Regulatory Timeline: Employment and Contingent Workforce

“Employment law remains a constantly moving issue for businesses. Significant reforms in the next 12 months include a new obligation for businesses with 250+ employees to disclose the gender pay gap in their organisation. How this gender pay gap is identified is a matter on which we are currently awaiting the outcome of a Government consultation.

In the meantime, we are expecting further case law interpreting domestic statutory provisions in light of European law, which could have significant effects for employers. Holiday pay is an area on which employers still urgently need clarification. Indeed, with Europe driving many UK employment laws, we await with interest the outcome of David Cameron’s negotiations with our European partners leading up to the expected referendum in 2017.

So far as temps and agency workers are concerned, the key development will be the potential for a move towards hirers being liable for tax and national insurance from April 2016 if their suppliers are not administering that properly. That has never been a material risk in the UK for users of contingent workers but that “safe” era looks like it is now coming to an end, and all users will need to look closely at their supply chains to make sure they do not inherit potentially huge liabilities. And remember that indemnities are unlikely to be the whole solution, not least because most suppliers will not be insured for this sort of risk and will not have the balance sheet strength to pay the largest claims from their own resources.”

During 2015 – Posting of Workers Enforcement Directive

The Government is currently seeking views on its proposals for complying with the Posting of Workers Enforcement Directive. We do not envisage any immediate actions for employers.

1 October 2015 – National Minimum Wage increases due

Increases to the National Minimum Wage are expected to be as follows: 

• adults increased from £6.50 to £6.70; 
• 18-20 year olds increased from £5.13 to £5.30; and 
• 16-17 year olds increased from £3.79 to £3.87.

2015 / 2016 – Reform of strike laws

The Trade Union Bill is currently progressing through Parliament. If passed in its proposed form, it would represent a major change to the law on industrial action.

Proposed reforms include the following:

• any strike would need a 50% turn out;
• if a strike would affect essential public services, the bar would be higher, with the union requiring 40% of those entitled to vote, to vote in favour of strike action;
• a new three month cut off would apply after a ballot for strike action to take place;
• the notice period before taking industrial action would increase from 7 to 14 days; and
• employers would be allowed to use agency workers to cover striking workers.

We anticipate that these reforms will come in in parts during 2015 and 2016, although the more controversial aspects of the reforms will be subject to rigourous parliamentary debate and adapted as the Bill progresses.

Late 2015 – Review of Employment Tribunal fee system

The Government is carrying out a review of the controversial Employment Tribunal fee system introduced in 2013. The Government will consult on any proposals for reforms arising out of this review.

The Justice Committee is also conducting an inquiry into the impact of fees, whilst UNISON recently lost its judicial review of the fee system in the Court of Appeal it has vowed to appeal to the Supreme Court.

Early 2016 – Regulations requiring publication of gender pay gap information

The Government is currently consulting on regulations which will require employers with 250 or more employees to disclose the gender pay gap in their organisation and it is anticipated that this new legal obligation will come into force in early 2016.

April 2016 – Living Wage

The new Living Wage was one of the highlights in George Osborne’s summer Budget in July 2015. The Living Wage will be £7.20 per hour for over 25s when it is introduced in April 2016. This will rise to over £9.00 per hour by 2020.

6 April 2016 – Removal of dispensation notices

HMRC is currently able to grant dispensations to employers, waiving the requirement to report certain expenses under the Income Tax (Earnings and Pensions) Act 2003. From April 2016 new legislation will cover the payment of business related expenses.

As a result of the new legislation, there will be no continuing need for dispensation notices, which are therefore being removed with effect from 6 April 2016.

6 April 2016 – Expenses legislation and related anti avoidance legislation

It was announced in the summer 2015 Budget that the removal of tax relief on travel and subsistence expenses for umbrella workers, personal service companies and workers operating via other ‘labour service’ intermediaries will come into effect in April 2016. The legislation will include tax debt transfer measures which could make hirers and staffing companies liable for tax compliance failures by umbrella companies and personal service companies.

Related targeted anti-avoidance legislation (s289 of Income Tax (Earnings and Pensions) Act 2003) will also be in place to catch arrangements which reduce the amount of employment income that is subject to tax and National Insurance contributions (and one of the main purposes of such an arrangement is to avoid tax or National Insurance contributions).

2016 / 2017 – Volunteering leave

David Cameron announced as part of his election campaign that employees in the public sector and large private sector companies (250+ employees) would be getting three days paid volunteering leave. There are no further updates on this as yet but indications are that this is still in the pipeline.

Early 2017 – New tax free childcare scheme expected to be launched

A new tax free childcare scheme is to be introduced to support eligible parents with childcare costs under the Childcare Payments Act 2014. It is envisaged that the Government will be providing 20% support , up to a maximum of £2,000 per child per year. Parents will qualify if all parents in the household are working, with earnings of less than £150,000 a year and are not already in receipt of tax credits or universal credit. This was anticipated to be brought into force in autumn 2015, but has now been delayed until 2017. It will replace the employer-run childcare voucher schemes, although employees will still be able to run these schemes for existing members.