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What’s next? 2016 in employment law

What’s next? 2016 in employment law

 

To accompany our round-up of the developments in employment law from 2015, here are the top 5 new developments that we are expecting in the coming year.
Employment status: some clarity at last?
The historically grey line between employment and independent contractor status (or self- employment) will be under the spotlight in 2016 from a mix of new Government initiatives and forthcoming court decisions.  This has always been a tricky area for employers, so if these changes bring clarity they could make employers’ lives easier.
The Government is considering a statutory test for employment status for tax purposes, and is also planning to restrict the ability of those employed by personal service companies to claim certain tax advantages.  It looks like more significant changes could be on the horizon as the Government seeks to reduce tax losses.
May 2016 will also see the Court of Appeal hearing the appeal in Pimlico Plumbers v Smith, which concerns the employment status of plumbers. It is an interesting case because the plumbers share many of the hallmarks of employment – strict rules on uniform and working methods, tending to work exclusively for one company – but also have some markers of self-employment, like taking on financial risk.  So far, the Tribunal and the EAT have come down on the side of self-employment, but a comprehensive judgment from the Court of Appeal could provide welcome assistance to employers struggling with these issues.
Senior managers’ regime comes into force
The new senior managers and certification regime will come into force on 7 March 2016.  The regime affects individuals working in banks, buildings societies and some investment firms. The key features of the regime are:
an approval regime focused on senior management, with requirements on firms to submit robust documentation on the scope of these individuals’ responsibilities
a statutory requirement for senior managers to take reasonable steps to prevent regulatory breaches in their areas of responsibility
a requirement on firms to certify as fit and proper any individual who performs a function that could cause significant harm to the firm or its customers, both on recruitment and annually thereafter
a power for the regulators to apply enforceable Rules of Conduct to any individual who they believe comes under their responsibility (they use the wording “impact their statutory objectives)
Affected firms and employees have been planning for the introduction of the regime for some time, and will no doubt continue to do so throughout the first quarter of the new year.
EAT judgment in commission holiday pay case
The appeal in one of the key holiday cases, Lock v British Gas, was heard before the EAT in December 2015.  The case concerned whether Mr Lock’s holiday pay should be increased to reflect commission payments he would not earn while he was away.  The Court of Justice of the European Union and the Employment Tribunal said that he should receive these payments under European law.  Along with the Bear Scotland  case on overtime, the decision caused many employers to reassess their holiday pay practices, and leading to the Government introducing legislation limiting retrospective holiday pay claims with effect from 1 July 2015.
British Gas is appealing the core decision in Lock regarding the treatment of commission for holiday pay purposes, and is also appealing the decision that the UK’s existing legislation can be interpreted in a way that gives effect to European law, potentially shifting some of the burden of historical claims onto the UK government.  The decision (due early 2016) will be eagerly awaited by employment lawyers, employers and employees alike.
New data protection directive
It’s been a long time coming (and probably featured on a few “what to expect in 2015” summaries a year ago), but on 15 December 2015 the European Parliament and the Council of the European Union reached an informal agreement on a new General Data Protection Regulation.  The new regulation will be the most significant development in the area since the previous 1995 directive, although the precise impact on businesses is not yet clear. Some of the expected changes are:
Greater consistency between member states, hopefully easing compliance for businesses operating across Europe.
Expanded territorial scope, meaning that businesses previously exempt from compliance will now be caught (for example, if they offer goods or services to EU data subjects from outside the EU).
Increased enforcement powers, with fines potentially as high as 5% of annual worldwide turnover.
Focus on risk-based approach to compliance, potentially reducing the burden for businesses undertaking low-risk processing.
Strict data breach notification requirements, potentially obliging businesses to notify data protection authorities of breaches within 24 hours (and data subjects within 72 hours).
Employment Tribunal fees: here to stay?
Employment Tribunal fees, first introduced in 2013, are fast moving from a novelty to a fact of life for Claimant and Respondents. But since they were brought in there has always been some doubt about whether the Government acted lawfully in doing so. There have been two attempts to judicially review the decision, one in Scotland (brought by Fox and Partners, a law firm) and one in England and Wales (brought by the trade union UNISON).  So far both attempts have been unsuccessful, with UNISON’s appeal to the Court of Appeal failing earlier this year.
2016 is likely to see UNISON’s final bite of the cherry at this issue, as they have lodged an application for permission to appeal to the Supreme Court.  The employment law and HR world will be watching eagerly to see whether the Supreme Court heralds a return to the good / bad* old days of more frivolous claims / greater access to justice*.
* Delete as appropriate depending on your views on Tribunal fees.

