Annual Employment Law Masterclass 2019 - Conference Slides 2019 (Eversheds Sutherland)

Emirates Old Trafford
Lancashire County Cricket Club
CIPD Annual Employment Law Conference
2019
Presentation by Audrey Elliott
Partner
Eversheds Sutherland
(International) LLP

Eversheds Sutherland | 24 January 2019 |
Brexit and free movement
In view of the agreement between the UK and European
Commission, free movement between EEA countries and the
UK will end
The current
arrangements will
remain until the UK
leaves the European
Union, with a form of
free movement likely
to be retained until
January 2021
“Settled Status”
applications will be
necessary for all EU
citizens (other than
Irish citizens)
between 2019 and
2021
Nothing changes at
present – EU rules
about free movement
are still in place

Settled status
Between the introduction of the settled status process and, at
latest, 30 June 2021, all citizens of EEA countries who wish to
continue to live and work in the UK must register with UK
Visas and Immigration:
─ available to nearly all who arrive UK before
31 December 2020 with five years’ continuous
residence in the UK
─ others will be granted pre-settled status and may
apply for settled status once they reach
this five-year point
─ intended to be a streamlined and user-friendly
process, with existing data used to establish
whether applicants have been in the UK
A pilot scheme commenced on 21 January, so applications can
be made now

Other things of which the Government has advised are:
How will this work in practice?
─ The aims of the application process:
1. this will be establishing the applicant’s identity
2. checking they are not a serious criminal, and
3. evidencing their residence in the UK
─ This will be digital as far as possible, with application by uploading
scans and photos and using an app
─ “Resident in the UK” will include those outside the UK on that date
but who have maintained continuity of residence
─ The status will not be lost unless a person leaves the UK for five
continuous years
Further announcement about how this is to be rolled out
are to be made

Feedback from employees attending our
presentations on Settled Status
Genuine worry that large scale data management projects undertaken
by UKVI tend to go wrong and the security of this data
There are technical difficulties with the App in it’s current form
which prevent some applicants from proceeding
A specific issue is arising regarding dual citizenship for German
and Dutch citizens
Only about half have access to the android devices it is
necessary to use
The fact that it’s unclear what happens to people who don’t
register, or that the rules may change, causes concern
Keen to understand, in every presentation, how the employer will help
them although often unaware of materials which have already been
published

Report of the Migration Advisory Committee
─ This report was published in September and assessed how it will
be possible for EU nationals to work in the UK in the absence of
free movement
─ The MAC suggests priority for new EU workers would not be
beneficial in isolation from all other considerations, but does not
rule this out as part of the bigger picture (for example, as a
provision within a trade deal)

Continued
Report of the Migration Advisory Committee
Fourkeyrecommendationsweremade:
The monthly cap of the number of restricted Tier 2
General Certificates may end, as could the
requirement for employers to conduct a resident
labour market test
The Tier 2 General immigration category should be
re-opened to all jobs requiring skill levels at RQF
Level 3
There should not be a Sector Based Scheme to
allow lower skilled migrants to take up specific jobs
The Tier 5 Youth Mobility Scheme could be extended
if a need is identified for more temporary workers in
relatively low-skilled roles

The Immigration White Paper
─ This largely accepts the key recommendations of the Migration
Advisory Committee with regard to EU workers after any transition
period ends
─ Lower-skilled workers could qualify for a visa which lasts for 12
months only, with most others requiring a role with a salary
paying £30,000 per year
─ There will be a lengthy period of consultation about the proposed
changes and it is unlikely this will be introduced prior to 2020
─ The Government acknowledges these proposals are at an early
stage and are likely be amended in response to future political
events (the form of Brexit adopted or a trade agreement) as well
as feedback received from stakeholders

Key Recommendations
The UK’s Immigration Rules will apply to EU and non-EU migrants
alike at a future date:
─ this will replace the current immigration provisions regarding the
Points Based System
─ builds on the previous report of the Migration Advisory Committee,
whose recommendations have been largely accepted
─ EU citizens arriving in the UK after the end of the transitional
period (31 December 2020) will need to meet these requirements.
Those arriving for the first time after 29 March 2019 may need to
do so by a future date – this depends on whether a deal is
reached to leave the EU
─ likely to be implemented on a date in 2021

Key recommendations
Tier 2 will be the main route for EU nationals to work in the UK from
January 2021
Many of the proposals in the White Paper simplify current business
immigration requirements which appears positive for employers,
including:
─ the removal of the current Tier 2 immigration quota
─ an end to the resident labour market test
─ assistance to students seeking to remain
─ greater possibility to apply in-country for permission to work
─ a commitment that the new system should be “as straightforward
and light touch as possible”
Suggestions elsewhere in the White Paper are that the system should
be self-funding. Increasing fees may regulate applications in future

