Employment update: What to expect in 2019
Although Brexit will no doubt continue to dominate our attention in 2019, there will be a number of important employment law developments to watch out for. We have summarised some important changes to employment law below:
Taking effect from 1 January 2019, companies with 250 or more employees will be required to publish the ratio between the CEO’s pay and the median pay in the workforce. They will also be required to prepare an annual statement of engagement with employees for companies (including details of any consultation arrangements and how directors have regard to employee interests). Recommended methods include: appointing a director from the workforce, creating an workforce advisory panel or the creation of a designated non-executive director responsible for employee engagement.
Responses to the ethnicity pay gap reporting consultation should be available by April. Unfortunately, there are clear challenges around collecting data and ethnicity classifications, as well as a lack of clarity around what information should be reported. For that reason, the consultation invited views from employers on what information should be published to allow for meaningful and proportionate action taken without adding undue costs to business. Possible options include:
- One pay gap figure comparing average hourly earnings of ethnic employees with a percentage of white employees;
- Several pay gap figures comparing average hourly earnings of different groups of ethnicity minority employees as a percentage of white employees; and
- Ethnicity pay information by pay band or quartile, showing the proportion of employees from different ethnic groups by £20,000 pay bands or by pay quartiles.
Fortunately, to avoid placing too great a burden on small businesses, the government is proposing that only public authorities and employers with 250 or more staff should be required to report. We can also expect that trials or a phased approach with “early adopters” will test the process before mandatory reporting is required.
From 1 April 2019, the national living wage is due to increase as follows:
- £8.21 per hour for workers aged 25 and over;
- £7.70 for workers aged at least 21 but under 25 ;
- £6.15 for workers ages at least 18 but under 21;
- £4.35 for workers aged under 18 who are no longer of compulsory school age; and
- £3.90 for apprentices.
From 9 December 2019, the Senior Managers and Certification Regime (SM&CR) will be extended to all firms authorised under the Financial Services Markets Act 2000. The SM&CR was introduced in 2016 for banks, building societies, credit unions and PRA-designated investment firms. Following this extension, approximately 47,000 financial advisors, asset managers, mortgage brokers and consumer credit firms will be affected.
The government’s “Good Work Plan” was published towards the end of 2018 and is designed improve working conditions for agency workers and zero-hour contract workers. The measures are mostly due to come into force in April 2020- with the following exceptions:
- From 6 April 2019, the (rarely enforced) financial penalties for employers who commit an “aggravated breach” of employment rights increases from £5,000 to £20,000. When considering whether an employer has committed an “aggravated breach”, an employment tribunal will take into account a number of factors. These include the employer’s circumstances, such as its size and behaviour, the duration of the breach, and the HR resources available. The employment tribunal will also consider whether the employer’s actions were deliberate or malicious and whether the employee’s rights were breached repeatedly.
- Also from 6 April 2019, the right of itemised payslips is to be extended to all workers. Where a worker is paid on an hourly rate basis, the payslips should contain the number of hours paid for.
As the year progresses, we can expect to see more draft legislation implementing aspects of the plan. The measures include a right for workers to request a more stable contract, an increase in the period required to break continuity of employment from one week to four and a ban on deductions from staff tips. The plan also proposes a process for publishing the names of employers who fail to pay tribunal awards on time.
For more information on the issues raised above or any other employment related matter, please contact a member of the Employment Team.