Welcome to the November 2017 edition of Frontline UK.
This month, as the festive season kicks off, associate Tom Mintern provides a five-step guide on avoiding the HR headaches of the office Christmas party.
Our Case Summary addresses the need for more detailed risk assessments in respect of breastfeeding workers; the tax issues arising out of the use of personal service companies when engaging individuals; and the knowledge that can be attributed to employers for the purposes of unfair dismissal claims.
Our Legal Update includes the Government's plans for the rights of EU nationals (and their families) following Brexit; the incoming changes to the taxation of termination payments; developments on the Employment Tribunal Fee Reimbursement scheme; and the contents of the European Commission's latest proposal to tackle the Gender Pay Gap.
We also bring you the latest on the gig economy, including the contrasting decisions concerning Uber and Deliveroo on employment status, and details on how to sign up to our upcoming webinar, 'To employ, or not to employ, that is the question', that takes a closer look at uberization across Europe.
The Office Christmas Party - How to Avoid an HR Hangover
With December around the corner, 'tis the season to be jolly', and that can only mean one thing; the office Christmas party.
With many employers well underway in their planning of this year's party, Tom lists five quick-fire steps employers can take to help make sure the big night doesn't lead to any lasting HR headaches.
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Breastfeeding worker highlights sex discrimination disparity
Ramos v Servicio Galego de Saude (European Court of Justice)
The ECJ has decided that where an employer fails to assess the workplace risks posed to breastfeeding workers, this may constitute direct sex discrimination. It also held that, where a pregnant or breastfeeding worker is exposed to a potential risk at work, it is not enough for employers to do a general risk assessment of the worker's role: they must instead assess the breastfeeding worker's individual circumstances in order adequately to determine whether there are specific risks to her or her child.
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HMRC not afraid of the Big Bad Wolff: IR35 strikes again
Big Bad Wolff v HMRC (First-tier Tribunal)
The First-tier Tax Tribunal has clarified that where individuals provide personal services through personal service companies ("PSC") and, but for their PSC, would be considered as an employee of the end-user client under applicable social security legislation, the IR35 intermediaries regime will apply for NIC purposes. This will require PSCs to account for NICs on the relevant individual's remuneration in full, deducted on a PAYE basis.
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Disciplinary decision-makers in the dark…
Royal Mail v Jhuti (Court of Appeal)
The Court of Appeal has confirmed that, for the purposes of unfair dismissal claims, the reasonable belief to be attributed to an employer when dismissing an employee should be determined by reference to what the decision-maker actually knew at the time of dismissal, and not what they 'ought' to have known. As such, an employee was not automatically unfairly dismissed for making protected disclosures where the dismissing manager was, in reality, unaware that such disclosures had been made.
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Clarity at last? Updated guidance published on post-Brexit rights for EU workers
The UK Government has provided updated information on its proposals for the rights of EU nationals and their families following the UK's exit from the European Union, confirming that the UK is 'very close to reaching an agreement with the EU'. The most recent publication provides further detail on proposals for a new 'settled status' for EU nationals with sufficient continuous residence in the UK, as well as practical information on the envisaged application procedure.
Read our full review >>
Incoming: fundamental changes to taxation of termination payments
The Government’s Finance Bill 2017 confirms a number of important changes to the taxation of termination payments, with the stated aim of reducing employer abuse and streamlining the applicable regime. In summary:
- No more PILON distinctions: all payments which are referable to an employee’s notice period, whether paid pursuant to a contractual PILON or not, will be treated as ‘earnings’ and fully chargeable to income tax and employee/employer NICs;
- Retention of £30,000 exemption: the first £30,000 of any payment which relates solely to termination, including genuine compensation payments in respect of loss of office and redundancy payments, will remain exempt from income tax;
- Watch for employer NICs: employer NICs will become payable on the balance of termination payments above £30,000 (although no employee NICs will be payable on such balance). Currently payable at a rate of 13.8%, this could lead to significant additional liabilities for employers;
- Abolition of Foreign Service Relief: FSR will not be applicable (except to seafarers) in any case where the relevant employee is a UK tax resident in the year of their termination; and
- Clarification on payments for injury: The current tax exemption for termination payments in respect of employee injury or disability will expressly include psychiatric injury, but will not cover awards for ‘injury to feelings’.
