Trends 2018: What’s new in UK employment law?

2018 is the year that we could see changes to the UK definition of ‘worker’ status as a result of the Taylor Review into the gig economy. His review makes the radical suggestion that people working in the gig economy should automatically be assumed to be “workers” unless self-employed status can be proven – with the burden of proof falling on employers.

The Review likewise proposes imposing punitive fines on employers that falsely classify workers as self-employed, thereby denying them the benefits of worker status, which include holiday pay, a guaranteed minimum wage, pensions and the like.

But 2018 will also be the year in which large employers will need to publish their gender pay reporting statistics for the first time. As a result, we are likely to see positive changes in diversity and inclusion practices, and possibly an increase in the number of equal pay audits.

This article highlights key anticipated changes to employment legislation over the year ahead, the results of ongoing consultations and some keenly awaited judgements that could influence employment law going forward.

Gig economy issues

The government’s 2017 Autumn Budget statement indicated that a discussion paper would be published as part of its response to the Taylor Review. The aim was to explore the options for longer-term reform in order to make employment status tests for both employment rights and taxation clearer. In the meantime, the government said it would work with stakeholders to ensure any potential changes were carefully considered.

Several cases in recent years have seen individuals, who were ostensibly engaged as self-employed contractors by companies such as Pimlico Plumbers, Uber, CitySprint and Addison Lee, claiming they should have “worker” or “employee” status in order to qualify for the national minimum wage, holiday pay and other rights. The trend resulted in these individuals being recognised as workers in the gig economy, despite having written contracts between them and their “employer” saying otherwise.  

Bucking the trend, however, was Deliveroo. In November 2017, it went before the Central Arbitration Committee (CAC) to defend an application by an independent trade union for worker status on behalf of its riders – and won. While the union could appeal the CAC decision by way of judicial review, it is not actually binding on employment tribunals as both are separate jurisdictions.

Moreover, the test before the CAC to recognise worker status was slightly different than other cases prosecuted under the Employment Rights Act 1996. Nonetheless, the decision could still be used to persuade an employment tribunal against granting worker status in employment matters.

Uber

Uber, meanwhile, lost its challenge over worker status when it appealed to the Employment Appeals Tribunal (EAT). The decision was delivered in November 2017. But the ride-hailing service is expected to launch another appeal on the matter, leapfrogging the Court of Appeal and going straight to the Supreme Court, which is considering a similar issue in relation to Pimlico Plumbers. 

In the Uber case, the overall question of “when the drivers are working, who are they working for?” was considered by the EAT and was also deemed the determining question. The possibility that drivers were operating as separate businesses and entered into direct contracts with passengers was weighed up, but in reality the relationship between Uber and the drivers was the main determinative.

Other relevant factors included the scale of Uber’s operation and the fact that drivers could neither grow their businesses, establish business relationships nor negotiate terms with passengers beyond agreeing a lower fare - although Uber was still likely to take a percentage of the money earned based on the fare it had set. Finally, drivers also had to accept Uber’s business terms.

The EAT decision is significant for employers operating similar business models as they could now be illegally engaging people in a self-employed capacity who might, in fact, officially be classed as “workers”.

It is worth bearing in mind that all of these gig economy rulings are highly fact-sensitive. But in Uber’s case, the degree of control that it maintained over its drivers made the concept of genuine self-employment difficult to sustain.

Discrimination

A report based on a parliamentary enquiry into older people and employment launched by the Women and Equality Committee is due to be published this year. 

Equally, we can also expect the outcome of a consultation into amendments to the Equality Act 2010 as to whether caste discrimination should be made unlawful. The consultation, which closed in September 2017, considered whether to make an order under the Equality Act to include caste as an aspect of race discrimination, or whether it would be best simply to allow case law to develop naturally.

Although no review of the law surrounding dress codes will follow the publication last year of ACAS guidance on the area, it remains uncertain whether specific provisions such as requiring female employees to wear makeup are contrary to the provisions of the Equality Act 2010. The government’s position is that, while the law is clear, it is poorly understood.

