Our weekly top five for employers: 11 January 2019

Welcome to this week's top five and which looks at key areas employers will need to tackle as we start 2019.

1. Brexit and your workforce

As we wait to see whether next week will bring any certainty on how the UK will leave the EU, from an employment law perspective, we can expect that at least for the time being, the status quo will largely be preserved – either through the transitional period should the current form of the withdrawal agreement be approved or, if it is not, via the various statutory rules the UK has been implementing to enable our existing legislation to continue where it is dependent on EU law. The exception to this is the rules around European Works Councils – please contact us if your business has an EWC and we can advise further. However, yesterday saw a Labour MP push for an amendment to the withdrawal agreement attempting to commit the UK to adopt any strengthening of employee rights by the EU which takes place after Brexit. As currently tabled, it wouldn't appear to be legally binding, but it's an interesting development.

Employers will however need to understand and prepare for new immigration rules. In December, the government published a policy paper on the rights of EU citizens living in the UK in the event of a no deal Brexit. It confirms that the UK will continue to run the EU Settlement Scheme but only for those resident in the UK before 29 March 2019, not 31 December 2020 (the end of the proposed transitional period). The government has also published a White Paper on the UK's future skills-based immigration system.

We are seeing an increasing demand to provide advice and guidance on what businesses can do to mitigate the impact of Brexit with regards to the movement and recruitment of staff. In particular, to help answer the two main questions: what can we do to protect our current staff and what can we do to fulfil future recruitment needs? We have designed a presentation focusing on the options available, highlighting the important considerations, and helping you prepare whatever the outcome. Whilst there is a large amount of, often contradictory, information out there we can help you cut through the rhetoric and politics to provide practical and useful advice and solutions you can implement now to be as prepared as possible. If this is of interest to you or anyone from your organisation, please let us know.

2. Employment status

The Court of Appeal has now handed down its decision in the 'Uber' case with a majority holding that drivers using the Uber app were workers and not self-employed contractors. With the one dissenting judge pushing for Parliament to legislate on such matters, the case will now proceed to the Supreme Court later this year. The government has committed in the recently published Good Work Plan to 'bring forward detailed proposals' on how the employment status frameworks for the purposes of employment rights and tax should be aligned and legislation to 'improve the clarity of the employment status tests'. Given the complexities in doing so, particularly where many working arrangements are fact specific, we anticipate developments in this respect are likely to be later rather than sooner. Indeed, the government has commissioned further independent research on those with uncertain employment status to help inform its approach.

Businesses should however as a priority take steps now to understand the make-up of their workforce and what each individual's employment status in fact is. IR35 reforms in the private sector are expected to be introduced in April 2020 and which will have significant repercussions for businesses relying on a contingent workforce and independent contractors. Our specialist contingent workforce team will be happy to discuss the impact on your business. Holiday pay, minimum wage and pension are just some of the 'rights attaching to worker status' and with the Sash Windows case settling (which was looking at whether or not an individual engaged as an independent contractor who successfully argued he was in fact a worker could claim untaken holiday pay for the whole of his engagement), the stakes remain high. The government's Good Work Plan also proposes a number of new rights for workers, such as the right to receive a written statement of terms from day one, keeping employment status issues firmly in the spotlight.

3. Diversity and #metoo

Diversity

Diversity continues to be high on agendas. Employers with 250 plus employees must make their next gender pay report on or before 4 April 2019 and will no doubt face greater scrutiny as this year's figures are compared against last years. Whilst there is no current requirement to provide a 'narrative' explaining any figures and initiatives to close the gap, many employers do so voluntarily. However, ACAS has now published guidance encouraging employers to implement an 'action plan' aimed at reducing the gender pay gap. The Equality and Human Rights Commission has also published a report urging employers to provide narratives to accompany their statistics. This push towards encouraging narratives may reflect in part the government's current consultation on ethnicity pay gap reporting and which asks whether or not narratives should be mandatory. The consultation closes this week.

The need to understand 'pay' – who gets what and why – is becoming increasingly critical. Brexit uncertainty aside, as well as the 'pay gap' disclosures above, this year will see a number of important cases in our courts on equal pay, as well as the new CEO pay reporting requirement (which came into force on 1 January 2019 but the first reports will not need to be made until 1 January 2020) requiring UK-listed companies with 250 or more employees to report annually on the difference in pay between their CEO and average workers.

Whilst not legally binding, following the trend towards greater transparency, the Department for Work and Pensions and the Department of Health and Social Care has also published Voluntary Reporting on Disability, Mental Health and Wellbeing which sets out a framework to support employers to report voluntarily on disability, mental health and wellbeing in the workplace. The framework is aimed at larger employers with over 250 employees but smaller employers are encouraged to adopt it as well. The framework recommends that employers produce a narrative to explain the employer's activities in relation to the recruitment and retention of disabled people and to support mental health and wellbeing of their employees.

