As part of the Government’s emergency coronavirus legislation, prime minister Boris Johnson has announced that workers who self-isolate shall be entitled to statutory sick pay from their first day (rather than their fourth day) of absence from work. It is understood that this will be a temporary measure only.

Given the many challenges presented by coronavirus, we have prepared guidance on the issues UK employers may wish to consider when formulating their plans – please click here. Wider insight and analysis is also available here.

For a few years now, the Government has been considering ways to enhance the security and sustainability of pensions in the UK, and to protect defined benefit (“DB“) pension schemes. These considerations were documented in the Pension Schemes Bill. Due to lack of Parliamentary time (aka a little thing called Brexit and the general election), the Bill was put on hold but remained very much on everyone’s minds. The Committee Stage in Parliament began last week, so now seems like a good time to refresh our memories about the key provisions of the Pension Schemes Bill from an employer’s perspective.

Continue Reading The Pension Schemes Bill – What employers need to know

Following the July 2017 Taylor Review and the publication of the Good Work Plan in December 2018, the changes to the scope of Section 1 statements are now looming. So what does this mean for employers in respect of those starting work on or after 6 April 2020 and their existing employees and workers who can request a new section 1 statement after this date?

  • First, the obligation to provide an employee with a written statement of particulars will be extended from 6 April 2020 to include workers.
  • Second, the provision of written particulars will become a “Day 1 Right” and so employers will, in most cases, need to ensure that they are providing employees/workers with written particulars on or before the date on which work begins, and there will be no minimum service requirement for either a worker or an employee to be entitled to receive such a document.
  • As to what changes are being made to the required particulars, employers will now need to also include detail in writing about any paid leave to which they are entitled; which days of the week that they are required to work and, if there can be any variation to this, how that variation will be determined; details of all benefits that will be provided by the employer; details of any probationary period, including the duration and any conditions; and any training entitlement provided, including whether it is optional/mandatory and how the cost of this training is to be covered.
  • The new Section 1 requirements only apply for contracts which start on or after 6 April 2020. However, existing employees and workers will be entitled to request a newly compliant Section 1 statement, and employers will need to provide this within one month of such a request or, if there are any changes made to any of the new information required to be given or the employee or the worker is re-engaged, then an updated Section 1 statement would also need to be provided.

In view of the above, it is likely that many employers will need to update their template contracts now to be ready for 6 April 2020 in order to ensure compliance with these new statutory requirements. Please get in touch with your usual Mayer Brown Employment Department contact if you need any assistance with updating your contracts.

The Supreme Court has this week declined to hear the appeal in what had been the highly anticipated case of Hextall v Chief Constable of Leicestershire Police.  Mr Hextall had sought permission to appeal a decision of the Court of Appeal from last year, which found that it was not sex discrimination for his employer to provide only the statutory rate of Shared Parental Leave (“SPL”) pay to men, while providing enhanced maternity pay to women.  

 In May 2019, the Court of Appeal had heard Hextall and a similar case (Ali v Capita Customer Management Ltd).  In Ali, the argument was that the operation of these different rates of pay was direct discrimination and, in Hextall, that it was indirect discrimination.  The Court of Appeal rejected both claims.  On direct discrimination, the court held that the correct comparison was between a man and woman taking SPL, not between a man taking SPL and a woman taking maternity leave.  On indirect discrimination, they said that the claim should properly be brought as an equal pay claim and, as such, it was bound to fail due to the rule that more favourable treatment terms are permitted in connection with pregnancy or childbirth.  Even if it could be brought as an indirect discrimination claim, the correct pool for comparison purposes was a pool of people (men and women) taking SPL and excluding women taking maternity leave as, in the court’s view, women taking maternity leave are in a materially different position from men and women taking SPL. Based on that pool, where men and women would be paid the same rate of SPL pay, there was no disadvantage to men.

As a result of the Supreme Court’s refusal to hear the Hextall appeal, and since the Ali case was not appealed, the Court of Appeal’s decision stands as the law.  Employers should therefore not be liable to a sex discrimination (or equal pay) claim if they operate an enhanced maternity pay policy and a statutory rate SPL pay policy.