But unfortunately, few cases are brought challenging discriminatory dress codes, which gives rise to unscrupulous employers exploiting workers in this area. As a result, the government is seeking to take a “persuasive enforcement approach” to clarify the legal situation – and, due to the apparent increase in sexual harassment cases reported in 2017 across various sectors, this field of discrimination law may well come to the fore in 2018.

Gender pay gap reporting

Large private and voluntary sector employers must now publish their first gender pay gap reports by 4 April 2018. At the time of writing, between 5% and 10% of employers covered by the regulations had uploaded their data to the government website.

The site is intended to make it possible to search and compare large employers’ gender pay data by reference to industry sector and, while it does not allow employers to upload a narrative alongside the published data, they can provide a link to their own website.

Narratives are key to providing additional information to employees and other interested parties, including trade and national press and prospective employees, and to explain apparent gender pay differentials. Getting these narratives right will be imperative for reputation management and to ensure that employees and prospective recruits understand that the organisation’s intention to work towards gender pay equality and improve workforce diversity.

National insurance contributions

Since April 2017, the only benefits that continue to gain from tax and national insurance contribution (NIC) relief are provided through salary sacrifice arrangements. These benefits include enhanced employer pension contributions, childcare benefits, equipment provided under the cycle-to-work scheme and ultra-low emission cars. The current childcare voucher scheme will be closed to new entrants from April 2018.

Simplification of taxation and termination payments

From 6 April 2018, exemption from income tax and NICs for termination payments up to a current threshold of £30,000 (US$40,112) will remain in place, and the employer’s NIC will be payable on amounts that are higher than £30,000. Revised draft legislation to this end was published in December 2016.

During 2018, we will monitor these changes and trends closely, but it looks like an interesting 12 months ahead!

Emma Bartlett is a partner at Charles Russell Speechlys LLP who advises on all aspects of employment law. She has particular expertise in dispute resolution and litigation, notably discrimination, whistleblowing and trade union issues. With a strong record in negotiating and resolving complex employment disputes, Emma is considered a skilled deal broker.

2018 is the year that we could see changes to the UK definition of ‘worker’ status as a result of the Taylor Review into the gig economy. His review makes the radical suggestion that people working in the gig economy should automatically be assumed to be “workers” unless self-employed status can be proven – with the burden of proof falling on employers.

The Review likewise proposes imposing punitive fines on employers that falsely classify workers as self-employed, thereby denying them the benefits of worker status, which include holiday pay, a guaranteed minimum wage, pensions and the like.

But 2018 will also be the year in which large employers will need to publish their gender pay reporting statistics for the first time. As a result, we are likely to see positive changes in diversity and inclusion practices, and possibly an increase in the number of equal pay audits.

This article highlights key anticipated changes to employment legislation over the year ahead, the results of ongoing consultations and some keenly awaited judgements that could influence employment law going forward.

Gig economy issues

The government’s 2017 Autumn Budget statement indicated that a discussion paper would be published as part of its response to the Taylor Review. The aim was to explore the options for longer-term reform in order to make employment status tests for both employment rights and taxation clearer. In the meantime, the government said it would work with stakeholders to ensure any potential changes were carefully considered.

Several cases in recent years have seen individuals, who were ostensibly engaged as self-employed contractors by companies such as Pimlico Plumbers, Uber, CitySprint and Addison Lee, claiming they should have “worker” or “employee” status in order to qualify for the national minimum wage, holiday pay and other rights. The trend resulted in these individuals being recognised as workers in the gig economy, despite having written contracts between them and their “employer” saying otherwise.  

Bucking the trend, however, was Deliveroo. In November 2017, it went before the Central Arbitration Committee (CAC) to defend an application by an independent trade union for worker status on behalf of its riders – and won. While the union could appeal the CAC decision by way of judicial review, it is not actually binding on employment tribunals as both are separate jurisdictions.

Moreover, the test before the CAC to recognise worker status was slightly different than other cases prosecuted under the Employment Rights Act 1996. Nonetheless, the decision could still be used to persuade an employment tribunal against granting worker status in employment matters.

