20 January 2017

Three (employment law) predictions for 2017

Few would dispute that 2016 was a tumultuous year. The biggest news in the UK was surely June’s vote in favour of Brexit. Theresa May has indicated that Article 50 will be triggered in March, which will then start the formal process of the UK leaving the European Union. That may generate some of the bigger political headlines of the year, but as we have discussed previously triggering Article 50 is, in itself, unlikely lead to major changes in employment law.

That does not mean, however, that 2017 will be uneventful from an employment law/HR perspective. Prediction may be difficult, "especially if it is about the future" as Niels Bohr once said, but we can still make some educated guesses about what will be competing for our attention over the next 12 months.

The gig economy will continue to generate headlines

The gig economy was a frequent talking point in 2016. The second half of the year in particular saw a number of high profile companies announcing that they would move away from the use of zero hours contracts, whilst the Employment Tribunal decision in the Uber case (discussed here) resulted in Uber drivers, who had previously been treated as self-employed, being granted certain basic employment law rights. 

That trend seems set to continue in 2017. Earlier this month, we had another Employment Tribunal ruling to the effect that an individual working in the gig economy was entitled to basic rights. In this case, a courier working for City Sprint succeeded in her claim that she was entitled to holiday pay. A number of claims against other courier companies are pending. 

In around the middle of the year, the Government is due to publish the outcome of its review of modern working practices. Amongst other things, the review is looking at whether existing employment practices are "fit for purpose" for newer business models such as the gig economy.

Finally, on a more prosaic level, the Government has taken steps to bolster HMRC’s role in enforcing payment of the minimum wage (a right enjoyed by workers such as the successful claimants in the Uber case, but not by the genuinely self-employed). Amongst other things, HMRC’s enforcement budget has been increased and a Director of Labour Market Enforcement has been appointed to tackle minimum wage abuse. Given that HMRC’s enforcement powers already include naming and shaming offending employers, HMRC’s expanded powers seem likely to keep the issue in the spotlight. 

Data protection will (or at least should) move up the corporate agenda

In May 2018, the General Data Protection Regulation (the GDPR) will come into force. Although the GDPR is EU legislation (such that it would not automatically apply to the UK after its departure from the EU), the Government has indicated that the GDPR will be implemented in the UK. Many of the rules contained in the GDPR are similar to existing rules in the Data Protection Act 1998, but there are some significant changes. A full review of the GDPR is beyond the scope of this article, but there are two changes which may be of particular interest for employers. 

Firstly, the consent rules have been tightened. Under the GDPR, consent must be freely given, specific, informed and explicit. Where an organisation is relying on an individual’s consent as a justification for processing their personal data, therefore, they will need to consider whether that consent meets the new requirements. 

Secondly, the GDPR introduces more stringent rules regarding how an organisation should respond to a subject access request. Amongst other things, in addition to the existing obligations the organisation will have to: disclose the source of personal data (where the data has not been provided by the individual themselves); indicate where possible how long data will be retained for, or what criteria will be used to determine this; if the request was made electronically, provide a copy of the individual’s data in electronic form unless the individual requests otherwise; respond to requests within one month (compared to the current 40 day period).

The GDPR is not all bad news, however. Amongst other things, it will introduce a single set of rules across the EU, which will make compliance easier for organisations operating in multiple jurisdictions. It also adopts a risk-based approach to certain aspects of the compliance regime, which may reduce the burden on organisations where the relevant activity is low risk. 

That being the case, why is the GDPR so significant? Primarily because of the large increase in the maximum fine that can be imposed for non-compliance. Whereas the current maximum fine is £500,000, under the GDPR this will increase to the greater of 4% of the organisation’s worldwide turnover and €20,000,000. Whilst it is to be hoped that more minor compliance issues will be dealt with in a proportionate manner, the potential maximum fines should be enough to encourage all organisations to review whether their existing approach to data protection will fit with the new regime. 

Access to justice will remain a concern

The requirement that claimants pay fees to pursue claims in the employment tribunal (and the employment appeal tribunal) was introduced in July 2013. Since then, there has been a dramatic reduction in the number of employment tribunal claims being brought. For example, in the first quarter after the fees regime was introduced, the number of new claims brought was 75% lower than the preceding quarter and 79% lower than the equivalent period in 2012. 

Whilst this might be viewed as good news by some employers concerned about spurious claims, there are also those who are concerned that some employees with genuine claims are being denied access to justice. A related question is whether the introduction of the fees regime is affecting how employment matters are being dealt with in the workplace. It seems likely that at least some managers will adopt a more robust approach towards employees knowing that (most) employees now face the additional hurdle of having to pay a significant fee before issuing a claim.

Against this backdrop, it is not surprising that the fees regime has been subject to legal challenges. Most notably, the public sector union, Unison, has brought proceedings arguing that the fees arrangement makes it disproportionately difficult for employees to exercise their rights. To date, that claim has been unsuccessful in both the High Court and the Court of Appeal, but it is due to be heard by the Supreme Court in March 2017. 

In addition, a House of Commons select committee has expressed its own concerns about the impact fees have had on access to justice and has recommended, amongst other things, that the level of the fees should be significantly reduced. The committee also criticised the Government for its failure to produce its own report – having announced in mid-2014 that it was planning to review the introduction of the fees regime "shortly", in early 2017 the outcome of that review is still awaited. Cynics may wonder if the Government is simply waiting for the outcome of the Supreme Court decision before determining what position to take, or at the very least may think that the issue is not a priority for it. As a consequence, therefore, whilst there are plenty of voices calling for a change to the fees regime, it is not obvious that anything will happen in the short term.

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