redundancies? In particular, must an employer consult about a strategic decision that would foreseeably or inevitably lead to collective redundancies such as a site closure?

Fingers crossed, the long running saga of The United States of America v Nolan will enter its final act. The long drawn out jurisdictional battle which went to the Court of Justice of the European Union and the Supreme Court reached a conclusion last year leaving the way for the substantive issue around trigger points to now be addressed by the Court of Appeal.

With Court of Appeal time scarce the listing office is currently trying its best to schedule the appeal as early as possible this year, but don't hold your breath!

Criminal prosecution given a sporting chance

Last year the criminal prosecutions of former City Link directors for failure to notify the Secretary of State of proposed collective redundancies failed. In that case, the directors were found not guilty as the court accepted they genuinely believed as at the date they decided to place the company into administration that a sale of the business was probable and as such there would be no redundancies.

Will the Government have better luck this year? The spotlight is now on the pending prosecutions in relation to the closure of a USC warehouse (part of the Sports Direct group) for which staff were given 15 minutes' notice of their redundancy. In October an employment tribunal ordered a 90 day protective award in favour of the affected employees. In granting the maximum award, the tribunal criticised the employer for what it described as "disgraceful and unlawful employment practices". It will be interesting to see what, if any, impact the views of the tribunal in ordering a protective award will have on the USC prosecutions before the Magistrates Court.

The prosecutions of former director David Forsey and administrator, Robert Palmer are due to be heard by the Chesterfield Magistrates Court 14 to 16 March.

Employment status

A servant or providing a service?

The first issue to establish when considering what employment rights and protections an individual may have is whether they are an employee, worker or self-employed.

At the end of January this year, the Court of Appeal considered the impact of the lack of mutuality of obligation between assignments for determining status under the Equality Act 2010 as opposed to under the Employment Rights Act 1995 (Arada v Windle).

In May the Court of Appeal will consider to what extent is the degree of personal financial risk taken by the individual a relevant factor when determining employment status under the Employment Rights Act 1996 (Pimlico Plumber Ltd v Smith).

Taxi!

Uber appears to be ever increasing its presence around the world as the 'go to' app for modern day cab hailing. While legal challenges by black cab drivers have failed to date, a legal challenge by the Uber drivers themselves, backed by the GMB, will go before the London Central Employment Tribunal in July. Are Uber drivers self-employed or 'workers' entitled to the national minimum wage and holiday pay? If they win, worker status (therefore attracting NMW wage and holiday pay rights) will have a material impact on the Uber business model.

Vicarious liability

The sins of another

As a general rule, employers will be held vicariously liable for the actions of their employees during the course of their employment. However, there are limits: there must be a sufficiently close connection between the wrongdoing and the employment. We await Supreme Court guidance on the potential scope of an employer's vicarious liability early this year.

In the case of Mohamud v WM Morrison Supermarkets, a customer after leaving a petrol station kiosk was subjected to a violent racial attack on the forecourt by a station attendant who had followed him out, despite an express instruction from his supervisor not to leave the kiosk.

Is the employer liable for the actions of the attendant as the employer had placed him in a customer facing role? So far, the High Court and Court of Appeal have held that the fact that the customer was assaulted on the employer's premises by an employee and that part of his job was to interact with customers, albeit a relevant factor, was not sufficient to bring a close enough connection to attract vicarious liability.