What is on your HR agenda for the year? After three years of relatively few employment law legislative changes, 2020 sees a return to the pre-Referendum level high number of legislative changes employers need to be aware of. Highly significant case law developments are also anticipated, with a number of long-running high profile cases reaching the Supreme Court this year.
With more detail of legislative plans announced in January, Gowling WLG's Employment, Labour & Equalities team brings you a quick round up of the employment law developments that should be on your radar over the next 12 months:
Ten Key Cases
The Supreme Court will be busy with employment law related cases with eight of our 10 2020 key cases:
1. Royal Mencap Society v Tomlinson-Blake
Where a worker is required to work a number of "sleep-in" night shifts at the employer's premises, and be available in case of an emergency, does the full night shift constitute 'working' for the purposes of the National Minimum Wage (NMW)? Alternatively, is the worker only 'working' for NMW payment purposes when they are awake to carry out any relevant duties?
In one of the most controversial employment law cases of 2018, the Court of Appeal overturned numerous Employment Appeal Tribunal (EAT) judgments to rule that the only time that counts for national minimum wage (NMW) purposes during sleep-in shifts is the time when the worker is required to be awake for the purpose of working (Sleeping on the job take two: National minimum wage and 'sleep-in' shifts).
This surprise Court of Appel judgment had a huge impact on the care sector. Care providers working on small margins concerned about staffing costs and their back pay liabilities were relieved, while often low paid sleep-in workers were disappointed.
The Supreme Court will now consider the issue on 12 and 13 February 2020.
2. Uber BV and ors v Aslam and ors
This long-running case that has become the poster-child for gig economy worker status cases. Back in December 2018, the Court of Appeal upheld the findings to date that Uber drivers are 'workers' entitled to national minimum wage (NMW), paid annual leave, and whistleblowing protection, but only by a majority. A dissenting judgment in favour of independent contractor status suggested all was still to play for with a further appeal surely on the cards.
The Supreme Court will now consider the tricky issue of 'worker' status for employment law purposes on 22 and 23 July 2020.
As held by the majority of the Court of Appeal, will the Supreme Court agree that much of the contractual documentation could be disregarded as it did not reflect the reality of the agreed working relationship? Or, as held by the minority, did the contractual documentation reflect the, albeit unfairly disadvantageous, reality of what the parties agreed?
This judgment will have with important implications for a number of other 'gig economy' employment status cases pending before the tribunals and EAT.
3. Chief Constable of Leicestershire Police v Hextall
Where employers offer enhanced contractual maternity pay to mothers, can they only offer statutory shared parental leave (ShPL) pay to fathers? Does a failure to match contractual enhancement for fathers taking ShPL amount to direct or indirect sex discrimination?
Last year, the Court of Appeal emphatically held that employers who pay enhanced contractual maternity pay but only statutory ShPL pay do NOT directly or indirectly discriminate against men and are not in breach of equality of terms (equal pay) legislation.
At the centre of this highly significant judgment is the Court of Appeal's conclusion that birth mothers on maternity leave are in materially different circumstances to men (or women) on ShPL, and that this distinction does not simply expire at the end of the two week compulsory maternity leave period.
Permission to appeal to the Supreme Court is currently being sought. Will the Supreme Court agree to further consider whether there is a point when maternity leave no longer protects a woman's biological condition following pregnancy, or the special relationship between mother and baby, and instead becomes akin to childcare?
4. Brierley v Asda Stores Ltd
Most of the large supermarkets are in the grips of large-scale equal pay claims with predominantly female retail shop floor employees seeking to compare themselves with a predominantly male distribution depot employees.
Can private employers avoid equal pay claims through corporate structures that physically separate female-dominated and male-dominated workforces? Last year, the Court of Appeal confirmed that common terms can apply as between two separate establishments (a store and a depot) not only where they apply to actual employees in the relevant classes working there but also where they would apply, even if the claimant's class of employee would never in practice be employed at the comparator's establishment (and vice versa). For example, an in-store baker would be paid the same even if she was hypothetically employed as a baker based at a distribution depot (it doesn't matter that you would never have a baker based at a depot). For both the retail staff and the distribution staff, Asda applied common terms and conditions wherever they worked and so the female retail staff can compare themselves with the male distribution staff. In addition, the fact that the Asda Executive Board was ultimately responsible for pay across the two groups also satisfied the "single source" test under EU law.
On 14 and 15 July 2020, the Supreme Court will consider this comparator point.