#metoo and non-disclosure agreements

Employers must also ensure that they are comfortable with their approach to harassment issues. The #metoo campaign impacts all businesses and we now have the government response to a report from the Women & Equalities Select Committee on Sexual Harassment in the Workplace. This provides for 'a package of 12 announcements' aimed at tackling sexual harassment at work including:

• Confirmation that there will be a statutory code of practice on sexual harassment;
• Proposals for future consultation on non-disclosure agreements, a potential positive duty on employers to prevent harassment, strengthening and clarifying the laws on third party harassment at work and a potential extension of tribunal time limits for relevant claims to 6 months.

Pending any new statutory rules, employers should review non-disclosure terms used in current employment contracts and settlement agreements to ensure that they are in line with the current guidance on using such provisions where there are issues of harassment. Non-disclosure agreements were the subject of a recent temporary injunction granted by the Court of Appeal restraining a newspaper from publishing allegations of discreditable conduct by a senior executive where it appeared information had been passed to the newspaper in breach of confidentiality clauses in settlement agreements. The decision was met with disapproval from some that perpetrators could hide behind such clauses, although others took the view that such provisions are an essential part of allowing parties to achieve a settlement and effectively 'move on' without going through what is likely to be a difficult litigation process. The Women & Equalities Select Committee has launched a further inquiryinto the use of non-disclosure agreements in the context of harassment and discrimination claims with a request for written submissions by 31 January 2019. Employers should also take the opportunity to review harassment policies to ensure they are fit for purpose, supporting both the 'victim' and the 'accused' and reduce risk.

4. Holiday pay

Calculating holiday pay continues to be a 'grey' area and, against the background of increasing 'worker' status cases, is an area where more certainty would be welcome. Last year the EAT ruled that both non-guaranteed and voluntary overtime where it is 'regular and settled' should be included in holiday pay calculations. However, the case will now be heard by the Court of Appeal later this year and against the backdrop of a recent ECJ case which arguably suggests a potentially more restrictive approach to the question of whether or not overtime is included as 'normal remuneration'. Employers should also note that under the Good Work Plan the government has indicated that it will be increasing the reference period for calculating holiday pay from 12 to 52 weeks. Please let us know if you would like to discuss this further.

Employers should also take steps to ensure that they are compliant with another recent ECJ decision which emphasised the need for employers to demonstrate that they had taken the necessary steps to enable a worker to take their leave entitlement, including providing accurate relevant information to workers in good time and the risk that holiday entitlement will be lost if it remains untaken. Whilst many businesses will have such provisions in place for their employees, via holiday policies, contracts of employment and holiday booking 'tools', employers should check that such information is available for other workers.

5. Data protection

We are now starting to see the EU General Data Protection Regulation (“GDPR”) which came into force in May bedding in. It is important that employers continue to work towards compliance, particularly given the increased fines for non-compliance.

Highlighting the need for rigorous policies and training, last year saw the media spotlight fall on businesses where data breaches had occurred through the accidental or deliberate actions of an employee and vicarious liability for the breach resting on the shoulders of the employer. Indeed, the Court of Appeal has suggested that employers could ‘insure‘ against this risk. Whilst on the face of it a seemingly simple solution, availability and cost may not render it so straightforward. Cyber insurance is becoming more widespread, but such policies are often heavily limited and would be unlikely to cover all legal and operational costs that arise from a major data breach and any ensuing litigation. This is particularly so given the potential for group actions where the data breach involves the disclosure of the personal data of a significant number of individuals. Employers should ensure they are taking all necessary steps to appropriately safeguard data within the organisation and to minimise the repercussions in the event of any data breach, including the potential distress which may be suffered by the individuals whose data is released or compromised. Whilst IT and compliance departments will inevitably have key roles to play in securing personal data and the technical and organisational measures to be taken, HR must also make sure that employees are fully aware of their roles and responsibilities, including the importance of handling personal data correctly, what behaviour is considered unacceptable and the consequences if they do not meet the employer’s expectations. HR also have a role to play in ensuring that employees are able to identify a data breach and trigger the relevant internal procedures.

We are also seeing an increasing number of data subject access requests and our specialist employment GDPR team have developed a tool to enable these to be dealt with effectively and efficiently. If your business is in receipt of a subject access request or you would like to discuss how to ensure you are ready for when one inevitably arises, please do contact us and we will be happy to talk you through the steps you should have in place. Now is also a good time to check that your policies and procedures are GDPR compliant and that appropriate training is in place. Again, we shall be happy to discuss this with you.