The year 2018 may be exceptional in terms of employment law in that very little new legislation is on the immediate horizon. Apart from the forthcoming new Data Protection Act, no major employment law changes are planned for this year. Nevertheless, Lynda Macdonald, employment law trainer and consultant, attempts to provide a round-up of what future developments are in the pipeline.

Data protection

The most fundamental change that will affect employers in 2018 is the coming into force (on 25 May 2018) of the EU General Data Protection Regulation (GDPR). This will be implemented in the UK by means of a new Data Protection Act, which is currently making its way through the standard parliamentary processes. This new Act will replace the Data Protection Act 1998.

The main features of the GDPR which will have an impact on the UK’s data protection law can be summarised as follows.

  • Employers will be obliged to provide each worker with information about the purpose(s) for which their data is being processed and the legal basis for processing upfront, regardless of whether the individual has requested this. Consequently, employers need to communicate this information to all their workers by 25 May (if they have not already done so).

  • There will be a more stringent requirement on employers to gain individuals’ consent to the processing of personal data. Consent will have to be given freely and unambiguously through clear affirmative action. Pre-ticked opt-in boxes will be banned. Furthermore, employers will need to have records that clearly demonstrate that consent was so given.

  • There will be a specific right for individuals to withdraw their consent to processing and employers will have to provide a straightforward way for them to do so.

  • Where an individual makes a “subject access” request, the employer will be required to provide access to the requested data within a month. This is considerably shorter than the current timeframe of 40 calendar days.

  • Employers will no longer be permitted to charge a fee for granting subject access, unless a request is “manifestly unfounded or excessive”. Currently, employers may, if they choose, charge up to £10.00 per access request.

  • There will be a new “right of erasure”, also known as the “right to be forgotten”. Individuals will have the right to ask a data controller (eg an ex-employer) to remove their personal information in certain circumstances, for example where there are no longer any proper grounds for continuing to process it.

  • Individuals will have the right to require a data controller to restrict the processing of his or her personal data to storage only in certain circumstances, including where the accuracy of the data is being contested or where the processing is unlawful.

  • There will be a new requirement for data controllers in certain circumstances (for example where high-risk or large-scale processing is proposed) to carry out a data protection impact assessment before processing is carried out.

  • Certain employers will be required to appoint a data protection officer; this will impact on public authorities and other employers where data processing is on a large scale or involves a large amount of sensitive personal data.

  • Organisations with 250 or more workers will be subject to more stringent requirements to maintain records of their data processing activities.

  • Employers will be required to report certain types of personal data breach to the relevant supervisory authority within 72 hours. This is a significant new requirement.

  • There will be the possibility of much higher fines for breaches of data protection laws. Fines for the most serious breaches will be up to 4% of the organisation’s annual global turnover, or €20 million, whichever is the greater.

The Information Commissioner’s Office has published draft guidance on the new provisions, which is being updated as necessary.

Gender pay gap reporting

The deadline date for private and voluntary sector employers with 250 or more “relevant employees” to publish their first gender pay gap reports is 4 April 2018.

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 require organisations to publish information, on an annual basis, about the average overall pay and median overall pay of their male and female employees throughout the organisation, together with the proportions of men and women in each of four quartiles of the employer’s pay distribution (which each have to contain the same number of employees). Overall pay means the gross hourly rate of pay based on an employee’s normal working hours. The difference between men and women’s average hourly pay rates must be expressed as a percentage of the full-time male hourly rate.

Bonuses awarded to men and women respectively must be included in the published information, but employers may calculate the amounts of such payments in proportion to the relevant pay period (for example where bonuses are awarded annually).

The information must be accompanied by a written statement signed by an individual in a senior position.

The term “relevant employees” is defined as including not only direct employees of the organisation but also anyone else who is employed by the employer on the relevant “snapshot date”. This includes workers such as casual staff and contractors who provide their services personally to the employer.

The published information must remain on the employer’s website for at least three years and must be in a form that is accessible to all the employer’s workers and to the public. There is also a requirement to upload the information to a government website where the information will be listed according to sector and be available to the public at large.

Employment status

Last year the Taylor Review of Modern Working Practices was published, its purpose being to review the implications of new models of working on employment rights, in particular how the Government should act to ensure the rights of workers in the “gig economy” (where new app technology or other digital system is used to organise a business). There has been a line of recent tribunal cases in which individuals working in the “gig economy” have successfully claimed worker status despite being labelled as self-employed by their employers.

Among other things, the Taylor Review recommends that:

  • primary legislation should be introduced to define “employee status”

  • the term “dependent contractor” should be introduced to refer to workers who are not direct employees, eg casual staff, contract staff, some freelancers, etc

  • the criteria for someone to be a worker should be amended so that it is not required for the individual to provide his or her services personally

  • greater emphasis should be placed on control as a criterion for determining employment status

  • the definition of employment and self-employment for employment law and tax purposes should be aligned.

As yet, the Government has not provided a response to the Taylor Review.

Taxation

As from 6 April 2018, there are to be some changes to the taxation of termination payments. The current exemption from income tax and National Insurance Contributions (NICs) on termination payments of up to £30,000 will remain in place, but employers will, as from April, have to pay NICs on any termination payments which are higher than this amount.

Historically, there has been a dichotomy over the tax treatment of payment in lieu of notice payments (known as “PILONs”). Broadly, if an individual’s employment is terminated with pay in lieu of notice (rather than him or her working out the notice period), the payment is free of income tax provided there is no contractual authority for the employer to terminate employment in this way. If, on the other hand, the employee’s contract contains a clause permitting the employer to terminate employment with pay in lieu of notice, the payment is regarded as normal wages and is thus taxable. This distinction is to be removed as from 6 April and all PILONs will be subject to income tax and Class 1 NICs from that date.

Statutory rates and National Minimum Wage

There are to be increases to statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory shared parental leave pay, all of which will increase from £140.98 to £145.18 per week in April. Additionally, statutory sick pay will rise from £89.35 to £92.05 per week.

There will also be increases to the National Minimum Wage (NMW). The rates as from 1 April 2018 will be:

  • £7.83 an hour for workers aged 25 and above

  • £7.38 an hour for workers aged 21–24 inclusive

  • £5.90 an hour for workers aged 18–20 inclusive

  • £4.20 an hour for 16- and 17-year-olds

  • £3.70 per hour for apprentices who are under age 19, or over age 19 but in the first year of their apprenticeship and employed under a contract of apprenticeship or engaged under certain government arrangements.

General

Some other miscellaneous changes are as follows.

  • Childcare voucher schemes are to be closed to new entrants as from 6 April 2018.

  • New referrals to the Fit for Work Scheme will come to an end in England and Wales on 31 March 2018, and in Scotland on 31 May 2018. It is widely thought that the scheme has not been successful.

  • The Department for Business, Energy and Industrial Strategy (BEIS) plans to review the law on shared parental leave and there is a proposal in the pipeline to extend shared parental leave to working grandparents.

  • The minimum contribution that employers must make into auto-enrolment pension schemes is to increase from one per cent to two per cent as from 6 April 2018.

Conclusion

When the Prime Minister, Theresa May, activated Article 50 of the Treaty on European Union in March 2017, this triggered the start of a two-year negotiation process for the UK to leave the EU. However, until an exit agreement is concluded or (if no agreement can be achieved) until the end of the two-year negotiation period — or any agreed extension — the UK will remain part of the EU. Thus, all European laws that currently impact on UK employment law will remain in force at least until March 2019 and most likely well beyond that date.

Last reviewed 18 January 2018