Uber

Uber, meanwhile, lost its challenge over worker status when it appealed to the Employment Appeals Tribunal (EAT). The decision was delivered in November 2017. But the ride-hailing service is expected to launch another appeal on the matter, leapfrogging the Court of Appeal and going straight to the Supreme Court, which is considering a similar issue in relation to Pimlico Plumbers. 

In the Uber case, the overall question of “when the drivers are working, who are they working for?” was considered by the EAT and was also deemed the determining question. The possibility that drivers were operating as separate businesses and entered into direct contracts with passengers was weighed up, but in reality the relationship between Uber and the drivers was the main determinative.

Other relevant factors included the scale of Uber’s operation and the fact that drivers could neither grow their businesses, establish business relationships nor negotiate terms with passengers beyond agreeing a lower fare - although Uber was still likely to take a percentage of the money earned based on the fare it had set. Finally, drivers also had to accept Uber’s business terms.

The EAT decision is significant for employers operating similar business models as they could now be illegally engaging people in a self-employed capacity who might, in fact, officially be classed as “workers”.

It is worth bearing in mind that all of these gig economy rulings are highly fact-sensitive. But in Uber’s case, the degree of control that it maintained over its drivers made the concept of genuine self-employment difficult to sustain.

Discrimination

A report based on a parliamentary enquiry into older people and employment launched by the Women and Equality Committee is due to be published this year. 

Equally, we can also expect the outcome of a consultation into amendments to the Equality Act 2010 as to whether caste discrimination should be made unlawful. The consultation, which closed in September 2017, considered whether to make an order under the Equality Act to include caste as an aspect of race discrimination, or whether it would be best simply to allow case law to develop naturally.

Although no review of the law surrounding dress codes will follow the publication last year of ACAS guidance on the area, it remains uncertain whether specific provisions such as requiring female employees to wear makeup are contrary to the provisions of the Equality Act 2010. The government’s position is that, while the law is clear, it is poorly understood.

But unfortunately, few cases are brought challenging discriminatory dress codes, which gives rise to unscrupulous employers exploiting workers in this area. As a result, the government is seeking to take a “persuasive enforcement approach” to clarify the legal situation – and, due to the apparent increase in sexual harassment cases reported in 2017 across various sectors, this field of discrimination law may well come to the fore in 2018.

Gender pay gap reporting

Large private and voluntary sector employers must now publish their first gender pay gap reports by 4 April 2018. At the time of writing, between 5% and 10% of employers covered by the regulations had uploaded their data to the government website.

The site is intended to make it possible to search and compare large employers’ gender pay data by reference to industry sector and, while it does not allow employers to upload a narrative alongside the published data, they can provide a link to their own website.

Narratives are key to providing additional information to employees and other interested parties, including trade and national press and prospective employees, and to explain apparent gender pay differentials. Getting these narratives right will be imperative for reputation management and to ensure that employees and prospective recruits understand that the organisation’s intention to work towards gender pay equality and improve workforce diversity.

National insurance contributions

Since April 2017, the only benefits that continue to gain from tax and national insurance contribution (NIC) relief are provided through salary sacrifice arrangements. These benefits include enhanced employer pension contributions, childcare benefits, equipment provided under the cycle-to-work scheme and ultra-low emission cars. The current childcare voucher scheme will be closed to new entrants from April 2018.

Simplification of taxation and termination payments

From 6 April 2018, exemption from income tax and NICs for termination payments up to a current threshold of £30,000 (US$40,112) will remain in place, and the employer’s NIC will be payable on amounts that are higher than £30,000. Revised draft legislation to this end was published in December 2016.

During 2018, we will monitor these changes and trends closely, but it looks like an interesting 12 months ahead!

Emma Bartlett is a partner at Charles Russell Speechlys LLP who advises on all aspects of employment law. She has particular expertise in dispute resolution and litigation, notably discrimination, whistleblowing and trade union issues. With a strong record in negotiating and resolving complex employment disputes, Emma is considered a skilled deal broker.