Our weekly top five for employers: 4 February 2019

1. Brexit: What is the latest position for employers?

With uncertainty still remaining, we set out below our FAQs on Brexit and what it means for employers:

Q. What would be the impact of a no deal Brexit for UK businesses trading with the EU?

Whilst we wait to see whether an agreement can be reached on the UK's exit from the EU, the UK government has made it clear that businesses should not see any significant changes to employment rights in the event of a no-deal Brexit. Technical amendments have been made to allow existing employment laws to continue to work post Brexit. As we wait to see whether any certainty on how the UK will leave the EU will be achieved, 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 if a 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 (EWC). The position in relation to EWCs differs depending on whether the EWC is currently governed by UK law – in which case the law of an EU27 Member State may need to be designated to govern the EWC post-Brexit – or by the law of an EU27 Member State, in which case the primary issue will be around the status of UK delegates post-Brexit.

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. The EU Settlement Scheme will continue in a no deal scenario, meaning that any EU citizen living in the UK by 29 March 2019 will be eligible to apply to this scheme and secure their status in UK law. There has been an indication that there would be an implementation period for potentially up to six months after exit. If a deal is ratified, EU nationals would be given the right to apply for settled status if they were living in the UK by 31 December 2020. After the end of any implementation period, subject to any agreement between the UK and the EU to the contrary, any new EU workers arriving in the UK would have to be sponsored through the current points based system.

The government has published this note on workplace rights in the event of a no-deal Brexit.

Q. What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?

Whilst we are not expecting any significant impact to UK employment law (see above), non-UK businesses trading within the UK will need to keep abreast of any immigration requirements impacting on business travel and longer stays by EU nationals in the UK, or vice-versa, along with the considerations discussed above in relation to EWCs (we have attached a guide for EU nationals working in the UK below).

Q. What should businesses be doing now to prepare for a no deal Brexit?

Whilst we are not expecting any significant impact to UK employment law (see above), non-UK businesses trading within the UK will need to keep abreast of any immigration requirements impacting on business travel and longer stays by EU nationals in the UK, or vice-versa, along with the considerations discussed above in relation to EWCs (we have attached a guide for EU nationals working in the UK below).

Please find attached a guide to the immigration position for EU nationals working in the UK reflecting the current position. It is also worth drawing to your attention the Home Office announcements made on Monday 28 January in relation to immigration/EU nationals if there is a "no-deal" Brexit. If there is no withdrawal agreement, then we will be left with a “no deal” scenario, and there will be no transition period and therefore no transition period during which free movement rights would continue unaltered. For EU nationals already living here by 29 March 2019, that should not be a concern. The government have said that the EU Settlement Scheme will still operate. However, the government wants free movement to end after the 29 March 2019 in the event of no deal. Therefore, new arrivals would, if they wanted to stay beyond three months, have to apply for the right to remain in the UK - “European Temporary Leave to Remain”.

The government has specifically said that, if there is "no deal", the EU Settlement Scheme will only be open to those living in the UK before 29 March 2019. Those arriving after that date will have to apply for European Temporary Leave to Remain, either from within the UK or from abroad, through a mechanism yet to be determined. This European Temporary Leave to Remain will be for up to 36 months and will not be able to be extended. An individual would then need to apply under the Immigration rules in order to stay, or simply depart: the Home Office states that “there may be some who do not qualify under the new arrangements and who will need to leave the UK”.

2. Family and sick leave: Increases to statutory pay rates

The rates for statutory maternity pay, paternity pay, shared parental pay and adoption leave have been published and will increase from 7 April 2019 to £148.68 per week (from £145.18 per week). The rate of statutory sick pay will increase from 6 April 2019 to £94.24 per week (from £92.05 per week).

Please click here for our latest calendar setting out 'What's on the Horizon' for employers this year.

3. Gender pay: With only 2 months until the next round of gender pay reporting, the Government Equalities Office (GEO) issues a report

As we approach the second year of gender pay reporting, the GEO has published a report on the first round of formal reporting last year. The report includes details of some of the measures employers have included in their reports in order to work towards reducing the gap for future years. Unsurprisingly, addressing flexible working was the most popular action with 87% of employers including this in their strategies. Other actions employers are reported as taking include:

• promoting parental leave policies to encourage men and women to share childcare (76%);
• making cultural changes within their organisation (65%);
• gender-specific recruitment, promotion or mentoring schemes (62%); and
• setting voluntary internal targets (33%).

The Women and Work All Party Parliamentary Group (APPG) has also launched 'How to recruit women for the 21st Century' which includes a guide setting out tips for employers for tackling female progression in the workplace. The report specifically highlights how the adoption of a flexible working culture can improve the female talent pipeline. As well as calling for employers to review regularly their recruitment processes, other adaptations proposed include the introduction of name-blind and context-blind applications and avoiding asking applicants about their current salary. The report also calls on the government to commission or publish new guidance on positive action and other means to help level the playing field.

Please do contact us to discuss how we can assist you with your gender pay reporting and actions for your organisation to close the gap and help grow the female talent pipeline.

4. Equal pay: Court of Appeal (CA) holds shop floor workers can compare themselves to distribution staff

The CA has confirmed that shop floor workers in a large retail employer, can compare themselves to male colleagues working in distribution centres. The CA held that there were 'common terms' between the shop floor workers and the distribution staff, despite the fact that the two groups of employees carry out very different tasks day to day. The case will now return to the Employment Tribunal to determine whether the female shop workers and male distribution centre roles are of 'equal value' and then, whether there is any reason beyond sexual discrimination for not paying these two roles equally.

Employers operating across establishments should now consider whether or not common terms exist within their organisation, albeit that the jobs being undertaken by the different individuals at different sites are very different. Where there are concerns, employers may need to undertake a job evaluation scheme or equal pay audit to help understand and take any appropriate steps to address potential equal pay issues within their organisation. Whilst equal pay claims are not the same as gender pay gap issues, the current media spotlight on pay (and which will be heightened further when listed employers publish their CEO and worker pay ratios from next year) is only likely to increase interest in 'fair' pay within companies.

Brierley and others v Asda Stores Ltd, Ahmed and others v Sainsbury's Supermarkets Ltd.

5. Employee incentives update

Please find attached the latest edition of the Employee Incentives Update and which covers:

• Executive pay transparency measures and updated investor guidelines.
• Changes to entrepreneurs' relief.
• The latest update from HMRC on employment related securities.
• Termination payments - a further delay to the next set of NIC changes.
• The government's 'Good Work Plan', in response to the Taylor Review.
• Some recent employee tax developments in the Netherlands and Belgium.

We hope that you find this update interesting. If you would like to discuss any of the issues raised, please let us know or contact a member of our specialist Employee incentives team.