The start of a new year is always a time for reflection and contemplation of the next 365 days (or 366 days for us in 2016). This represents a good time for those involved in employment law and HR to take stock of some of the key changes to employment expected over the next 12 months. Here is our (non-comprehensive) list of the bigger developments to look out for.
1. The National Living Wage
In July 2015, George Osborne shocked some when he announced the introduction of a National Living Wage in his Budget. As of 1 April 2016, this premium hourly rate will come into effect meaning employers will have to pay their workers aged 25 and over at least £7.20 per hour. Part of the reason the Government opted to take this “top up” approach was the belief that too many employers were only paying staff the minimum wage in the knowledge that income would in effect be supplemented by the state through Income Support, Working Tax Credits, Housing Benefit, etc. The idea of a wage “premium”, as opposed to a simple increase to the minimum wage rates, is to reinforce the notion that employers will now be expected to take greater responsibility in ensuring their workforces are remunerated to allow for a minimum standard of living.
The Living Wage will initially be set at a rate of £7.20 per hour. This figure will be periodically reviewed by the Low Pay Commission who will recommend any future increases to the Government.
Not all workers will be eligible. Only workers 25 and over will be eligible for the Living Wage, with no increase being due to workers under 24 or apprentices. Nevertheless, this remains the major change and will affect employers of all sizes and in most sectors.
2. Gender pay gap reporting requirements
The gender pay gap has long been a central issue in employment law and wider society. Section 78 of the Equality Act 2010 provided the Government with the power to compel certain employers to “publish information relating to the pay of employees for the purpose of showing whether, by reference to factors ... there are differences in the pay of male and female employees”.
To date, Section 78 has never been brought into force: however this is due to change this year. Section 147 of the Small Business, Enterprise and Employment Act 2015 requires that the Government must by 26 March 2016 introduce regulations for the “purpose of requiring the publication of information showing whether there are differences in the pay of males and females”.
While we have yet to see details of the regulations, what is known is that it will affect all private sector employers who have 250 or more employees. What is not yet known is the full extent of information the Government will expect employers to produce:
- How much detail will be required?
- Where will the information be published?
- How much notice will employers have to produce their reports?
- Will employers be afforded the opportunity to qualify their reports (e.g. provide additional information which would help objectively justify why there may be a discrepancy between male and female employees in their workforce)?
- Are there likely to be any confidentiality issues?
It is, however, expected that these issues will be addressed in the coming months.
3. Trade Union Bill
After a winter of strikes affecting the London Underground and the Caledonian Sleeper railway services– as well as this week’s junior doctor strike in England – trade union reform is on its way.
The Trade Union Bill, which is still being debated in the House of Lords, is likely to come into effect in the next few months. As covered in a previous Miller Samuel blog, the Bill will make widespread changes to the role and nature of trade union relations and the overall powers unions will have in influencing or changing employer policy and upholding members’ rights, including:
- Qualifying further the voting requirements for union ballots.
- Introduction of a longer “notice of industrial action” period.
- Use of agency workers as cover.
- Enhanced disclosure of information requirements.
Crucially, these changes tend towards being more beneficial to employers at the expense of unionised employees. On first glance, the effect of the more stringent ballot voting requirements will be to make industrial action more difficult for unions.
However, given the loyalty which many workers have to their unions, the opposite effect may be brought about – with members ensuring they vote on all ballots – meaning there is less scope for compromise between union and employer in the long run.
Only once the Trade Union Bill has been formally passed into law will we begin to see the effect of these changes and what impact they will have on the employer-union relationship in practical terms.
4. Immigration Bill – employment of foreign workers
Like the Trade Union Bill, this piece of legislation is still making its way through Parliament. Unlike the Trade Union Bill, the implications of this legislative change are far more obvious at this stage with the creation of two new criminal offences: “illegal working” and “employing illegal workers”.
Previously, the focus has been much more on penalising employers who hire those who have no right to work or remain in the UK or who have failed to take the necessary steps to verify job applicants’ immigration status. The UK Border Agency has since February operated a civil enforcement against employers who use illegal workers.
Clause 8 of the Immigration Bill means that any person who unlawfully takes up employment in the UK may also now face criminal sanction as a result (such as fine, imprisonment or both). However, the Immigration Bill will also extend the scope of existing proceeds of crime legislation to allow the wages of an illegal worker to be confiscated.
Employers should not rest on their laurels when it comes to verifying the immigration status of prospective workers as employers too will face stiffer criminal penalties for failing to take proper precautions here.
5. Exclusivity clauses – strengthened powers of enforcement
While exclusivity clause contained in zero hours employment contracts have been banned since May 2015 – by virtue of Section 153 of the Small Business, Enterprise and Employment Act 2015 – anecdotal evidence suggested that some employers were ignoring this.
As of 11 January 2016, this prohibition has been strengthened through the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015. The effect of these regulations is to give a zero hours worker a specific right to raise a claim of unfair dismissal at the employment tribunal were the sole or principal reason for dismissal was the breach of an exclusivity clause, giving the prohibition on exclusivity clauses for zero hours workers now has some bite.
Employers who engage zero hours staff must therefore be alert to the fact they cannot prevent their zero hours workers taking up employment elsewhere. Where it is imperative from a commercial outlook that an employer’s zero hours workers cannot be allowed to work elsewhere, the only option now is to provide them with a set number of working hours – therefore removing their status as zero hours workers.
6. Consultation on extending Shared Parental Leave to grandparents
The new concept of Shared Parental Leave was introduced in April 2015 allowing working mothers of babies born on or after 5 April 2015 to shorten their maternity leave and allow their partner to use the untaken period by way of shared parental leave instead.
The Government has now published plans to launch a consultation in 2016 with a view to extending the Shared Parental Leave scheme to grandparents by 2018. This will hopefully help single parents who may not qualify for Shared Parental Leave, while at the same time protect working grandparents who may feel compelled to retire early or leave their jobs to help with childcare. However, there remain several inherent issues with this proposed expansion of the Shared Parental leave scheme and it will be interesting to see what solutions these consultations propose.
7. Exit payments for public sector workers
2016 will also mark the year when compensation payments made on termination of employment will become regulated. There are two draft regulations in this area:
- The Repayment of Public Sector Exit Payments Regulations 2015 – this will require public sector employees earning £100,000 or more must repay their settlement agreement payments if they have returned to work in the same public sector organisation within 12 months of leaving; and
- The Public Sector Exit Payments Regulations 2016 – this will place a statutory cap a public sector employee may receive as a settlement payment at £95,000.
These changes will affect all senior employees who work for public sector organisations where employment and remuneration practices are the responsibility of the UK government, including those in Scotland working for non-devolved public bodies such as the Competition and Markets Authority or the Home Office.
As always, we at Miller Samuel are happy to discuss whatever employment issues, concerns or worries you may have and can always provide you with the most up to date and current employment law advice at whatever time of the year.
Employment Lawyers: Contact Us
If you think you will be affected by any of these changes or want to speak to a solicitor about employment law advice, contact us today using our online contact form.
