Employment – what’s ahead for 2016 and beyond?

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

We set out below some of the developments we can expect to see in employment law from 2016 starting this week….

Zero hours contracts - last year, exclusivity clauses in zero hours contracts became unenforceable under the Small Business, Enterprise and Employment Act 2015. The Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 have now come into effect this week. Broadly, these introduce the right for zero hours employees not to be unfairly dismissed and for zero hours workers not to be subjected to a detriment in either case because they have failed to comply with an exclusivity clause. The Government has also recently issued guidance for employers on zero hours contracts which can be viewed here.

Modern Slavery Act 2015 - the Act imposes a duty on businesses with a total annual turnover of £36 million or more to state publicly the steps they have taken to ensure that their operations and supply chains are trafficking and slavery free. Businesses with a year end of 31 March 2016 will be the first required to publish a statement under the Act. The Government has also issued helpful guidance under the Act - “Transparency in Supply Chains etc. A practical guide” - which can be viewed here.

National living wage and the national minimum wage - the new national living wage of £7.20 per hour will apply to all workers aged 25 and over and is expected to take effect from 1 April 2016 as is an increase in the financial penalties for employers who fail to pay the national minimum wage. The Government has also indicated that it will introduce further sanctions for breaches of the national minimum wage legislation and will provide additional investment in enforcement action to ensure employers comply with their obligations.

Gender pay gap reporting - employers with 250 or more employees will be required to publish details on whether there are differences in the pay of male and female employees. Draft regulations setting out the detail on the information employers will be required to publish are expected early this year.

Trade union reforms - the Trade Union Bill is currently making its way through Parliament – it includes provisions requiring a minimum 50% turnout in ballots for industrial action. Related reforms also include the lifting of the current ban on hiring agency staff to cover work during industrial action.

On the radar….

Data protection reform - in December 2015 the EU institutions reached a compromise on the General Data Protection Regulation. The relevant new rules - which will ultimately replace the Data Protection Act 1998 - will have direct effect from early 2018, two years from the date of formal adoption and publication of the Regulation. For more details please see our update here. More detail on the practical effect of this development for employers will follow early this year.

Grandparents and shared parental leave - in 2015 the Government announced plans to extend shared parental leave and pay to working grandparents by 2018. More details are likely to be set out when the consultation process gets under way which the Government said would be in the first half of this year.

Financial penalties for failure to pay employment tribunal awards and settlement sums agreed through ACAS - the relevant provisions of the Small Business, Enterprise and Employment Act 2015 are still to be brought into effect.

Taxation of termination payments - in July 2015 the Government launched a consultation on changing the tax and National Insurance treatment of employee termination payments (please see our previous update here). The consultation sought views on various issues, but perhaps most significantly a proposal to remove the current £30,000 exemption from tax and NICs for qualifying termination payments in favour of a new system of relief which might include the level of exemption being linked to length of continuous employment. We still await the Government response to the consultation.

Personal service companies and taxation under the IR35 regime - the IR35 regime has been under scrutiny for some time and was the subject of a discussion paper during the summer of 2015 (which can be viewed here). IR35 was introduced to tackle tax avoidance through disguised employment and applies where individuals provide their services through an intermediary, most commonly their own personal service company. However, the Government considers that the legislation is not working as effectively as it should and that widespread non-compliance has led both to a loss to the Exchequer and unfairness in that two people doing the same job may pay different levels of tax, depending on how their engagement is structured. The Government has stated that if it decides to proceed with reforming the rules any proposals will undergo a full consultation and so we await next steps.

EU referendum - the referendum on the UK’s continued membership of the EU is to take place by the end of 2017. A vote for a “Brexit” will impact employment law in that much employment related legislation is derived from EU Directives and case law is interpreted in accordance with rulings from the Court of Justice of the European Union – for more analysis please see our update here.