There will be a number of important employment law developments in 2019.
Post-Brexit Immigration Rule Changes
Regardless of whether a deal on the UK’s exit from the EU is agreed, the rules around the employment of EU nationals will change sooner or later. Once the UK leaves the EU, free movement will end, although in practice this is likely to be delayed pending legislation to repeal the current arrangements. Also, it will take time to put in place the practical arrangements necessary to make this possible. The Government has confirmed that it will introduce a skills-based immigration system once the UK leaves the EU.
The Government has introduced a scheme under which EU workers already in the UK will be able to apply for “settled status”; to be able to live and work in the UK indefinitely. However, employers need to be aware that, going forward, the employment of workers from the EU is likely to be subject to restrictions in the same way as the employment of other foreign nationals; so recruitment processes will need to be adjusted accordingly. Recruitment and retention policies will certainly need to be reviewed for effective workforce planning.
Despite Government ‘reassurance’, there are practical steps employers can take now to reassure their European workers, and help them navigate the immigration maze. Employers should also be aware of the real risks in adopting a passive attitude. If you take no action, you risk employing illegal workers further down the line, and losing key non-UK staff, either because of illegality or uncertainty.
National Minimum Wage Rate Increases
The Government will increase the National Living wage (NLW), which applies to workers aged 25 and over, by 4.4% from £7.83 to £8.21 per hour from 1st April 2019.
At the same time, the National Minimum Wage (NMW) rates will be increased as follows:
- from £7.38 to £7.70 per hour for 21 to 24 year olds;
- from £5.90 to £6.15 per hour for 18 to 20 year olds;
- from £4.20 to £4.35 per hour for 16 and 17 year olds; and
- from £3.70 to £3.90 per hour for apprentices;
If you provide some form of staff housing as part of the contractual arrangements, then the daily accommodation offset will increase to £7.55.
Increased Statutory Rates
The weekly rate for Statutory Sick Pay is expected to increase from £92.05 to £94.25 from 6th April 2019.
The weekly amount for statutory family pay rates is expected to increase for 2019/20. The increase normally occurs on the first Sunday in April, which in 2019 is 7th April. The new rate will apply to maternity pay; adoption pay; paternity pay; shared parental pay; and maternity allowance.
The current weekly rate of Statutory Maternity Pay is £145.18 or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate. This rate is rising to £148.68 from 7th April 2019.
Also on 7th April 2019, the rates of Statutory Paternity Pay and Statutory Shared Parental Pay will to go up from £145.18 to £148.68 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate).
The rate of Statutory Adoption Pay will also increase. This means that, from 7th April 2019, Statutory Adoption Pay is payable at 90% of the employee’s average weekly earnings for the first six weeks, with the remainder of the adoption pay period at the rate of £148.68, or 90% of average weekly earnings if this is less than £148.68.
The rates for Statutory Redundancy Pay, Statutory Guarantee Pay and Tribunal Awards are not yet announced; we will send an update as soon as the new rates are published.
Preparing for Parental Bereavement Leave and Pay
The Government has confirmed that it intends to introduce a right for bereaved parents to take paid time off work. Under the current proposals, bereaved parents will be able to take leave as a single two-week period, as two separate periods of one week each, or as a single week. They will have 56 weeks from their child’s death to take this leave.
The new right is expected to come into force in April 2020, but employers can start preparing for it during 2019, and could decide to introduce their own bereavement leave policy if they don’t already have one.
Extend Itemised Pay Statements to Workers
From 6th April 2019, the right to an itemised pay statement will extend to workers, not just employees.
Further, where a member of staff’s pay varies according to time worked, employers will have to include on the itemised pay statement the total number of hours worked for which variable pay is received. This can be done either as an aggregate figure, or as separate figures for different types of work, or different rates of pay.
If you have ‘workers’, then you need to ensure they get proper pay statements, and if your payslips for employees are ‘minimalist’, then you need to be changing them to conform to these new requirements.
Significant Developments in the Pipeline
We are now seeing the development of further legislation as per the recommendations made in the Taylor Review of Modern Working Practices, i.e. the Good Work Review. The Government claims it is the biggest reform of employment law in 20 years.