To accompany our round-up of the developments in employment law from 2015, here are the top 5 new developments that we are expecting in the coming year.

Employment status: some clarity at last?

The historically grey line between employment and independent contractor status (or self- employment) will be under the spotlight in 2016 from a mix of new Government initiatives and forthcoming court decisions.  This has always been a tricky area for employers, so if these changes bring clarity they could make employers’ lives easier.

The Government is considering a statutory test for employment status for tax purposes, and is also planning to restrict the ability of those employed by personal service companies to claim certain tax advantages.  It looks like more significant changes could be on the horizon as the Government seeks to reduce tax losses.

May 2016 will also see the Court of Appeal hearing the appeal in Pimlico Plumbers v Smith, which concerns the employment status of plumbers. It is an interesting case because the plumbers share many of the hallmarks of employment – strict rules on uniform and working methods, tending to work exclusively for one company – but also have some markers of self-employment, like taking on financial risk.  So far, the Tribunal and the EAT have come down on the side of self-employment, but a comprehensive judgment from the Court of Appeal could provide welcome assistance to employers struggling with these issues.

Senior managers’ regime comes into force

The new senior managers and certification regime will come into force on 7 March 2016.  The regime affects individuals working in banks, buildings societies and some investment firms. The key features of the regime are:

  • an approval regime focused on senior management, with requirements on firms to submit robust documentation on the scope of these individuals’ responsibilities
  • a statutory requirement for senior managers to take reasonable steps to prevent regulatory breaches in their areas of responsibility
  • a requirement on firms to certify as fit and proper any individual who performs a function that could cause significant harm to the firm or its customers, both on recruitment and annually thereafter
  • a power for the regulators to apply enforceable Rules of Conduct to any individual who they believe comes under their responsibility (they use the wording “impact their statutory objectives)

Affected firms and employees have been planning for the introduction of the regime for some time, and will no doubt continue to do so throughout the first quarter of the new year.

EAT judgment in commission holiday pay case

The appeal in one of the key holiday cases, Lock v British Gas, was heard before the EAT in December 2015.  The case concerned whether Mr Lock’s holiday pay should be increased to reflect commission payments he would not earn while he was away.  The Court of Justice of the European Union and the Employment Tribunal said that he should receive these payments under European law.  Along with the Bear Scotland  case on overtime, the decision caused many employers to reassess their holiday pay practices, and leading to the Government introducing legislation limiting retrospective holiday pay claims with effect from 1 July 2015.

British Gas is appealing the core decision in Lock regarding the treatment of commission for holiday pay purposes, and is also appealing the decision that the UK’s existing legislation can be interpreted in a way that gives effect to European law, potentially shifting some of the burden of historical claims onto the UK government.  The decision (due early 2016) will be eagerly awaited by employment lawyers, employers and employees alike.

New data protection directive

It’s been a long time coming (and probably featured on a few “what to expect in 2015” summaries a year ago), but on 15 December 2015 the European Parliament and the Council of the European Union reached an informal agreement on a new General Data Protection Regulation.  The new regulation will be the most significant development in the area since the previous 1995 directive, although the precise impact on businesses is not yet clear. Some of the expected changes are:

  • Greater consistency between member states, hopefully easing compliance for businesses operating across Europe.
  • Expanded territorial scope, meaning that businesses previously exempt from compliance will now be caught (for example, if they offer goods or services to EU data subjects from outside the EU).
  • Increased enforcement powers, with fines potentially as high as 5% of annual worldwide turnover.
  • Focus on risk-based approach to compliance, potentially reducing the burden for businesses undertaking low-risk processing.
  • Strict data breach notification requirements, potentially obliging businesses to notify data protection authorities of breaches within 24 hours (and data subjects within 72 hours).

Employment Tribunal fees: here to stay?

Employment Tribunal fees, first introduced in 2013, are fast moving from a novelty to a fact of life for Claimant and Respondents. But since they were brought in there has always been some doubt about whether the Government acted lawfully in doing so. There have been two attempts to judicially review the decision, one in Scotland (brought by Fox and Partners, a law firm) and one in England and Wales (brought by the trade union UNISON).  So far both attempts have been unsuccessful, with UNISON’s appeal to the Court of Appeal failing earlier this year.

2016 is likely to see UNISON’s final bite of the cherry at this issue, as they have lodged an application for permission to appeal to the Supreme Court.  The employment law and HR world will be watching eagerly to see whether the Supreme Court heralds a return to the good / bad* old days of more frivolous claims / greater access to justice*.

* Delete as appropriate depending on your views on Tribunal fees.