2018: what to look out for in employment law

12 Jan 2018

2018 looks set to be a busy year in employment law, with some fairly significant changes expected. Key developments include the introduction of gender pay gap reporting and changes to data protection requirements and the taxation of payments in lieu of notice. We highlight the key employment law changes and cases to watch out for in the coming year.

Employment law changes

Gender pay gap reports

By 30 March the first gender pay gap reports have to be published by the public sector. This is shortly to be followed by the private sector (where applicable) on 4 April 2018. The reports are bound to be hotly reported in the media, as those already released have been, and it will be interesting to see how much the voluntary narrative provided by employers can mitigate the reputational effects of any significant pay gaps. It is important to ensure the accuracy of the gender pay gap figures prior to publication. Several companies have already been caught out by a Financial Times investigation into the accuracy of their figures.

Statutory increases 

In April statutory maternity, paternity, adoption and shared parental pay will increase, along with statutory sick pay. The national minimum wage will rise on 1 April.

Payments in lieu of notice

From 6 April, income tax and both employer and employee National Insurance contributions will be payable on all payments in lieu of notice.

EU General Data Protection Regulation (GDPR)

The GDPR will come into force on 25 May. This will require employers to comply with new legislation in respect of the processing of personal data. Careful consideration will need to be given as to how employee data is processed and how information is provided to employees about the use of their data. In particular, the GDPR will require a move away from relying on employment contracts towards comprehensive and clearly drafted privacy notices. Liability for a breach will be 4% of annual global turnover or €20 million, whichever is higher. We can also expect the Data Protection Act to be replaced with a new Data Protection Bill.

Corporate governance reforms

These are expected to come into effect by June. The proposals for reform include executive pay, strengthening the employee voice, and corporate governance in large privately-held businesses.

Senior Managers and Certification Regime (SM&CR)

There is a planned extension in the summer of 2018 to the SM&CR, which relates to the provision of regulatory employment references. This will now apply to all firms authorised under the Financial Services and Markets Act 2000 and relevant firms seeking to appoint someone to either a senior management or certification function need to ensure they have requested references for the individual's previous six years of employment.

Key cases

  • Pimlico Plumbers Ltd and another v Smith – we expect this case to be heard in February and it focuses on a key topic of 2017: the gig economy. We wait to see whether the Supreme Court will agree with the lower courts that, despite having a contract stating he was self-employed, a plumber was actually a worker
  • The Sash Window Workshop Ltd and another v King – this is another case that is bound to have implications for the self-employed (or gig economy). The European Court of Justice (ECJ) recently ruled that a worker must be able to carry over unused holiday where they have been unable to exercise the right to take paid leave due to the fact it would not be paid. The Court of Appeal will now consider its decision in this case following the outcome of the referral to the ECJ
  • Ali v Capita Customer Management Ltd, and Hextall v Chief Constable of Leicestershire Police – these cases relate to shared parental leave and whether it is sex discrimination to deny male employees the chance to receive enhanced pay whilst taking shared parental leave. In both cases, enhanced pay would have been paid to a woman taking maternity leave. This is an important set of cases to keep an eye on – depending on the EAT's decision, it may result in employers having to enhance shared parental pay where they also offer enhanced maternity pay
  • Peninsula Business Service Ltd v Baker – this case is due to be heard by the Court of Appeal on 27 March and will hopefully answer the question of whether a claimant has to prove that they are disabled in order to claim disability harassment
  • Porras Guisado v Bankia SA and others – the ECJ's decision is due, following the Advocate General's opinion that the Pregnant Workers Directive should protect workers against dismissal from the moment they become pregnant, even if they have not notified their employer
  • Lee v McArthur and Ashers Baking Company Ltd – the Supreme Court will hear this case in May and it is a case more commonly known as the 'gay cake case'. The Court will decide whether a bakery directly discriminated against a gay man by refusing to bake him a cake with the decoration 'Support Gay Marriage'. The outcome of this case will have important implications for all those in service based industries
  • Focus Care Agency Ltd v Roberts and two other cases – the Court of Appeal will consider the correct test when establishing whether employees who sleep on employer premises overnight are engaged in 'time work' (for the purposes of the national minimum wage) for the whole of the night shift or whether they are only entitled to the national minimum wage when awake and carrying out duties. 

We will continue to keep readers informed of developments through our weekly updates.  Our employment club seminars – which will take place in March, July and November this year – will also include a summary of recent cases and employment law changes on the horizon.  We will be sending out the dates of our seminar programme soon.