5. Various Claimants v WM Morrison Supermarket PLC
Is an employer vicariously liable for the data protection breaches of a rogue employee who uploaded payroll data of thousands of employees to the internet? So far the courts have held that the employer is liable for the actions of its employee who had access to the information, albeit for very different and limited purposes. The Court of Appeal expressed that it 'troubled' by the fact that the employee was motivated by hostility to the employer. However, when considering vicarious liability, the employee's motive is irrelevant.
The Supreme Court considered this thorny issue back in November 2019 with judgment expected to be handed down sometime in the first few months of this year
6. Dunkley and Ors v Kostal UK Ltd
Section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 makes it unlawful for employers to offer incentives to workers with the sole or main purpose of undermining collective bargaining by the union. But just how wide is the scope of section 145B? In particular, if acceptance of a direct offer would mean that at least one term of employment will be determined by direct rather than collective agreement, is that sufficient to amount to an unlawful inducement, even if other terms continue to be determined collectively?
Last year the Court of Appeal held that where workers' terms of employment are determined by collective agreement, s145B will only come into play if the employer's purpose is to achieve the result that one or more of the workers' terms of employment will no longer be determined by collective agreement on a permanent basis. It is not sufficient if the employer's purpose is merely to ensure that the term or terms will, on this one occasion, not be determined collectively.
Unsurprisingly, the union involved in this case is not happy with this judgment and supporting the employees in seeking permission to appeal to the Supreme Court.
7. The Harpur Trust v Brazel (UNISON intervening)
Should holiday entitlement be pro-rated to prevent term-time only casual workers from receiving a disproportionately higher level of holiday pay than full-time or part-time workers who work throughout the whole year? Last year, the Court of Appeal held that while the pro-rata principle for holiday entitlement and related pay applies in the case of full-year part-time workers, it does not apply in the case of part-year workers such as term-time only teachers. As such, term time only workers are entitled to 5.6 weeks holiday based on their weekly work pattern during the term. Also, the express provisions for calculating holiday pay for workers with variable hours contained in the Working Time Regulations (WTR) cannot be overridden by capping annual holiday pay at 12.07% of annualised hours for ease of calculation. The calculation set out in the WTR must be used even where it results in part-year workers receiving a higher proportion of their annual earnings as holiday pay.
Unsurprisingly this case is also on appeal with permission being sought from the Supreme Court
8. Chief Constable of the Police Service of Northern Ireland and another v Agnew and others
Also, in relation to holiday pay, the Northern Irish Court of Appeal (NICA) challenged the perceived wisdom on holiday underpayment back pay claims last year. It held the Working Time Regulations (Northern Ireland) (identical relevant provisions to the Working Time Regulations) must be construed as allowing claims for underpayments for holiday pay that were part of a series of underpayments potentially going back a number of years. It also rejected the 2015 EAT judgment in Bear Scotland Ltd v Fulton and other cases to hold that a series is not ended as a matter of law by a gap of more than three months between unlawful deductions related to holiday pay.
Permission is currently being sought to appeal to the Supreme Court.
Two key Court of Appeal judgments to look out for this year are:
9. Heskett v Secretary of State for Justice
It has been established for some time that an employer cannot justify discriminatory treatment solely because the elimination of such treatment would involve increased costs. However, while cost alone cannot justify a discriminatory act, cost plus some other factor (the 'cost plus' approach) may do so.
Is 'absence of financial means' capable of being the 'plus' factor justifying indirect age discrimination or is it still just 'cost'? The EAT upheld a tribunal's decision that the aim of seeking to break even year-on-year by making decisions about the allocation of resources is capable of justifying indirect age discrimination when amending its pay progression scale. The EAT held there is a distinction to be drawn between absence of means and an employer seeking impermissibly to place reliance solely on cost.
The Court of Appeal is due to consider the 'costs alone' or 'costs plus' question in May.
10. The Queen on the application of The Independent Workers Union of Great Britain (IWGB) v The Central Arbitration Committee (CAC)
Back in 2018, the IWGB began a novel attempt to obtain union recognition from an end user in relation to a group of outsourced workers. The CAC rejected the application for union recognition The IWGB is now seeking to challenge that rejection as being in breach of article 11 (trade union rights) of the European Convention of Human Rights. In December the IWGB obtain permission to appeal to the Court of Appeal and is currently waiting to be listed for later this year. If successful, and it is a big 'if', this would have significant implications introducing a concept of joint employment for collective bargaining purposes.