Proposed changes, dates yet to be confirmed, include:
- Amending the rules on continuity of employment. This will increase from one week to four weeks as the period required to break continuity of employment, for the purpose of accruing employment rights. When this occurs, this will be a significant change for employers, particularly those that regularly employ casual and/or seasonal workers or temporary employees that are on either fixed term or open ended contracts.
- There will be legislation to streamline the employment status tests, so they are the same for employment and tax purposes, to avoid employers misclassifying employees/workers as self-employed. The Government accepts that ‘renewed effort’ should be made to align the tests, and will bring forward detailed proposals in this regard. The Government will also legislate to ‘improve the clarity of the employment status tests, reflecting the reality of modern working relationships’. Legislation to clarify employment status is, of course, welcome, but the difficulty is establishing clear definitions which are better than those we currently have. Nobody knows how to do that, and the Government has simply said that detailed proposals will be published in due course.
- A ban on employers making deductions from staff tips. Presumably this may be achieved by extending the existing unlawful deduction rules to cover tips, although at present this is not stated as to how this will happen.
- Limited proposals are there to tackle abuse of zero hour contracts. There will be a right to request a fixed working pattern for those who do not have one, after 26 weeks’ on a non-fixed pattern. Presumably this right will be similar to the right to request flexible working, i.e. a series of procedural requirements an employer must follow, but – broadly – considerable discretion for the employer to refuse, with very limited financial penalties if breached.
- There are also plans for a single enforcement body to ensure ‘vulnerable workers’ (there is no specific definition for who this term applies to) are better protected; create new powers to impose penalties on employers who breach employment agency legislation like non-payment of wages; and bring forward legislation to enforce holiday pay for vulnerable workers.
The Government appears to have prioritised the following:
- The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 comes into force on 6th April 2020. It provides that the Written Statement of Employment Particulars must be given from day one of employment. We have been advising our clients to do this for many years because it avoids uncertainty, so we recommend that it is sent along with your Handbook, with the offer letter so avoiding slip ups on day one, and just because it looks professional and, therefore, needs early action. It also changes the rules for calculating a week’s pay for holiday pay purposes, increasing the reference period for variable pay from 12 weeks to 52 weeks. This may make it easier for some employers to calculate out average holiday pay, especially where pay varies seasonally.
- The Agency Workers (Amendment) Regulations 2018 will abolish the Swedish Derogation for Agency Workers. It also comes into force on 6th April 2020. Current law gives employers the ability to pay agency workers less than their own workers in certain circumstances.
- The Employment Rights (Miscellaneous Amendments) Regulations 2019 extends the right to a Written Statement of Terms and Conditions to workers (previously just employees), also on day one, increases penalties for aggravated breaches of employment law from £5,000 to £20,000, and lowers the percentage required for a valid employee request for the employer to negotiate an agreement on informing and consulting its employees.
Other changes as listed will only affect those clients who employ more than 250 employees, thus classing them as large employers.
Start gathering evidence for Executive Pay Reporting
Rules coming into force on 1st January 2019 mean that UK quoted companies with more than 250 employees will have to report on ratios between the CEO and employees’ pay and benefits. The requirement applies to financial years beginning on or after 1st January 2019, so the first tranche of reporting will start in 2020. However, affected companies should gather their evidence in good time to be able to calculate their pay ratios by the deadline. The information will have to be included in the Directors’ Remuneration Report.
Publish Second Gender Pay Gap Report
Employers with 250 or more employees on the “snapshot date” (5th April in the private and voluntary sectors) must report on their percentage gender pay gap annually within 12 months of that date. This means that the deadlines for the second round of reports are 30th March or 4th April 2019. Employers need to gear up to publish their second report, if they have not done so already.
Even though the Government is currently embroiled with issues surrounding Brexit some of the changes listed above are actually of real significance so should not be ignored.
You are welcome to raise any concerns with our Consultant, who would be pleased to advise you on any element of the issues arising from this newsletter.