Key recommendations
The greatest immediate concern for employers is likely to lie in the
proposals regarding lower skilled workers
─ Tier 2 has skills and salary criteria
─ a minimum salary of £30,000 is suggested for Tier 2 with roles to
be at RQF Level 3 or above
─ a lower skilled worker visa is also suggested which should be
limited to twelve months, followed by a “cooling off” period
─ it is suggested that category should only exist temporarily to
assist with short-term labour shortages following Brexit and may
come with restrictions based on nationality, duration and, possibly,
a quota
This does not appear to match employer feedback about
requirements to date and will be especially significant for industries
with significant numbers of such employees (such as agriculture, food
production and social care)

Key questions for the consultation
How may lower-
skilled workers be
accommodated by
the new system?
Feedback we have
received from clients
indicates this
suggested visa route
may not adequately
serve those who rely
on large numbers of
EEA staff
How will employers be
able to resource these
sectors of the
economy properly?
Is the right
balance being
struck between
skill, salary and
shortage?
The new proposals
may make it
significantly easier to
work in the UK if paid
a salary of above
£30,000 per year or,
possibly, less than
that,
Will salary and high
application fees to be
the main method of
establishing
permission to work in
future?
Is the system
simple enough?
A more complicated
immigration regime
will exist in the UK for
employers post-Brexit
Will the right-to-work
regime change to
reflect this greater
complexity?

Key questions for the consultation
How will trade negotiations after Brexit impact this?
─ the presumption that there would be no further discussion of the
benefits of free movement in trade agreements seems an unlikely
one which would change the basis for qualification
─ citizens of some countries will acquire enhanced rights to live and
work in the UK based on trade agreements - how would this
impact citizens of countries who do not?
Will restrictive immigration policies impact recruitment and
retention of talent?
─ our work with clients over the past two and a half years has shown
many have lost key employees through concern regarding Brexit
and the report acknowledges an economic cost of ending free
movement
─ a more general feeling that the UK does not suitably value the
contribution of EU workers, fear or actual experience of intolerance
may damage recruitment and retention of talent

The provisions in the draft withdrawal agreement regarding
transitional immigration arrangements would no longer take effect
What happens if there’s “No Deal”
─ UK Visas and Immigration will introduce the EU Settlement
Scheme for those living in the UK at the point of Brexit in any
event, although the deadline to apply would be 31 December 2020
rather than in 2021
─ The European Union (Withdrawal) Act would mean free movement
provisions continue immediately after withdrawal, but a new
immigration system could be imposed for those without residence
prior to 29 March (which we would expect to happen)
─ any new immigration requirements would be likely to make it
more difficult to live and work in the UK for those arriving
after Brexit

Continued
What happens if there’s “No Deal”
─ greater risk to the immigration status of British citizens working in
EU countries, who would need to rely on national immigration laws
rather than the transitional period mentioned in the Draft
Withdrawal Agreement
─ major political changes may occur
which could mean a new Prime
Minister, a General Election,
postponement of the withdrawal
date or a referendum on the
final agreement

Questions?

2019
Presentation by Naeema Choudry
Partner
(International) LLP

− Right extended to workers
− Must state hours where paid by reference to time worked
− Pay periods starting on/after 6 April 2019
− Purpose: improve NMW compliance
Payslips
National Minimum Wage

BEIS is consulting on :
− whether NMW legislation should be
amended to make it easier for
employers to rely on the salaried hours
exemption?
− Also considering the impact of the NMW
rules on salary sacrifice schemes
− Whether there are any NMW rules
which penalise employers without
protecting workers from detriment?
− Consultation closes 1 March 2019
Consultation

Enforcement
─ 600 employers “named and shamed” during 2017/18
• £15.6m in back pay identified for 200,000 workers, with
employers fined additional £14m
─ Top 5 explanations for underpayment:
• taking deductions from wages for costs such as uniforms
• underpaying apprentices
• failing to pay travel time
• misusing the accommodation offset
• using the wrong time periods for calculating pay
─ HMRC is encouraging employers to “self review”
• HMRC webinars and online guide to support employers available
on www.gov.uk
─ Recent HMRC confirmation: since 2 July 2018, where TUPE
applies, all NMW liabilities (including full penalty amount) are
applied to new employer

Royal Mencap Society v Tomlinson-Blake;
Shannon v Rampersand:
Sleep-in shifts
─ Court of Appeal found that care workers on sleep-in shifts entitled
to NMW only for hours required to be awake for purposes of
working – not for whole shift
─ However, note:
• judgment does not create any “blanket” rule – each case needs
to be determined on own facts
• Unison has applied to Supreme Court for permission to appeal
─ HMRC understood to be considering position of employers who had
previously signed up to social care compliance scheme