Nine April changes
1. Taxation - termination payments
From 6 April, termination payments above £30,000 will become subject to class 1A NICs (employer liability only) aligning the employer NICs treatment of termination awards with the income tax treatment.
2. Taxation - IR35 (off-payroll working)
From 6 April existing public sector restrictions and rules on IR35 (workers providing services through intermediaries) will be extended to medium and large private sector organisations. Under the controversial change, instead of the contractor having responsibility for determining their employment status for tax purposes, the client or hirer will need to make the call. They could be liable for any missing tax if they get the decision wrong. (See IR35 private sector reform: Get ready for April changes).
3. Holiday Pay
From 6 April, the reference period for calculating holiday pay for those with variable pay will increase from 12 to 52 weeks (or the number of complete weeks for which the worker has been employed if fewer than 52). This will allow for consistent holiday pay calculation over the year rather than holiday pay being inflated (if holiday is taken after a busy period) or deflated (if holiday is taken after a quiet period) for workers with variable hours.
4. Agency Workers
From 6 April 2020, the 'Swedish derogation' (which excludes agency workers from the right to the same pay as directly-recruited workers if they have a contract of employment with the agency) will be repealed.
Also from 6 April 2020, all employment businesses must provide every agency worker with a 'key facts' page (type of contract, minimum rate of pay that can be expected, how they will be paid etc…).
5. Written Employment Particulars
From 6 April 2020, all employers must provide a Statement of Employment Particulars to all 'workers' (currently only employees) to be received on day one of employment commencing (currently within two months). Some new additional particulars must also be set out including more detail on working hours, benefits, paid leave, probationary periods and required training.
These changes will apply to employees and workers whose employment begins on or after 6 April. "Existing employees" can request a new post 6 April compliant statement of employment particulars which must be provided within one month of the request.
6. Parental Bereavement Leave
From 6 April 2020, all employees who lose a child under the age of 18, or suffer a stillbirth after 24 weeks of pregnancy, will be entitled to two weeks' statutory leave to be taken in one block or as two separate blocks of a week. The leave can be taken any time up to 56 weeks after the death. Employees with at least 26 weeks' service, who meet minimum earnings criteria, will also qualify for Statutory Parental Bereavement Pay.
7. NMW annual increase
On 1 April 2020, the National Minimum Wage rates will increase:
- rate for 25+ year olds (the national living wage) from £8.21 to £8.72 per hour
- rate for 21 to 24 year olds from £7.70 to £8.20 per hour
- rate for 18 to 20 year olds from £6.15 to £6.45 per hour
- rate for 16 to 17 year olds from £4.35 to £4.55 per hour
- rate for apprentices from £3.90 to £4.55 per hour
8. Statutory Pay Rates annual increase
The annual increase to statutory payments is:
- Statutory maternity, paternity, adoption and shared parental pay will be £151.20 (up from £148.68) from 5 April 2020.
- Statutory sick pay weekly rate will be £95.85 (up from £94.25) from 6 April 2020.
9. ET Awards
The annual increase to employment tribunal compensation limits is expected to come into force on 6 April 2020. The increased limits have yet to be announced
Eight Queen's Speech announced legislative plans
As announced in the December 2019 Queen's Speech, the Government intends to introduce a new Employment Bill which will introduce:
1. Neonatal Leave and Pay
Introduce a new right for parents to each take one week of Neonatal Leave and Pay for every week that their baby is in neonatal care, up to a maximum number of weeks (a cap) for babies who have spent a minimum of two continuous weeks in neonatal care immediately after birth (essentially Maternity and Paternity leave and pay periods will be extended).
2. Redundancy protection for pregnant employees
Currently, if a woman's role is made redundant while she is on maternity leave, she is entitled to be offered suitable alternative employment by her employer or associated employer if such a vacancy exists. Essentially, she has priority over other employees whose role is made redundant at the same time. This priority period will be extended at both ends. It is proposed that the period will start from the point at which a woman notifies her employer that she is pregnant and extended by an additional six months after she has returned to work
3. Unpaid carer's leave
Introduce an entitlement to one week's leave for unpaid carers. Details of the new leave entitlement have yet to be announced
4. Work security
Introduce a new right for all workers to request a more predictable and stable contract after 26 week's service similar to the right to request flexible working.
5. Flexible working to be the norm
Subject to further consultation, the Government intends to make flexible working the default starting position unless employers have a good reason not to.
6. Labour market enforcement
A new single labour market enforcement agency is to be created to better protect workers' rights.