This post will be of interest to employers who have a defined benefit pension scheme.

Background

Defined benefit (DB) pension schemes were once the pension arrangement of choice for paternalistic employers seeking to provide competitive benefit packages for their employees.

In more recent times, however, difficult investment environments, increasing life expectancy, low gilt yields and in many cases shrinking company size, have left companies with expanding DB pension schemes burning a hole in their balance sheet. Sound familiar? It is unlikely you would have missed the press coverage surrounding BHS and Tata Steel, and the issues that those companies faced.

Continue Reading Buy-ins vs buy-outs – what employers should know

As discussed in our previous posts in April 2019 and January 2020, the government intends to apply the IR35/off payroll reforms to the private sector in April 2020.  By way of reminder, the IR35 reforms are intended to apply to any individual who, but for the supply of their services through an intermediary, would otherwise be an employee of the end-user client receiving the service. These rules will impact medium and large businesses in their role as the end-user client. From 6 April 2020, these organisations will become responsible for determining the employment status of contractors, regardless of whether they supply their services through a personal service company directly to the end-user or via an agency. The new rules will effectively see a shift in current responsibility on status determination, from the contractor to the end-user client.

By way of update, in early February 2020, HMRC provided some clarification about the new off payroll rules.  In order to allow businesses more time to prepare for the changes, it has confirmed that the new regulations will only apply in respect of services provided on or after 6 April 2020, rather than any payments for services made on or after that date.  Therefore, if any payments are made post-5 April 2020 for services that were provided pre-6 April 2020, they will not be caught by the changes.  This is helpful clarification for end user clients who currently engage individuals via personal service companies – it means that there is an additional period in which businesses have time to prepare for the implementation of the new rules.

The formal publication of the review that has been conducted into the implementation of changes to the off payroll rules is due to conclude in February 2020, and it is hoped that it will bring some additional welcome clarification on the new rules for private sector contractors and end-user clients alike.

Consultation on RPI/CPI changes delayed

Judged to be to be a “poor measure of inflation” by the UK Statistics Authority (UKSA), its view is that before the Retail Prices Index (RPI) is scrapped, it should be aligned with a variant of the Consumer Prices Index which includes owner-occupier’s housing costs (CPIH).

Although the Government rejected the proposal to remove RPI, it agreed to consult on whether to align CPIH with RPI and the timing of this.   It confirmed that no change will be implemented for five years (before February 2025).   The Government also confirmed that its objective is for CPIH to become its headline measure over time but was silent on whether it might start to issue CPI-linked gilts.

Continue Reading RPI to CPIH

As the number of reported cases of the Novel Coronavirus (2019-nCoV) continues to rise and authorities ramp up preparations to handle possible contagion, so too must employers.

Click here for helpful guidance from our Hong Kong team on what employers in Hong Kong are required to do when dealing with a Novel Coronavirus outbreak.

As we flagged in our post in April 2019 (https://www.mayerbrown.com/en/perspectives-events/blogs/2019/04/ir35-reform-what-employers-can-be-doing-now-to-prepare), the government intends to apply the IR35 reforms to the private sector in April 2020. As a reminder, the IR35 reforms are intended to apply to any individual who, but for the supply of their services through an intermediary, would otherwise be an employee of the end-user client receiving the service. These rules will impact medium and large businesses in their role as the end-user client. From 6 April 2020, these organisations will become responsible for determining the employment status of contractors, regardless of whether they supply their services through a personal service company directly to the end-user or via an agency. The new rules will effectively see a shift in current responsibility on status determination, from the contractor to the end-user client.

2020 update

On 7 January 2020, the government confirmed the launch of a review, to run until mid-February 2020, to consider concerns from affected individuals and businesses about the implementation of the private sector reforms in April 2020. There has been no suggestion that this review will change the decision to implement the IR35 reforms from 6 April 2020. However, it is hoped that the review will bring some welcome clarification on the new rules for private sector contractors and end-user clients alike.

