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UK Employment and Pension law: What’s on the agenda for 2018?

United Kingdom
Written by
Lewis Silkin, widely recognised as the UK’s leading specialist employment law practice.
This article sets out the main developments in employment and pensions law in the UK in 2018, including issues relating to regulation of the gig economy, data protection and Brexit.

Employment status

The slew of employment status cases, particularly in the ‘gig economy’, will continue into 2018. In February, the Supreme Court will hear an appeal by Pimlico Plumbers to decide whether a plumber was a worker or a contractor. Uber will take their case to the Court of Appeal, challenging the Employment Appeal Tribunal (‘EAT’) ruling that Uber drivers are workers. Deliveroo will defend Employment Tribunal (‘ET’) claims, having recently been successful in a separate worker status case in a trade union context (see the UK employment law review 2017). The Government is also set to respond to the independent Taylor Review of modern working practices. This made proposals regarding the statutory definitions of employment status, which were reflected in House of Commons select committee recommendations. Meanwhile, the UK Government is looking at how some form of automatic enrolment into pension saving might be extended to self-employed workers.

Data protection

The EU General Data Protection Regulation (‘GDPR’) comes into force in May 2018, taking effect across all EU member states including the UK. In September 2017, the Government published the Data Protection Bill, which will repeal the Data Protection Act 1998 and implement the GDPR. The new regime imposes more severe fines for non-compliance. It should also necessitate a shift in thinking for employers that have previously relied on employees signing up to blanket consent policies: these are unlikely to be compliant under the new regime. Those with responsibility for workplace pensions also need to be prepared. Among other things, they should be auditing the personal data they hold on both current and former members, as well as their dependants and beneficiaries, establishing the grounds on which they process that personal data, updating contracts, and communicating with pension scheme members.

Equal pay

The long-running private sector equal pay case brought by thousands of employees of the supermarket chain Asda will continue into 2018. The Court of Appeal will hear argument on whether workers in Asda’s retail stores (who were lower paid and mostly women) can compare themselves with distribution centre workers (who were higher paid and mostly men). The EAT ruled in favour of the claimants but granted Asda permission to appeal. It is possible that the publication of gender pay reports (see above) will prompt more employees to bring equal pay claims against their employers.

Taxation of termination payments

The tax treatment of termination payments will change in April 2018. The new measures align the rules for tax and employer National Insurance contributions (‘NICs’) by making an employer liable to pay NICs on termination payments they make to employees. Employers will be required to pay NICs on any part of an ex gratia termination payment that exceeds the GBP 30,000 tax-exempt threshold. Additionally, all payments in lieu of notice will be subject to income tax and NICs in full.

Caste discrimination

The Government is expected to respond to a consultation on caste discrimination that closed in September 2017. The consultation asked whether legislation should be introduced to cover caste as an aspect of race discrimination, or whether the case law in this area should be allowed to develop naturally. It is doubtful whether the Government has any real appetite to propose legislation on this issue.

Family benefits

There are set to be developments regarding certain family-related benefits for employees.

Shared parental pay

The EAT is expected to deliver judgment in two cases appealing conflicting ET decisions on shared parental pay. In Capita Customer Management v Ali, a tribunal found that a male employee was discriminated against when his employer refused to allow him any shared parental leave at full pay (when a woman on maternity leave would have received full pay). In the other case, Hextall v Chief Constable of Leicestershire Police, an ET held that a policy of full pay for mothers on maternity leave, but only statutory shared parental pay for partners, was not discriminatory.

Bereavement leave

The Government is supporting a bill to give employed parents two weeks’ paid leave if they lose a child under 18. The Parental Bereavement (Leave and Pay) Bill is currently progressing through Parliament and regulations are expected to be introduced in 2020.

Grandparental leave

In 2016, the Government proposed to extend shared parental leave and pay to working grandparents by 2018. It has not, however, published any further announcements on the topic and it is unclear if or when it intends to take this forward.

Minimum wage

In March 2018, the Court of Appeal will hear the joined cases of Focus Care Agency v Roberts, Frudd v Partington Group and Royal Mencap Society v Tomlinson-Blake [2017] IRLR 588. The issue concerns employees who sleep in to carry out duties if required, whether those employees engage in ‘time work’ for the duration of the night shift, or whether they are only entitled to the national minimum wage when they are awake and carrying out duties.

Corporate governance

The Government intends to legislate in the first half of 2018 on a number of proposals for corporate governance reform. These include making large companies publish the ratio between CEO’s and workers’ pay, strengthening the voices of employees, customers and suppliers, and corporate governance in large private companies.

Sunday working

The Enterprise Act 2016 places new obligations on retailers in relation to Sunday working. There will be extra protection for shop workers who do not wish to work on Sundays and a new right to object to working additional hours on Sundays. The provisions are not yet in force, but once they are implemented retail employers will have a two-month period in which to act.

The future for ‘defined benefit’ pensions

Pensions based on a defined benefit, often a proportion of an employee’s final salary, remain in the spotlight, following the collapse of several high profile companies. The government’s Work and Pensions Select Committee is considering the adequacy of existing regulatory powers and whether specific additional measures are required for private companies or those with complex and multinational group structures, to ensure that employers cannot walk away from their pension responsibilities. A Government white paper on the regulation of such schemes is expected soon.

Automatic enrolment

Employers are required to automatically enrol ‘eligible jobholders’ who meet certain thresholds, in terms of age and earnings, into pension saving and pay contributions. The minimum contribution rates are being gradually increased and are set to rise from 6 April 2018 so that the total minimum contribution will be 5% of an employee’s qualifying earnings (band earnings between GBP 6,032 and GPB 46,350 in the in 2018/19 tax year), of which at least 2% must be paid by the employer.

State Pension Age (‘SPA’)

SPA in the UK depends on an individual’s date of birth. Currently age 65 for men, for women it is in the process of rising to 65, so that by November 2018 it will be the same for both men and women.  SPA had then been scheduled to rise incrementally for all, so that by 2020 it would be age 66 and, by 2028, age 67. However, following an independent review in 2017, the Government proposed a new timetable for rises in SPA to age 68, to maintain ‘fairness between generations in line with continuing increases in life expectancy’. The UK Government’s Department for Work and Pensions now intends to increase SPA to 68 between 2037 and 2039. The change will affect everyone born between 6 April 1970 and 5 April 1978, subject to appropriate legislation being introduced. The next review, currently due to be concluded by 2023, will consider whether rises beyond 68 are needed and when.

A ban on cold calling

In a move designed to crack down on pension scams, the UK Government is planning to introduce a ban on pensions cold calling in 2018. It is intended that the ban would prohibit unsolicited phone calls, text messages and emails about pensions, with certain exclusions for legitimate business, such as where an existing client relationship exists.

A new pensions Directive

EU Member States have until January 2019 to implement ‘IORP II’, which includes new measures for workplace pensions on governance and communications, as well as changes to the rules on cross-border pensions. However, as the implementation period is largely running in parallel to the UK’s Brexit negotiations, it currently unclear how the UK Government might tackle its obligations here.

And finally… Brexit

In March 2017 the UK gave formal notification of its intention to leave the EU, beginning a two-year countdown until Brexit day in March 2019. Until then, the UK remains bound by EU law, including employment laws. The 2018 Brexit negotiations will focus on the future relationship between the UK and EU, as well as the terms of a transitional period (set to last around two years). The prime minister has repeatedly said that she does not want to water down EU-derived employment rights. In late 2017, however, she failed specifically to deny rumours that the Conservative Party would seek to depart from European working-time rules post-Brexit. The future direction in relation to such EU employment rights may become clearer during 2018.