Employment law – a snapshot of 2016

Thomas Twitchett

As 2016 looms on the horizon, it’s a good time to reflect on the year that was, and to look forward to next year’s employment law developments.

It’s probably fair to say that 2015 has not been a trailblazing year in terms of the developments in employment law. No sweeping legislative changes, no drastic re-writing of rights, no wholesale changes in Government policy; a year principally of consolidation and organic, steady progress.

There have, however, been some developments in employment law. Perhaps the biggest changes, in terms of mass-market impact are:

  • shared parental leave: introduced on 5 April 2015, a progressive and long-awaited policy recognising the modern family, offering flexibility to parents and cutting through antiquated stereotypes of the roles of men and women.
  • holiday pay: applying guidance from the Court of Justice of the European Union, the Employment Tribunal ruled that employee holiday pay should include commission (although, note below the decision is being appealed).
  • Financial services: employers have also been busy preparing for some of the major changes to come in 2016, particularly the new senior manager regime.

So, will 2016 be more of the same? Slow and steady development in employment law? Well, there are some contentious issues up for debate, and most of them with a financial impact for employers…

So what does 2016 hold in store for employment law?

The perennial issue of tribunal fees will undoubtedly feature once again. UNISON continues to seek a judicial review of their introduction, MPs continue to condemn their punitive impact on the most vulnerable employees, and the Government is due to report back on a review of tribunal fees which kicked off earlier in June.employment_law

2016 will also herald further developments on industrial action and trade union obligations. The new Trade Union Bill 2015-2016, published by the Government on 15 July 2015, is currently making its way through Parliament. The Bill aims to increase strike ballot thresholds, introduce new information and timing requirements in relation to industrial action, and to impose obligations on unions regarding the supervision of picketing. This year has seen a number of strikes by employees in the UK, including (to name but a few) employees at Transport for London, First Great Western, the Met Office, the National Gallery, the Probation Service and the Docklands Light Railway. The Bill is sure to be contentious.

The new senior manager regime will be shepherded in on 7 March 2016. Although there are still some moving parts on which the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) are still consulting, a number of the rules have now been finalised. The purpose behind the new rules is to make senior managers accountable for the regulatory activities they oversee and is designed to fix the perceived lacuna in responsibility when things go wrong at regulated firms. Firms have been gearing up for the 8 February 2016 deadline, by which time they must notify the FCA and PRA of their approved persons who are to become senior managers under the new regime. Challenges remain in terms of complying with the certification regime and putting effective whistleblowing arrangements in place.

Companies will have to grapple with the new gender pay gap reporting requirements. Announced by the Prime Minister David Cameron and Equalities Minister Nicky Morgan, new regulations are being introduced to challenge the disparity in pay between men and women in the workplace. Private and voluntary sector employers with at least 250 employees will be required to publish information about their gender pay gap by 25 March 2016. Based on recent announcements, the Government intends to capture bonus information and, in the future, to extend the reporting obligation to public sector employers. We await the draft regulations.

Perhaps we will also finally get a definitive answer on whether commission should be included in holiday pay, when the Employment Appeal Tribunal delivers its judgment in the latest twist of Lock v British Gas. Although the Court of Justice of the European Union is clear that commission should be included in holiday pay, British Gas continues to argue that UK domestic legislation contains no such comparable requirement.

2016 will also be year of the national living wage which comes into force in April 2016. Effectively a new minimum wage for those aged 25 and over, the starting rate will be £7.20 an hour. Several high profile companies have raised concerns about its impact on their bottom lines.

One other matter to watch is the development of the law in relation to whistleblowing and the public interest test that must be satisfied before an employee’s disclosures are protected. Despite the clear introduction of the test by the Enterprise and Regulatory Reform Act 2013, its impact has already been substantially eroded by the Employment Appeal Tribunal reducing it to a negligible hurdle. In Chesterton Global Ltd v Nurmohamed, a group of 100 interested employees satisfied the test; in Underwood v Wincanton plc, just four. Chesterton is due to be revisited by the Court of Appeal in October next year. As an increasing number of employees seek to argue they have been dismissed because they have ‘blown the whistle’, this area of law is bound to be litigated further.

In all, next year looks like an interesting one in employment law. Will tribunal fees be abolished? Will firms get to grips with the new senior manager regime – and on time? Will the gender pay gap reporting expose any particular firms? What financial impact will the national living wage have (or holiday pay, if redefined) on business? Will the Trade Union Bill make it through Parliament and will it curtail strike action?

We’ll have to wait and see.

Happy Christmas and New Year!

Comments published on Employment Talk do not necessarily reflect the views of Allen & Overy.

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