7. Tips and service charges
New provisions to require employers to pass on all tips and service charges to workers in full (without an administration fee deduction) to be supported by a statutory Code of Practice, to ensure that tips be distributed on a fair and transparent basis.
8. Ill-health
In addition to the above Employment Bill provisions the Government also set out an intention to take action to reduce ill health-related job loss. As part the plan, it is proposing to introduce a right to request work/workplace modifications on health grounds. This will allow requests to be made by non-disabled employees similar to the existing right to request flexible working.
Seven more likely legislative reforms
1. Sexual harassment & non-disclosure agreements (NDAs)
The issue of sexual harassment in the workplace continues to attract headlines. The Government is currently considering proposals to:
- Introducing a duty to prevent harassment in the workplace.
- A new Statutory Code of Practice.
- Re-introducing explicit protections against third party harassment.
- Extending protection to interns and volunteers.
- Extending time limits for bringing a tribunal claim.
On 15 January 2020, the EHRC published new technical guidance on sexual harassment and harassment at work forming the first draft of the new Statutory Code of Practice, to be finalised later this year.
As regards non-disclosure agreements, the Government has stated that it intends to legislate "when Parliamentary time allows" to:
- ensure that a confidentiality clause cannot prevent an individual disclosing to the police, regulated health and care professionals or legal professionals;
- make the limitations of a confidentiality clause clear to those signing them;
- improve independent legal advice available to an individual when signing a settlement agreement (not only on nature of the confidentiality requirement but also the limitation of clauses);
- produce guidance on drafting requirements for confidentiality clauses; and
- introduce "new enforcement measures" for confidentiality clauses that do not comply with legal requirements.
2. Review of parental rights
Last July, the Government announced it is considering "high level" reforms that will involve trade-offs from the existing system including around how leave is split between parents, flexibility, costs, and timing of leave (around birth or when child older).
The review is considering options ranging from tweaks to exiting forms of leave to a bold 'wiping the slate clean and start again' to develop a new modern comprehensive suite of family-related policies.
Reform proposals (at least headline level) are expected to be floated later this year.
3. Employment Status
Like the last year few years, determining worker status in modern workplaces will continues to be a hot topic.
The Department for Business, Energy & Industrial Strategy (BEIS) and HM Revenue & Customs (HMRC) ran a joint public consultation on Employment Status back in 2018 on possible codification of an employment status test and in particular the options of:
- A 'precise criteria' test: a test based on more precise and objective criteria, such as length of engagement, the percentage of an individual's income that comes from one employer, and where the work is done;
- A 'precise structure' test: a test based on a clear order, hierarchy or weighting of the criteria; or
- A less complex test by reducing the number of factors to consider.
As we anticipated, trying to encapsulate the nuanced factors developed over years of case law into legislation is no easy feat and aligning the three employment law statuses (employee, worker or self-employed) with the binary tax system (employee or self-employed) complicates matters even further.
In 2019 we expected further detail on if and when a new statutory test would be introduced. They never materialised. Fingers crossed for 2020.
4. Work security
The Government's December 2018 'Good Work Plan' announced proposals to tackle 'one-side flexibility' for low paid zero hour contract and casual workers. Proposals include:
- An increase from one week to four weeks the period required to break continuity of employment for the purpose of accruing employment rights;
- a right to reasonable notice of work schedules; and
- compensation for shift cancellation or curtailment without reasonable notice.
We await confirmation of whether any of the above will be taken forward.
5. NMW: salary sacrifice
Back in December 2018, the Government launched a consultation on the impact of the NMW rules on salary sacrifice schemes, in particular whether employers are withdrawing schemes from low-paid workers in order to avoid non-compliance with the NMW.
Details of any proposed changes to address this issue are expected tis year.
6. Public Sector employees
Since 2016 there have been a series of consultations and announcements about the creation of a statutory obligation to repay public sector exit payments in certain circumstances ('clawback' provisions), and the introduction of a statutory cap of £95,000 on such payments.
Last year draft regulations were published on the introduction of a statutory cap. If and when these regulations will be brought into force is still awaited.
7. Ethnicity pay gap reporting
At the end of 2018 the Government consulted on the possible introduction of mandatory ethnicity pay reporting along similar lines to gender pay gap. It appears to have been widely accepted that simply cutting and pasting the methodology used in gender pay gap reporting is unlikely to be suitable as particular issues arise from small statistical groups as well as collection and classification of ethnicities information.
We expect more on how such pay reporting can be taken forward later this year.