The new regime will apply to all termination payments made on or after 6 April 2018. The changes should already be high on the agenda of employers considering exits that will or may extend into next April. Furthermore, given that there will no longer be any tax benefit from omitting PILON clauses from employment contracts, employers may also wish to revisit their employment documentation.
Full roll-out of ET fee reimbursement scheme
Following the Supreme Court's decision in Unison (see here for our detailed comment), which ruled that Employment Tribunal fees were unlawful, the Government has announced a scheme to reimburse those who have paid fees to bring their claims in the Employment Tribunals over the last four years.
October saw a phased implementation of the scheme apply to an initial 1,000 eligible parties, who were invited to apply for reimbursement. The Government has now rolled out the scheme in full, which is open to claimants, respondents (including those who had been ordered to reimburse fees incurred by their opposite number) and their representatives or sponsors who actually paid tribunal fees. The scheme does not yet cover those who may have been deterred from bringing claims due to the fee regime, or those claims that were rejected or dismissed for the non-payment of fees. An expansion of the scheme is expected in due course.
Eligible parties can apply online, by post or email. Specific forms will need to be completed, and successful applicants will be entitled to a full refund plus interest paid at a rate of 0.5%. Full details, and links to the necessary documentation, can be found here.
European Commission tackles stagnated gender pay gap
The European Commission has published an eight-stage action plan for 2018-2019 to close the gender pay gap, following slow progress in overcoming gender pay inequality in the last five years. The plan addresses the need to consider further-reaching measures at EU-level and ensure the full application of the principle of equal pay between women and men.
The measures identified cover: (i) specified action to combat segregation across particular occupations, sectors and at different levels of seniority, including the potential introduction of a Directive aimed at improving gender balance on boards; (ii) steps aimed at better validating women's skills, efforts and responsibilities; (iii) undertaking investigations to uncover inequalities and ongoing stereotypes; and (iv) improved alerting and information channels, along with enhanced partnerships, to tackle the gender pay gap.
You can read the Commission's full action plan here.
Spotlight on the Gig Economy
Gig economy lesson Deliveroo'd to Uber
(1) Uber BV v Aslam and others (EAT); and (2) Independent Workers’ Union of Great Britain v RooFoods Limited t/a Deliveroo (CAC)
The employment status of gig economy workers has, once again, been under the spotlight during November.
As has been widely reported, the EAT confirmed that Uber drivers should be classified as ‘workers’ when they are logged in to the Uber app within their designated territory and are able and willing to accept assignments. The decision reiterates that such drivers are entitled to a minimum level of employment rights such as the national minimum wage, holiday pay and rest breaks. The EAT specifically rejected an argument, brought in reliance on the written contracts in place, that Uber simply acts as an agent for independent drivers, who are in business on their own account and contract directly with the passengers they drive. Our more detailed comments on the Uber proceedings can be found here, and the full EAT judgment can be read here.
Less than a week later, however, the Central Arbitration Committee (a body dealing with collective and union recognition disputes) held that Deliveroo’s delivery ‘riders’ should be classified as genuinely self-employed. As such, they cannot claim workers’ rights and are not entitled to ‘unionise’. This decision hinged primarily on the substitution clause within the riders’ contracts, which gives them a largely unfettered right to appoint others to work on their behalf. Critically, the Committee considered that this right was genuine and that there was evidence of it having been exercised in practice. The obligation of personal service necessary for ‘worker’ status was therefore absent. The full decision can be found here.
Although the outcomes appear inconsistent, they once again confirm that employment status can only be determined on a case-by-case basis, depending on the specific operation of a relationship in practice, rather than the written terms in place between parties. It remains clear that those operating within the gig economy cannot avoid their employment obligations through clever drafting, without also implementing consistent working practices.
To employ, or not to employ, that is the question
Tune in to our Uberization webinar exploring the blurred lines of employment in the gig economy
6 December 2017
08:30 Pacific Standard Time & 12:00 Greenwich Mean Time (13:00 CET)
Sign up here >