UK Employment law Update 2018 – 2019

2018 saw a number of prominent modifications in the existing UK employment law.

While public, private and voluntary sectors were directed to publish their reports on the gender pay gap across England, Wales, and Scotland, the Union bid farewell to the ‘Fit for Work’ Assessment.

But that’s not all. With the year still ongoing, there are many other changes pertaining to the employment law, discrimination and unfair dismissal.

Let us take a look at some important updates in UK employment law, this year ongoing.

Taxation of Termination Payments and PILONs

Introduced on 6 Apr 2018, this measure will help the government ‘clarify and tighten’ the tax structure pertaining to the treatment of termination payments.

Furthermore, the government aims to treat all payments in lieu of notice (PILONs) as earnings, which will be subjected to tax and class 1 NICs.

Subsequently, if the notice is not worked, employers will have to submit an amount equivalent to the employee’s basic pay as tax.

Additionally, all termination payments that are above the threshold of £30,000, will be subjected to class 1A NICs (employer liability only). The termination payments equal to £30,000 and above subjected to class 1A NICs, will be implemented under the National Insurance Contributions Bill that will be published in 2018.

The HM Treasury will also be permitted to vary the £30,000 threshold by regulations after this change is implemented.

Data Protection Act 2018 and General Data Protection Regulation

Effective from 25 May 2018, the General Data Protection Regulation (GDPR) will apply to all EU Member States, including the United Kingdom. Subsequently, the GDPR will help strengthen the existing data protection rules by:

  • Expanding the individual data protection rights (including the right to be forgotten);
  • Tightening the rules on individual consent to processing sensitive data;
  • Reducing the response time to ‘subject access requests’ from 40 days to 30 days, while removing the £10 fee;
  • Requiring organisations to submit reports on any data breaches, which ‘risk the rights and freedoms of the individual’ to a relevant regulatory authority.

Any breach of the GDPR may result in fines up to 20 million Euros or 4 percent of the organisation’s global turnover, whichever is the greater.

That said, the enforcement of the new regulations will rest with the Information Commissioner’s Office (ICO) in the UK.

The government also introduced a new Data Protection Bill on 13 September 2017, which:

  • set new benchmarks for protecting general data according to the GDPR, while retaining certain exemptions for the UK;
  • replace the existing Data Protection Act 1998 in the UK;
  • implement the EU’s law enforcement directive, which aims to prevent, detect and prosecute criminal offences;

Abolition Of Childcare Vouchers

Due to delays, the government’s plan to scrap its workplace childcare voucher system did not close until 5 April 2018.

Rather, the ruling was extended by six months, following a vote in Parliament. The abolition of the voucher system is among the most significant changes that would be a part of the rollout of universal credit.

Subsequently, the previously employer-backed voucher system will be replaced with another, which will help ensure tax-free childcare for families and also entitle them for claims up to £2,000 per child.

Additionally, the government also plans to restrict employment allowance for illegal workers. Therefore, employers will be unable to claim Employment Allowance for up to one year, in case:

  • They hire an illegal worker;
  • They have been penalised by the Home Office;
  • They have exhausted all appeal rights against that penalty;

CEO/Worker Pay Gap Reporting

Under the initiative taken by the Department for Business, Energy, and Industrial Strategy, the draft legislation, requiring all listed organisations to reveal the pay difference between an average worker and their CEO, will be published before the 2018 summer recess of Parliament.

Furthermore, the government also announced a number of corporate governance reforms, with effect from August 2017. These include:

  • mandatory reporting of pay gaps between workers and chief executives;
  • a new public register of listed organisations that have faced major opposition from shareholders to executive pay packages;
  • new measures on ‘employee voice’ in boardrooms.

Overall, these reforms intend to improve the “transparency of big business to shareholders, employees and the public”, says Greg Clark, Business Secretary to the Government.

Brexit

One of the most talked-about events of 2017, Brexit may come into effect starting 29 March 2019.

It all started when Theresa May served the notice of the UK’s intention to quit, triggering the process for leaving the EU under Article 50 of the Lisbon Treaty by on 29 March 2017.

While the Treaty sets a 2-year time frame so that the EU and a member state may hold negotiations on the terms of that state’s departure, once the Article 50 date is triggered, this period may extend by agreement.

Having said this, it was during December 2017 that the prime minister attempted to enshrine 29 March 2019 in the law as the date for the United Kingdom’s official exit from the EU; however, this initiative was refuted by a vote in the Parliament.

Subsequently, there have been talks of a possible transitional period that will last several years following the official Brexit date. During this time different arrangements may come into existence before a permanent relationship agreement is developed between the EU and the UK.