The government has also published a research briefing paper, in addition to launching the review referenced above, which details the history of the IR35 legislation from 2010 onwards, and sets out some interim responses to certain concerns raised, namely that (see link to Factsheet): i) the new rules will not be retrospective – HMRC will focus on whether businesses are complying with the reform for new engagements post-6 April 2020 rather than concentrating on past engagements; ii) organisations’ decisions on whether individuals fall into the new rules will not automatically trigger an enquiry into earlier decisions in previous tax years; iii) the reforms will not prevent individuals from working through a personal service company or an equivalent; iv) organisations will receive support and guidance throughout the implementation period to ensure that the reforms are applied correctly via initiatives such as workshops and detailed legislative guidance; v) HMRC will continue to improve the CEST tool (a digital tool which has been designed by HMRC to assist public authorities (and now private sector companies) to assess whether a worker falls inside or outside the scope of the IR35 rules) with input from stakeholders; and vi) the status decision of a worker made by an organisation will be able to be challenged in real time through a client-led status disagreement process which is outlined under the proposed legislation.

It would not be advisable to wait until the outcome of the government review before businesses take steps to prepare for the reform. Should you need any assistance with your planning process, please get in touch.

The Supreme Court is set to be busy with employment law cases in 2020. Below, we take a look at some of the most important cases coming up this year and why they are significant.

Various claimants v Wm Morrisons Supermarket

In this case, which is the first group litigation to be brought in the UK following a data breach, the Supreme Court will decide whether the Data Protection Act 1998 (“DPA”) excludes an employer from being vicariously liable for a data breach committed by an employee. It will also consider whether the employee’s actions in this case occurred in the course of his employment (and, therefore, whether Morrisons are vicariously liable). The employee in question copied the personal data of nearly 100,000 employees on to a USB stick which he then published online. The Court of Appeal found that Morrisons were vicariously liable even though the employee had acted in a deliberate attempt to damage Morrisons, and even though Morrisons were themselves compliant with the data protection legislation. While this case involves the law as it stood before the GDPR, given the increase in the rights of data subjects under the GDPR, employers should be wary that a Supreme Court finding against Morrisons could well lead to an increase in data breach class actions. This case was heard in November 2019. Judgment is awaited.

Asda v Brierley

This is an equal pay claim brought by around 35,000 Asda employees. The Supreme Court will consider the issue of whether female employees working at retail stores are able to compare themselves to a group of predominantly male distribution depot workers for the purposes of an equal pay claim. While this decision will only determine whether the workers are able to bring the claim (and not, at this stage, whether Asda are actually in breach of equal pay legislation), the outcome will be significant for other supermarkets who are also currently facing similar claims, worth very significant sums, and for employers who have both warehouse and retail operations. The Supreme Court is likely to hear the case in the second half of 2020.

Ali v Capita Customer Management Ltd; Hextall v Chief Constable of Leicestershire Police

The Supreme Court is set to consider whether it is sex discrimination for an employer to operate a Shared Parental Leave (“SPL”) policy which provides only the statutory rate of SPL pay while having a maternity policy offering enhanced maternity pay. The Court of Appeal ruled that such a policy is neither directly nor indirectly discriminatory. Had this case gone the other way, employers would have been faced with the choice of either increasing SPL payments to match their maternity pay schemes, or reducing maternity pay so that it could not be relied on to improve SPL pay. The Supreme Court hearing on this case is therefore eagerly awaited. A date for the hearing is yet to be confirmed.

Uber BV and others v Aslam and others

The long-running case on whether Uber drivers are workers or self-employed is set to come to a conclusion this year. The Supreme Court will hear the case in July. In 2018, the Court of Appeal held (by majority) that Uber drivers are workers, rather than self-employed, despite the fact that their contractual documentation says differently. Uber were given hope, however, as Underhill LJ disagreed with the majority of the Court of Appeal, arguing that the relationship between Uber and the drivers (as described in the contractual documentation) was neither artificial nor unrealistic. This case will have wide-ranging implications for the gig economy in general and is keenly awaited.