Employment law updates: Collyer Bristow

1. What is your name, job title and company?

Tania Goodman, partner, head of employment and dispute resolution at Collyer Bristow

2. What are the top 3 employment law issues right now?

1. Employers with more than 250 employees are shortly going to have to publish data showing the pay differential between men and women within the organisation. As well as the administrative burden of analysing and preparing the data, these reports are likely to reveal varying degrees of pay inequity and employers will need to consider very carefully how to position the results and any associated strategies for reducing pay differentials.
    
2. As a general theme, the issue of privacy is constantly making headlines. A recent ECJ case which held that an employer was entitled to rely on an employee’s private messages on a work social media account to justify his dismissal was widely reported, and generated fierce debate about the blurring of the line between personal and work spheres.  With social media now widely available to employees on personal devices during the working day, this throws up a whole host of potential HR issues.
    
3. The courts have decided that the way in which employers have been calculating holiday pay since the Working Time Regulations were introduced in 1998 has been incorrect, meaning that employers may be liable to pay significant amounts of back holiday pay to all their staff.  They will also need to update their systems to ensure that holiday pay is calculated correctly going forward.  Employers most affected are those who pay their staff any payments other than basic salary, such as overtime pay, commission, shift premiums etc.

3. How would you advise employers to tackle the issues you mention above?

1. Employers who will fall within the scope of the new regulations should begin to prepare for this now. If they do not already collect this data, carrying out a ‘pre-audit’ will expose likely areas of risk and highlight parts of the business where the gender pay gap is greater. The organisation will then have 12 months to put strategies in place to reduce the pay differential, and to investigate the reasons for the pay gap in the first place, before the first reporting period in April 2017. 
    
2. Employers need to have a very clear monitoring policy in place which notifies staff of any monitoring that is (or may be) carried out on the employer’s IT and phone systems. In practice, while employers could well have legitimate reasons for monitoring email accounts, it would be advisable to avoid reviewing any documents that are clearly private, such as medical information. The policy should also set out the standards of conduct that are expected when using the organisation’s email and internet systems, and the penalties for breach of those up to and including dismissal for gross misconduct.
    
3. Employers who regularly make payments on top of basic pay should urgently carry out an audit to ascertain their potential liability, if they have not already done so. A decision must then be made as to whether the business should change the way in which it calculates holiday pay and notify staff of the change, risking an influx of claims when the employees realise that they have been underpaid. The alternative is to wait until the various appeals have been finally decided by the courts and the position is certain, and only implement the change then. Whilst this may be simpler and avoid two sets of changes, for every day that holiday pay is underpaid, the business is increasing its potential liability if tribunal claims are brought.

4. Are there any upcoming employment law updates that employers need to be mindful of?

• The proposal to change the rules relating to tax-free payments to employees on the termination of employment is likely to make it much more difficult to negotiate agreed exits with employees. At present, employers are able to make a payment of up to £30,000 in tax-free compensation to incentivise employees to agree to the termination of their employment. This can provide a constructive solution where both sides agree that the employment should not continue and avoids lengthy and unpleasant disciplinary and grievance processes. Many changes have been proposed, and whichever new system is adopted, the tax-free allowance will be lower (and maybe significantly so). The response to the consultation is due in early 2016.
   
• New restrictions brought in in January 2016 on the use of zero hours contracts mean that a worker who is subjected to any detriment or dismissed because they have worked for another employer while under a zero hours contract has significant legal protection.
   
• The Modern Slavery Act 2015 (MSA) requires commercial organisations operating in the UK with a global turnover of above £36 million to publish a slavery and human trafficking statement for each financial year that ends on or after 31 March 2016. Whilst you could be forgiven for believing that this only impacts on the largest of organisations, businesses in scope must in fact also explain the steps they have taken to ensure that slavery and human trafficking is not taking place in any of its supply chains. Therefore, any businesses, large or small, that contract with an entity covered by the MSA will need to be able to provide their own account of the steps they have taken to ensure they have no involvement of any kind with slavery or trafficking.

5. Could you indicate how these updates will impact day to day working?

• Any change to the tax rules is likely to mean that contractual and non-contractual payments are all taxed in the same way. This will avoid the current complex system where there is a great deal of uncertainty over which elements of a termination payment should be subject to tax and/or national insurance, or neither. Any simplification is to be welcomed.  However, in our view, anything which means that employers and employees are deterred from reaching an amicable agreement in the case of a dispute will lead to increased litigation or – at least in the short term – employers having to increase gross settlement sums to take account of any increased tax payable.
   
• Employers need to be very careful with zero hours workers. If a zero hours worker is unavailable for a particular shift because they are working for someone else, care must be taken not to disadvantage them in any way. Dismissal, for example, would be automatically unfair, even if they had less than two years’ service.  This will give rise to operational issues for businesses who rely on zero hours workers to ‘fill any gaps’, and it may be that employers are going to have to place less reliance on zero hours workers, plan further ahead if possible, or have a larger bank of zero hours workers on which they can call if necessary.
   
• MSA obligations are more likely to affect strategic and operational decisions, however, organisations will need to ensure they have strict policies in place setting out expectations of their suppliers and the procedures that must be followed by staff to verify and monitor this. Any failure to take the appropriate steps should be expressly stated to be a ground of potential gross misconduct which could lead to summary dismissal.

6. What systemic changes do you anticipate in the coming years and how can employers prepare?

• It is expected that new rules will come into force in April 2016 allowing financial penalties to be imposed on employers who do not pay tribunal awards or sums due under a COT3 settlement agreement, plus interest. If an employer does not pay the award, and ignores a warning notice from an enforcement officer, a fine will be levied of 50% of the relevant sum, subject to a maximum of £5,000. To avoid this, employers will need to ensure that they have proper systems in place to ensure that all such payments are made in a timely manner.
   
• The idea has been mooted that a single Employment Court could be established, removing the current anomaly where some employment cases are heard in the Employment Tribunal and some in the High Court/County Court. This may well have some advantages (not least avoiding the prospect of having to issue/defend proceedings in two different jurisdictions), but could lead to all employment matters being dealt with within the framework of the traditional court system. This would have far-reaching impacts on employment claims, with the potential application of far more onerous procedural rules and a wholly different costs regime increasing the costs of employment litigation enormously.