Whilst 2017 was anticipated to be a fairly static year for UK employment law, that did not in fact prove to be the case, and there were various notable developments. To a large degree, 2018 is likely to be defined by the ongoing Brexit negotiations and the passage of the EU Withdrawal Bill, which will, amongst other things, lay the framework for the future movement of EU workers to the United Kingdom. Employers should, however, be aware of some additional key developments on the horizon.
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The UK Employment Appeal Tribunal has upheld the Employment Tribunal’s finding that Uber drivers are “workers”. It rejected Uber’s argument that Uber is simply a technology platform acting as an agent to connect self-employed Uber drivers with users of the ride-hailing app.
What Is the Issue?
The United Kingdom recognises three categories of employment status: employees, workers and self-employed contractors, each with varying levels of protection under employment law. Employees and workers are afforded greater protection than self-employed contractors, with employees having the full suite of UK employment rights. Workers are entitled to core rights such as statutory holidays, sick pay and breaks, and national minimum wage.
In this “back to school” round-up, we take the opportunity to catch up on the most important UK employment law events and developments in 2017 to date.
A significant judgment delivered on July 26, 2017, by the UK Supreme Court increases the likelihood of employment claims being brought in the future and is of significance to all organizations employing staff in the United Kingdom.
The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2017.
This alert sets out the changes in full and highlights important consequences for employers.
McDermott’s “Key Employment Law Events in 2017 and Beyond” update highlighted the upcoming regulations requiring certain employers to report on the gender pay gap in their workforce (Equality Act 2010 (Gender Pay Gap Information) Regulations 2017) (the Regulations). Under these Regulations, from April 2017, large private and voluntary sector UK employers will be required annually to calculate and publish a range of gender pay information regarding their workforce.
Current indications are that 2017 may be a fairly static year as regards to employment law.
Whilst it is anticipated the government will trigger Article 50 to start Brexit negotiations, these are likely to last for at least two years, and existing employment laws are unlikely to feel any ripple effect from leaving the European Union for some time.
In the meantime, the Prime Minister has asked for a review, expected to take around six months, on whether current employment laws are adequate to protect the rights of the growing numbers of atypical workers. It is unlikely though that any resulting changes will come into effect in 2017.
There are, however, a number of key developments that employers will definitely need to get to grips with, or at least prepare for, in 2017.
*Cindy LaMontagne (Trainee) contributed to this article.
As you may have seen from the extensive press coverage, the UK Employment Tribunal has delivered its much anticipated judgment in Aslam and Farrar v Uber. The case was about whether Uber drivers are self-employed contractors, or are “workers” with rights to minimum wage, statutory holidays, sick pay and breaks, amongst other workers’ rights.
The government has published its response to feedback received on its proposals to simplify the taxation of termination payments, expected to come into force in April 2018.
The following table sets out the main proposals and the effect these will have on employers. Importantly, there is no change to the current £30,000 tax free allowance.
|1. Termination payments above £30,000 to be subject to employer National Insurance contributions (NICs).||Currently, termination payments above £30,000 only attract income tax, not NICs.
While employer NICs will be payable under the proposal, employee NICs won’t.
|At 13.8%, the addition of employer NICs could add a not inconsiderable cost to paying a termination payment exceeding £30,000.|
|2. All payments in lieu of notice (PILONs) (contractual and non-contractual) to be taxed as income.||
Currently, contractual and non-contractual PILONs are taxed differently.
Contractual PILONs (that are provided for in the employment contract) are treated as earnings and subject to income tax and both employer and employee NICs. Non-contractual PILONs, which are paid in the absence of the contractual right to do so, are subject to income tax, but not NICs.
It isn’t always straightforward to determine whether a PILON is contractual or not given that HMRC can also have regard to the regularity with which the employer pays PILONs.
This clarification is actually welcome given the differences in opinion which can arise when negotiating a settlement agreement.
|3. Injury to feelings awards (such as for harassment or discrimination) will not qualify for general injury tax exemptions.||
There is an exemption to income tax on termination payments, in addition to the £30,000 threshold, when a payment is made because of death, disability or injury of the employee.
It is currently unclear whether injury to feelings awards qualify for the exemption as there have been contradictory decisions on the point.
|This proposal would provide additional welcome clarity, but in common with all 3 proposals, means increased cost to employers.|
These changes are likely to come into force in April 2018. Given that items 2 and 3 in the table clarify points that are currently argued either way, a prudent employer might want to veer on the side of caution when considering those issues before April 2018.
Lauren Goda (Trainee) contributed to this article.
Don’t panic. The United Kingdom will continue to be an EU Member State until procedures are completed for exiting the European Union, which is likely to be at least two years. Until a withdrawal agreement is reached, EU laws and treaties will still apply, including the right for EU nationals to work in the United Kingdom. This means that all current EU-derived employment laws should remain in place for at least two years.