Work Right

Russell Dann, Associate, Clarkslegal LLP on changes and developments in employment law.

There are various changes which will impact on employment over the next 12 months. Some of these relate to Brexit, others to the postponement due to the pandemic of many employment law changes that were to take place in 2020. Some, however, are more recent developments.

 

Employment Bill

In December 2019, the Queen’s speech included references to a new Employment Bill but its introduction was delayed, probably due to the pandemic. The Bill is anticipated this year and it is expected to incorporate many of the measures identified in the government’s Good Work Plan.

The Bill is likely to include the following:

  • Extended redundancy protection for new mothers

If a woman is selected for redundancy while on maternity leave, she has enhanced rights to be offered a relevant alternative vacancy without a competitive interview. The government is expected to extend this protection for six months after a woman has returned from maternity leave as a way of tackling pregnancy and maternity discrimination relating to redundancy decisions.

 

  • Unpaid carers’ leave

In March 2020, the government issued a consultation paper proposing the introduction of a new right for unpaid carers to have an additional week of (unpaid) leave per year. Consultation closed in August 2020 and, while the response has not yet been published, it is anticipated that the new right will be included in the Employment Bill.

 

  • New right to neonatal leave and pay

The government’s response to a 2019 consultation confirmed its intention to implement a new right for parents to take an additional week of leave for every week their baby is in neonatal care (up to a maximum of 12 weeks).

The leave is expected to be available to all employees, with no qualifying period of service necessary to be eligible. However, to receive pay for the neonatal leave, it is expected that a qualifying period of 26 weeks’ service for those earning above the minimum pay threshold will apply.

There have been no further details published on the new right, including the level of the neonatal pay. It is anticipated that this right will be included in the Employment Bill.

 

  • A new single enforcement body for employment rights

A new body enforcing employment rights is anticipated, with the aim of ensuring that workers are better informed of their rights whilst supporting businesses to guarantee legislative compliance. This would replace the current patchwork of enforcement carried out by HMRC on minimum wage compliance the Gangmasters and Labour Abuse Authority on illegal labour exploitation and minimum wage and the Employment Agency Standards Inspectorate of the rights of agency workers. It would specifically not include the remit of the Health and Safety Executive, which will remain separate.

If it is introduced, enforcement powers are expected to include statutory sick pay, minimum wage, unpaid tribunal awards and publicising employment rights.

Further details are awaited but there is a possibility that it will be omitted from the Employment Bill because the government has not yet replaced the outgoing Director of Labour Market Enforcement or published the UK Labour Market Enforcement Strategy for 2020-2021 which he prepared at the government’s request and submitted in mid-2020.

 

  • A new right to request a more predictable and stable contract

With the aim of addressing the uncertainty of zero-hour and variable contracts, those engaged under such contracts could be given the right to request a more ‘predictable’ contract after 26 weeks of service. This was the subject of a 2019 consultation of which the government’s response is yet to be published.

This could impact the gig economy in particular. Contrary to some media briefing, the recent decision by the Supreme Court confirming that the Uber drivers in the claim were workers rather than self-employed contractors did not effect flexibility for either party. There was, and still is, no obligation for Uber to offer any work or for drivers to accept any.

However, if the government does introduce this new right it will make a difference. Where, as in the Uber case, the nature of the working relationship is that the individuals providing the service are in a subordinate and dependent relationship controlled by the company using their services, the new right would allow them to request more regular hours.

 

IR35 

Changes to the off-payroll tax legislation, IR35, were due to take effect in 2020 but were deferred by a year due to the pandemic so now come into force on 6 April 2021. The changes impact medium and large businesses in the private sector who engage self-employed contractors via an intermediary, usually in the form of a personal service company (PSC).

From 6 April 2021, the responsibility for accounting for the income tax and NI payments of individuals offering their services through an intermediary will shift to the party that pays for the individual’s services. All consultant contracts via intermediaries will have to make it clear whether the individual falls within IR35 or not.

In anticipation of these changes, it is essential that medium and large businesses carry out an assessment to identify any self-employed contractors providing services to their organisation who are engaged via an intermediary and determine whether the IR35 rules apply. If they fail to do this, they will face the tax bill and any fine imposed by HMRC for non-compliance.

The government’s online tool can assist in establishing whether a company is responsible for deducting income tax and national insurance contributions at source when paying contractors under the new rules.

The rule changes do not create any employment rights in themselves and, in theory, the test used by HMRC to determine if work is employment for tax purposes is not identical to the test used by employment tribunals to decide if an individual is self employed or not. In reality, the tests are very similar and it is unlikely that someone whose pay is subject to income tax and National Insurance will accept not having at least the statutory rights to paid holiday, sick pay and national minimum wage which apply to workers

 

Brexit

The deal between the EU and UK includes a commitment that the UK must not reduce or weaken the employment rights in place on 31 December 2020.

This covers fundamental rights including those relating to working time and working conditions, health and safety, information and consultation rights, restructurings, and transfers of undertakings. There are also separate commitments relating to the road transport sector in respect of working time and rest breaks.

This restricts the government from making major changes to employment law in Great Britain (Employment law is devolved in Northern Ireland, meaning it will be for the Northern Ireland Assembly to legislate to amend or repeal retained EU workers’ rights) but will not prohibit changes entirely: the “weakening of” rights is only prohibited in circumstances which will impact trade or investment. Under the deal, the EU can take “appropriate rebalancing measures” in the event the UK is found to have weakened rights that materially impact trade or investment.

As a result of this we do not anticipate significant changes to statutory employment law rights in 2021. In January, the government did appear to have been considering consulting on changes to the Working Time Regulations including the 48-hour weekly average maximum but that seems to have been shelved for now.

However, the picture regarding case law is subtly different because employment tribunals are no longer bound by European Court of Justice (ECJ) decisions. There is currently little guidance on disregarding previous ECJ decisions and we expect tribunals to adopt a cautious approach to this in the short term.

One area in which we can expect developments over time will be holiday pay. This is because many of the key cases on including overtime, bonuses and commission in holiday pay calculations were determined by ECJ decisions rather than domestic statute law and UK employers may seek to argue that they no longer apply.

 

Furlough

At the time of writing, the furlough scheme is due to end on 30 April 2021. However, it is widely anticipated that the budget on 3 March will include an announcement that the furlough scheme is being extended again. If it is extended, it will probably be for at least three months, given that the government’s road map out of the pandemic does not anticipate coronavirus restrictions being completely removed before 21 June 2021.

When the last extension was announced, the cut off date for eligibility was extended to workers who were on the employer’s payroll on 30 October 2020. The monthly cap on the number of employees in respect of whom employers could claim reimbursement under the scheme was also removed.

It is not yet known whether any extension to the scheme will extend the eligibility date again, reintroduce the monthly cap or bring back the employer contributions to furlough pay which were a feature of the scheme in September and October 2020.

 

The Employment (Allocation of Tips) Bill

It is anticipated that this will be enacted in 2021 making it a legal requirement that payment of all tips and service charges go to workers, ensuring fair distribution of sums under a new statutory Code of Practice.

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