2019 – Employment Law Changes on the Horizon

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2019 – Employment Law Changes on the Horizon

Happy 2019! Can I still say that, or has everyone long forgotten the festive break, as you become entrenched back in the workplace? We’re nearing the halfway point of January 2019, and already the legal landscape for employers is shifting. Here’s a round-up of what 2019 holds in store for employers and employees alike.

1 January 2019 – Executive Pay Gap Reporting

Under the Companies Act 2006, from 1 January 2019 all UK listed companies employing 250 or more staff will have to report on the pay gap between their CEO and their average UK employees.

Although the first reports will not be until 2020, affected businesses should be collating the relevant information throughout 2019 in order to calculate the pay ratio by the 2020 deadline. This information will also need to be reported in the CEO’s remuneration reports going forward.

29 March 2019 – Brexit

There is so much uncertainty around the whole ‘deal or no deal’ scenario, we are all watching that space. However, there is some general clarity on employment-related matters:

With the European Union (Withdrawal) Act 2018 ready to take effect on the day we leave the EU, all laws that are currently in place will continue to be in effect after we have left the European Union. This means any EU legislation that currently affects UK employment rights (including European Court of Justice rulings) will simply become UK domestic legislation from the point of Brexit, and the Government will then decide, over time, which legislation to keep, to discard or to amend.

Immigration rules, however, will change and could affect how businesses are resourced. The Government has introduced the EU Settlement Scheme, which will allow EU nationals to apply for ‘settled’ or ‘pre-settled’ status until 31 December 2020. The scheme will be open for applications from March 2019.

Any EU nationals who have been in the UK continuously for five years or more will be able to apply for ‘settled status’, allowing them to live and work in the UK indefinitely. Any EU nationals arriving in the UK until 31 December 2020 will be able to apply for ‘pre-settled’ status until they have been in the UK continuously for five years, and will then be able to apply for settled status.

For EU nationals arriving in the UK after 31 December 2020, new immigration rules will apply, although the Government is yet to confirm what these rules will be.

Employers will need to review and update their recruitment and selection practices in accordance to any new requirements and restrictions, i.e. becoming a sponsor with the UKVI, as currently required when recruiting other foreign nationals.

1 April 2019 – National Minimum Wage (NMW) and National Living Wage (NLW) increases

The new rates for the age groups will be as follows:

Aged 25 or overIncrease from £7.83ph to £8.21ph
Aged 21 – 24Increase from £7.38ph to £7.70ph
Aged 18 – 20Increase from £5.90ph to £6.15ph
Aged 16 – 17Increase from £4.20ph to £4.35ph
Apprentice rate (aged under 19, or aged 19+ in their first year of apprenticeship)Increase from £3.70ph to £3.90ph

The Government is pushing hard for employers to pay the right rate for their staff and have begun to ‘name and shame’ organisations that do not pay the rates. A maximum penalty fine of £20,000 per underpaid employee is also a sizeable risk!

4 April 2019 – Gender Pay Gap Reporting

Private organisations with 250 or more employees will be required to publish their second gender pay gap report by 4 April 2019 – the deadline for the public sector is 30 March 2019. The reports need to be published both on the organisation’s own website and on Gov.uk.

Given this will be the second report, the figures will be heavily scrutinised and it would serve businesses well to either provide some narrative to highlight any reductions in the gap from last year or to ‘justify’ any increases in the gap, in order to limit reputational damage.

I would imagine further Government initiatives will flow from the analysis of these reports – perhaps more specific quotas to increase female presence in particular industry sectors or management levels; or scrutiny for organisations with fewer than 250 employees. With the linked (but not same) issue of multiple equal pay claims going through tribunals affecting the likes of Tesco, Morrisons, Asda and Sainsbury’s, there remains intense focus on these areas.

6 April 2019 – Payslip changes

From this date, all your workers – not just employees – will also need to receive an itemised payslip. This will include agency, casual and zero-hour workers.

The detail within the payslip will be changing too. If the individual’s pay varies according to the time worked, the employer will now have to detail the total number of hours worked for which variable pay is received.

This is definitely the time to ensure your payroll department, or provider, has the right processes in place to action this from April.

6 April 2019 – Auto-enrolment contributions increases

The new tax year also brings in phased increases for both employer and employee contributions. Employer contributions will increase from 2% to 3% and employee contributions will go up from 3% to 5% of their salary.

Whilst this is a legal requirement, I would certainly recommend employers ensure timely consultation with all employees before the contribution increase takes effect.

7 April 2019 – Statutory Sick Pay (SSP) and family pay rate increases

As per the norm, from the first Sunday in April, there will be an annual increase in statutory pay rates. SSP will increase to £94.25 per week and maternity, paternity, adoption and shared parental leave pays will increase to £148.68 per week from this date too.

2020 and beyond…

There have been several high-profile cases rumbling through the tribunals recently, raising questions over employment status and rights. When is a ‘worker’ an ‘employee’? When is a self-employed contractor actually a worker? With several cases going to appeal, this is certainly a topic all employers should be following closely.

The Government has recently confirmed details of proposed legal changes that will take effect in 2020. Known as the ‘Good Work Plan’, some of the key proposals to be aware of include:

Legislation to improve employment status tests so employers and workers understand what rights and protections they should enjoy;

A right for staff to receive a written statement of terms from day one, rather than within two months – this would be for workers as well as employees and would set out any eligibility for sick leave, pay and other statutory entitlements;

An increase in the reference period used for calculating an average week’s pay where the worker does not work consistent hours. This will now be 52 weeks rather than the last 12; and

An increase in the period required to break continuous employment for the purpose of accruing employment rights, linked to length of service – this will increase from the current one week to four weeks.

With further court rulings covering the concept of ‘joint employer status’, where both the end client and service provider could be held as ‘joint employers’ for outsourced staff, and appeals set to take place in relation to whether staff who work on ‘sleep-in’ shifts (sleep on location where they have to be on call) should be paid national minimum wage for the time they sleep, 2019 is set to be another busy year for employment law.

Have a question? Please get in touch. We’re always happy to help.