Neil Buck: HR and Employment Law in 2016

This story is over

As this is my last article of 2016, I thought I would take a whistle-stop look at the big things that have happened in HR management and employment law over the course of the year.

Due to new and amended legislation and ongoing case law decisions, the goalposts are often changing and it’s therefore difficult for employers to keep up with and on top of.

Since getting things wrong with your staff, regardless of whether it’s done consciously or not, can potentially have significant harmful effects on the bottom line in one way or another. That’s why ensuring you’re knowledgeable and one step ahead of your legal obligations and how it may impact on your business operations is vital for any successful business.

This year, zero-hour contract regulations brought in a few measures to ensure fairness for these types of workers e.g. employers can’t now insist on exclusivity.

The new National Living Wage (NLW) was introduced in April – simply another tier of the existing National Minimum Wage (NMW) for 25+ year olds.

This higher wage rate meant a few challenges for employers who then had issues such as paying different rates for the same job being done by two people and hence creating disharmony.

Some employers even offset the higher rate by removing other benefits which obviously didn’t go down too well with the staff and was frowned upon by the Chancellor at the time as not being in the spirit of things.

Also age discrimination risks became apparent if the reason for employing someone younger is to save on costs only.

The majority of statutory rates were frozen in April, but there were a couple of changes to note such as for dismissals on or after April 6, 2016, the maximum compensatory award cap for unfair dismissal increased to £78,962.

The maximum amount of a week’s pay (which is used to calculate statutory redundancy payments and various other awards) increased to £479.

A new scheme was introduced to penalise employers who fail to pay tribunal awards or settlements agreed via ACAS. The penalty is 50% of the unpaid sum, subject to a minimum of £100 and a maximum of £5,000. If the employer pays both the unpaid sum and the penalty within 14 days, the penalty will be reduced by 50%.

Politically, the Brexit vote and Theresa May becoming the new Prime Minister with her own ideas of governance, will certainly impact on employers. Although it is impossible to say for definite at this stage what laws will be affected or when.

In terms of us leaving the EU, the main immediate concern for employers has been about managing the existing workforce expectations, protecting any EU nationals from any harassment due to their status, and supporting EU nationals to remain by getting residency status for example.

Whether we will see a widening talent gap and skills shortages long term if many EU nationals leave remains to be seen but it is probably likely.

Regarding the legislation that may change by leaving the EU, the fact is that many of our existing employment laws go beyond the EU law requirements or stemmed from our own national law in the first place e.g. unfair dismissal rights, so I don’t think there will be widespread changes to either legal obligations reducing or employees rights being decimated.

I analysed the potential impact of Brexit more closely back in July, but the likely suspects to be tweaked or looked at closely if/when we eventually leave the EU, are perhaps holiday pay calculations not including overtime or commission payments that have recently come about through EU case law, TUPE regulations allowing the harmonisation T&C’s post transfer, the agency worker regulations being abolished and discrimination claims being capped, to name just a few.

The ongoing legal obligation to set up an auto-enrolment pension scheme and all the associated costs continued throughout 2016, which gave many employers another admin and management nightmare to deal with.

In terms of case law, there were some large cases including holiday pay calculations – British Gas v Lock confirmed statutory holiday pay (the four weeks element) should include commission payments but watch this space as an appeal is likely.

Equal Pay claims involving large retailers such as Asda meant that store workers can compare themselves to warehouse and distribution male workers.

The Acas Code of Practice on Disciplinary and Grievances Procedures was found NOT to apply to ‘Some other Substantial Reason’, (which is one of the existing five potential fair reasons for dismissing someone) where it involved a breakdown in the working relationship.

It had also been decided in another case that it didn’t apply to ill health – incapability reasons for dismissal.

The Employment Appeal Tribunal (EAT) held that it was not discriminatory for an employer to discontinue childcare vouchers provided under a salary sacrifice scheme during an employee’s maternity leave since the vouchers represent a part of the salary that has been diverted before showing in the employee’s final pay packet. Here, the vouchers are in effect ‘remuneration’ and hence can be discontinued during, maternity leave.

There was also the recent case involving Uber taxi drivers that decided that the drivers were not self-employed contractors but in fact ‘workers’ and hence entitled to certain employment rights, albeit not as extensive as employee rights.

This will be a blow to the uprising of the ‘gig economy’ type of new technology platforms that are becoming more mainstream way of delivering a service to end users using individuals to deliver that service in a different way to the norm.

If they are classed as workers it will certainly have a knock on effect of higher prices and give the companies more of an admin headache to ensure compliance with workers rights.

The things I have mentioned here really are only scratching the surface of what’s gone on in 2016, but it hopefully serves as a useful reminder at this year-end point that keeping abreast of developments that may impact your business is certainly worthwhile to protect you from any negative side effects of non-compliance.

Merry Christmas!