1. EHRC has confirmed that all employers believed to be in scope have
now submitted their 2017-18 data to government website – over
10,500 employers reported
2. Reported figures have revealed how widespread pay gap is across
economy – only 14% of reporting employers had pay gap in favour
of women
3. August 2018:
− BEIS Committee Report published: recommendations for
strengthening reporting requirements and closing the gap
− Government Equalities Office guidance published: sets out
evidence-based actions for employers on reducing gender pay gap
Gender pay reporting

BEIS Committee Report
Conclusions Recommendations
─ Ambiguities in interpretation of the
Regulations e.g. treatment of bonuses.
─ Greater transparency and granularity of pay
data needed
─ Govt to work with stakeholders to identify areas
of ambiguity and publish revised guidance
─ Introduce lower threshold for reporting
obligation
─ Requirement to provide narrative report and
action plan alongside pay data
─ Amend Regs so that: salary breakdown shown in
deciles, rather than quartiles; part-time gender
pay gap data included; bonus calculations on
full-time equivalent, rather than actual basis
─ Consult on introducing pay reporting re.
disability and ethnicity in time for publication
in 2020
─ Issues encountered by EHRC re. compliance
and enforcement
─ Govt to publish and maintain list of all
organisations falling within scope of Regs
─ Provide EHRC with power to issue fines for non-
compliance
─ Challenges encountered in closing the gap ─ Sector bodies to develop ambitious targets
─ Board-level KPIs linked to reduction of gaps

GEO guidance – what works?
Effective actions
• Include multiple
women in
recruitment /
promotion shortlists
• Encourage salary
negotiation by
showing salary
ranges
Promising actions
• Improve workplace
flexibility for men and
women
• Recruit returners
Actions with mixed
results
• Unconscious bias
training
• Leadership
development training
“To move the dial on equalising pay, we need to debias systems, not
people. Human resource management must be based on rigorous
evidence of what works to level the playing field, treat everyone fairly
and benefit from 100 percent of the talent pool”.
Iris Bohnet, Harvard Kennedy School

“
”
The government is determined to break down the
barriers that hold back under-represented ethnic
groups. This is not just about fairness and access to
opportunity. A wide body of literature suggests that
organisations with a diverse range of employees can
better understand the needs of a wider range of
customers, foster greater creativity and innovation
and build a more resilient workforce
Ethnicity pay reporting consultation, BEIS, 11/10/18

Government consultation
Ethnicity pay gap reporting
─ Some employers already report on voluntary basis, but lack of
consistent methodology
─ Consultation on introduction of mandatory reporting duty closed
on 11 January 2019
─ Questions included:
• whether pay data to be reported upon should mirror gender pay
reporting requirements?
• how to improve employee self-reporting or declaration rates?
• should a standardised approach to classifications of ethnicity
be used?
─ Race at Work Charter also launched:
• Calls to action include appointing an executive sponsor for race
• https://race.bitc.org.uk/issues/racecharter

1. Continuing controversy regarding excessive CEO reward packages,
leading to calls for greater fairness and transparency
2. Govt has been actively considering issues of executive pay and
corporate responsibility since 2016
3. Pay ratio reporting will be introduced, comparing CEO
remuneration to average pay in the wider company workforce
4. New Regs approved by Parliament in July 2018; came into force
1 January 2019
5. Will apply to companies reporting on financial years starting on or
after 1 January 2019 i.e. required for annual reports published
in 2020
6. Some employers are already reporting on a voluntary basis
Executive pay ratio reporting

Source: Review of FTSE 100 executive pay, CIPD and High Pay Centre, August 2018

Scope of reporting duty
─ Quoted companies registered in UK (with 250+ UK employees) will
be required to publish ratio of their CEO’s “single figure” total
remuneration to the median, 25th and 75th percentile total
remuneration of their full-time equivalent UK employees
─ Supporting information will be required, including:
• methodology used to calculate the pay ratios
• reasons for changes in ratio year on year
• whether company believes median ratio is consistent with its
wider policies on employee pay, reward and progression
─ Pay ratios will be disclosed in a table in the annual remuneration
report; will build incrementally, over time, to include data covering
a 10 year period

What role can HR play?
Executive pay reporting
─ HR and payroll’s experience of complying with gender pay
reporting duty will be invaluable: collation of reliable raw data;
performing calculations and analysis; liaison with communications
team etc
─ Influence remuneration committees to ensure CEO performance is
assessed by non-financial as well as financial measures and that
reward schemes are streamlined to better incentivise behaviour
─ Ensure there is greater alignment through the organisation over
how individuals are rewarded relative to their contribution
─ Ensure senior leaders receive and act upon pay data insights
─ Be prepared to deal with employee engagement issues,
post-publication

