10 Employment Law Developments to Watch out for in 2016

1.    Gender pay gap reporting

Pursuant to section 147 of the Small Business, Enterprise and Employment Act 2016, the Government is required to make new regulations by 25 March 2016 requiring private and voluntary sector employers with at least 250 employees to publish information about their gender pay gap. The Government published a consultation paper on implementing the mandatory gender pay gap reporting in July 2015, and in October it announced it would be extending the requirement to public sector employers too. The draft regulations have now been published and the Government is conducting a consultation on them, with responses to be given by 11 March 2016.

The first private sector large-scale equal pay case of Brierley and others v Asda Stores is due to be heard later this year, in which a group of female check-out and shelf stackers are arguing they should be paid the same as male workers in Asda’s distribution centres on the basis that their jobs are of equal value.

2.    Zero hours contracts

The Exclusivity Terms in Zero Hours Contracts Redress Regulations 2015 came into force on 11 January 2016. The Regulations provide that individuals on zero hours contract should not be unfairly dismissed or subjected to a detriment for a reason relating to a breach of a provision of a zero hours contract to which section 27A(3) of the ERA 1996 applies. Section 27A(3) of the ERA 1996 provides that a provision in a zero hours contract which prohibits a worker from doing work under any other arrangement is unenforceable. Workers are allowed to present complaints to the employment tribunal and seek compensation.

3.    Employment Tribunal Fees

Despite Unison having so far failed at every stage in its argument that fees in the employment tribunal system are unlawful, the Union is seeking leave to take its challenge to the Supreme Court for judicial review. Tribunal fees are currently under review by the Ministry of Justice and are the subject of a separate inquiry by the Justice Committee, whilst in Scotland the Scottish Government has outlined plans to abolish fees in the Scottish employment tribunals. Whether the Government’s review or Unison’s further challenges will mean Tribunal fees in England and Wales will be abolished is yet unknown, but the issue rumbles on.

4.    Holiday Pay

As previously reported by the Memery Crystal team, and discussed at the recent seminar by barrister Benjamin Gray, 2016 will see EAT rulings on the cases of Fulton v Bear Scotland (overtime included in holiday pay) and Lock v British Gas (sales-related commission included in holiday pay). The Fulton case asks the EAT to reconsider how far back workers can go claiming holiday pay and whether a gap of 3 months between underpayments  breaks a “series” meaning the right to claim is lost. December 2015 saw the appeal in the Lock case, with British Gas arguing that commission should not be included in holiday pay – the EAT’s judgment is expected soon.

5.    Taxation of termination payments

Last July the Government started a consultation on how the tax and NICs treatment of termination payments can be made simpler and fairer. The Government has said it will publish a summary of the responses in 2016 and if the proposals go ahead in their current form, it is likely to mean higher cost implications for employers and impact the tax-free amounts available to terminated employees. The proposals for reform include, for example, introducing a new exemption from tax and NICS, and removing the distinction between contractual and non-contractual payments, so that all termination payments will be treated as earnings.

6.    Financial Penalties

Section 150 of the Small Business, Enterprise and Employment Act 2015 will be implemented in April 2016. The provision imposes financial penalties on Respondent employers who fail to pay a Claimant’s employment tribunal award or a settlement award. A warning notice will be issued first, with a penalty notice following if the sum remains unpaid. A Respondent employer will first be issued with a warning notice, stating that a financial penalty will be imposed unless the award is paid by a specified date (no less than 28 days from the date of the notice). If the employer fails to pay by that date, a penalty notice will be issued, which will be 50% of the unpaid relevant sum, subject to a minimum of £100 and a maximum of £5,000. The penalty will be reduced by 50% if it is paid within 14 days of the penalty notice.

7.    Criminal prosecution of company directors over redundancies

Where an employer proposes to make redundancies of 20 or more employees within a 90 day period, an obligation arises to notify the Secretary of State for BIS of the proposals. The end of last year showed an increasing propensity by the Government to prosecute company directors for failing to file the requisite notification form in collective redundancies, even where the company becomes insolvent and administrators/receivers are appointed last minute. The case of R (on behalf of the Insolvency Service) v Forsey is due to be heard in March this year. A criminal prosecution has been brought against Mr Forsey, the Chief Executive of USC, for failing to make the appropriate notification in relation to nearly 80 workers when the company closed upon just 15 minutes’ notice. The maximum penalty for the alleged offence is a £5,000 fine, but if found guilty Mr Forsey will have a criminal record and therefore be disqualified as a director.

8.    Indirect Discrimination

The case of Essop v Home Office (UK Border Agency) is due to be heard by the Supreme Court this year, where it will consider whether it is necessary in indirect discrimination claims for the Claimant to demonstrate not only that they, and a group sharing a protected characteristic, are disadvantaged, but also why they suffer that disadvantage.

9.    Whistleblowing Requirements

New whistleblowing rules will come into effect this year and will apply to certain employers in the financial service sector, such as banks and insurance firms. Most of the rules will come into effect on 7 September 2016, with the exception of the requirement to appoint a whistleblowing champion, which comes into effect on 7 March 2016. The new rules impose various obligations on firms, including to establish internal whistleblowing arrangements to handle disclosures, inform UK based employees about the PRA and FCA’s whistleblowing services, and ensure that all settlement agreements expressly state that workers may make protected disclosures.

10. Whistleblowing – the “public interest” test

The case of Chesterton Global Ltd and another v Nurmohamed is due to be heard in October 2016. The EAT has previously held that the “public interest” test can be satisfied by application to a small sub-section of the public. In Chesterton, the sub-section was comprised solely of employees employed by the same employer, who had the same interest in the matter as Mr Chesterton did. The Respondent employer has appealed the decision.

The Employment Team