HM Insights

Employment law changes in 2018: the big things to look out for

It seems as if we say this virtually every December, but this year has seen some important changes in employment law.

There was the seismic shift in tribunal access due to the removal of employment tribunal fees (latest statistics show a 64% increase in claims brought since their abolition) and many important judgments in every court, from the Employment Appeal Tribunal to the European Court of Justice.

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It's never an exact science to predict what will happen in 2018, but there are two main themes that we see developments falling into:

Financial squeeze on employers

Pensions auto enrolment

On 6 April 2018, there will be an increase to minimum auto enrolment pension contributions for both employers and employees. As it stands, the current minimum contribution for both parties is 1% but this will increase to 2% employer contribution and 3% employee contribution next April. There is then a further increase scheduled in 2019 for a 3% employer contribution and 5% employee contribution.

Living and minimum wages

Alongside this, there will be the usual increase to living and minimum wage rates on 1 April 2018, with the national living wage for workers aged 25 and over to be increased to £7.83 (from the current rate of £7.50).

Taxing termination payments

One change to look out for when dealing with Settlement Agreements is the change in April 2018 to the treatment of taxation of termination payments in respect of payments in lieu of notice. All such payments will be subject to income tax and National Insurance deductions, whether contractual or not.

It is presently possible to pay entirely non-contractual payments in lieu of notice as damages payments, not subject to tax, but this will no longer be the case. Either the employee – in accepting reduced sums – or the employer – in "grossing up" the payment will be financially affected by this.

Equal pay claims

We're all familiar with the saga of public sector equal pay claims, which have been the subject of litigation for many years. However, as (some) of these draw to a conclusion, the focus will turn more to private sector claims and supermarkets seem the current target, with claims against Asda and Sainsbury's currently winding their way through the tribunal system. Expect these types of claims to become more prevalent.

Holiday pay

Appropriate calculation of holiday pay has been a headache over the past few years, and with recent cases such as the European Court of Justice case of King v Sash Windows, there may be further developments. Although the King case turned very much on its facts, it may offer scope for challenges to settled cases, therefore there is a possibility holiday pay entitlements may need re-calculated next year. We'll keep you updated on any concrete developments.

Increase to individual rights

Data protection

The second theme we expect to see is an increase to, and enforcement of, individual rights. The General Data Protection Regulation will be coming into force in May 2018 and will offer increased rights and protection to individuals in respect of their personal data.

Combined with these enhanced individual rights, there are robust sanctions for non-compliance. In light of the recent case involving Morison's supermarket (where an employer was vicariously liable for a disgruntled employee's data breach of personal details of almost 100,000 employees), it is quite possible that we will find individuals (and solicitors) more keen to pursue enforcement of these rights and seek financial recompense for breaches.

Gig economy

We will see more "gig economy" cases, where individuals are fighting for worker rights notwithstanding a contractual self-employed status. The Pimlico Plumbers case is in the Supreme Court, the Uber case likely to be at the Court of Appeal (having been refused a direct appeal to the Supreme Court) and a number of other cases will be heard in the employment tribunal.

One particularly interesting claim is that of Jess Varnish, the Olympic cyclist, who has claims in the employment tribunal both against British Cycling and UK Sport for sex discrimination, detriment for whistleblowing, victimisation and unfair dismissal. These heads of claim will require her to establish at least worker status to allow some to proceed, and employee status for all to proceed.

Tribunal access

Lastly, and predictably, given the abolition of the fees regime, there will be many more claims brought in the employment tribunal.

Get in touch

It's sure to be an interesting year, and that's without even contemplating the effect of Brexit on employment law. If you have any queries about any of the issues raised in this article, please do not hesitate to contact one of our employment team.