8 February 2016

Whither the red tape challenge? Whistleblowing, illegal workers and other developments to watch out for in 2016

Remember the red tape challenge? It was a Government initiative which was intended to reduce the regulatory burden on businesses.

The exercise appears not to have been an unqualified success. A report in the Financial Times published towards the end of the last Government's time in office suggested that whilst the Government had removed £1.2bn worth of regulation since 2010, it had added £4.3bn of new regulation. Against that backdrop, it is perhaps unsurprising that 2016 looks like being another busy year for HR professionals. We discuss below some of the key upcoming changes.

1. New gender pay reporting obligations

As we have reported previously, attempts to encourage businesses to report information about gender pay differences voluntarily have been unsuccessful. The Government has therefore committed itself to introducing regulations by 26 March 2016 requiring employers with at least 250 employees to report pay differences between male and female employees. It has been announced that the reporting obligation will extend to bonus payments. That apart, we currently have little detail as to what the obligation will look like. It is likely, however, that employers will have to provide comparative statistics for male and female employees in the same job, and where they are in jobs which are different but of equivalent value (reflecting existing equal pay legislation). Determining which jobs are “of equivalent value” may not be straightforward. Other complexities may arise in relation to part-time employees, employees returning from career breaks, and so on. Employers will need to be prepared to devote significant time and thought to complying with this obligation.

2. Widening the criminal offence for employing illegal workers

It is already a criminal offence for an employer “knowingly” to employ someone who (because of immigration controls) does not have the right to work in the UK or to do the job in question. Employers may also be subject to a civil penalty if they employ an illegal worker, even unknowingly, unless they have carried out the prescribed checks.

The Immigration Bill that is currently making its way through Parliament will widen the criminal offence so that an employer will be liable if they employ someone knowing, or having reasonable cause to be believe, that the individual is an illegal worker. The offence will be punishable by 2-5 years in prison. Employers should therefore ensure that their right to work checks are robust (but nonetheless applied in a non-discriminatory manner).

3. Determining who can bring whistleblowing claims

Bringing a whistleblowing claim can be an attractive option for a disgruntled employee. Unlike in ordinary unfair dismissal claims, employees who claim that they have been dismissed because they blew the whistle do not need to have a qualifying period of service before they can bring a claim and there is no cap on the amount of damages that a Tribunal can award.

Since 2013 there has been a requirement that the employee reasonably believes that the disclosure is in the public interest if they wish to bring a claim under the whistleblowing legislation. This was intended to ensure that the legislation protected individuals whistleblowing about matters of wider public concern but not those whistleblowing about matters affecting only them. However, the Courts have interpreted the public interest requirement widely. In Underwood v Wincanton Plc, the Employment Appeal Tribunal ruled that four HGV drivers who had made allegations about an unfair allocation of overtime could bring whistleblowing claims. The EAT noted that disputes about employment terms and conditions can be in the public interest and that the ‘public’ in ‘public interest’ can mean just a subset of the public.

The issue of what constitutes public interest is due to be considered further by the Court of Appeal in another case, Chesterton Global Ltd (t/a Chestertons) and another v Nurmohamed, later this year. What the Court decides will have a significant influence on how easy it will be for employees to bring whistleblowing claims.

4. The vexed issue of holiday pay

The aim of the Working Time Regulations 1998 (WTR) may be laudable. Amongst other things, the WTR provide that employees are entitled to a minimum amount of paid annual leave. However, determining exactly what employees must be paid during periods of holiday has proved less than straightforward. 

After considerable amounts of litigation, it appears that, in addition to receiving basic pay, during periods of annual leave employees must also be paid overtime and other payments that they receive whilst working if these relate to the tasks that the employee is required to perform or to their status (eg their seniority). 

The latest piece of the puzzle is commission payments. Judgment is expected shortly in the case of Lock v and others v British Gas Trading Ltd and another. The Employment Appeal Tribunal has been asked to determine whether the WTR can be read as requiring that pay during holidays should (where applicable) also include an amount in respect of commission. 

Other complexities abound, including whether the above decisions apply to all of an employee’s holiday entitlement under the WTR (arguably not) and how the non-salary elements of holiday pay are to be determined when these payments vary over time.

So, that red tape challenge? Challenge seems to be the operative word.

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