2019
Presentation by Daniel Allan
Principal Associate
(International) LLP

Whistleblowing and Personal Liability

−Protection for whistle-blowers if they
have made a qualifying and
protected disclosure
−Employees protected from dismissal if
protected disclosure is reason or
principal reason for dismissal
−Workers protected from being subjected
to detriment on ground of having made
PIDA 1998
Background

Qualifying disclosures
Any disclosure of information
which…
in reasonable belief of worker
making the disclosure…
is made in the public interest…
and tends to show one or more of
the following…
If made on or after 25 June 2013…

Criminal
offence
Failure to
comply with
legal obligation
Miscarriage of
justice
Endangering
someone’s
health and
safety
Damage to
environment
Covering up
wrongdoing in
any of these
categories
Qualifying disclosures

1. whether the worker subjectively believed at the time
that the disclosure was in the public interest; and
2. if so, whether that belief was objectively reasonable
A low bar!
Two questions for Tribunal
Public interest

− Employees have always been personally liable for subjecting
someone to a detriment because that someone has made a
− Law has always viewed (and still does) dismissal as a separate act
and not itself a detriment
− Question in Timis & Another v Ospirov was whether Timis &
Another were personally liable for their dismissal of Ospirov on
grounds that Ospriov made a protected disclosure
− Court of Appeal found that they were
− Important because of the losses that flow from dismissal
Detriment v Dismissal
Personal Liability

“It seems our laws allow rich and powerful men to pretty much do
whatever they want as long as they can pay to keep it quiet”
Jess Phillips MP
“Legal weapon of choice for the rich
and powerful”
The Telegraph

─ Prevents parties (or only one of the parties) disclosing information
about their employment, the agreement and the sums contained
in it
─ Can be signed at the outset of employment/engagement or at
end, often in a settlement agreement
─ In a settlement agreement, it is often employees who will want
them as well as an employer
What does an NDA do
What’s an NDA

─ Disclosure to lawyer
─ Disclosure to HMRC
─ Disclosure which amounts to a protected disclosure
─ Disclosure to certain regulators
But
─ Solicitors’ rules now prevent advising on using NDAs to cover up
workplace sexual misconduct
Current position
What can’t an NDA cover

─ Plain English?
─ An offence for both employers and lawyers to use them in cases of
sexual misconduct?
─ Banned in harassment cases?
─ Employers obliged to disclose use?
─ Banned?
Watch this space: Consultation on use in employment disputes
The future
What can’t an NDA cover

Modern slavery – beyond compliance

Some of the mounting pressures …
Cost & time
pressures
“Known
unknowns”
Differing
cultures
Long supply
chains
Human
rights harms
Public/media
attention
Corporate
accountability
Human rights
contract terms
Businesses,
big and
small, are
feeling the
pressure

─ The Modern Slavery Act aims to prevent modern slavery and
protect victims and sets out a range of serious criminal offences
and penalties, including imprisonment
─ The Government has appointed a new Anti-Slavery Commissioner
and task force
─ The Government and its agencies (including the police, UK Visas
and Immigration, HM Revenue & Customs and the Gangmasters
Licencing Authority) have placed great emphasis and resources into
combating this type of organised crime resulting in a rise in arrests
and prosecutions
What does the Modern Slavery Act 2015 do?
Human Rights Reporting

─ Who must report?
1. A commercial organisation
2. Which carries on business in the UK
3. Supplying goods or services
4. Has a total turnover of not less than £36m
─ What about …?
Turnover:
• Includes global turnover and the turnover of any subsidiaries
Group structures:
• Note that subsidiaries may be part of a parent’s supply chain or
its business and vice versa
• Non-UK parents with no demonstrable business presence in the
UK do not have to report just because they have a UK subsidiary
• One single report covering all or separate?
Focus on the Modern Slavery Act
Human rights reporting

The duty to report: what is a “must”?
─ Annual statement by qualifying commercial organisation
─ Of the steps taken to ensure that slavery and trafficking (S&T) is
not taking place in any of its supply chains and business
─ Or, a statement that no such steps have been taken
─ Signed and approved (by director and board/equivalent)
─ Published on website: prominent link from homepage
─ 31 March 2016 financial year-ends onwards

The duty to report: what is a “may”?
─ The statement may include information about:
• the organisation’s structure, its business and its supply chains
• its relevant policies
• its due diligence processes
• where there is a risk of slavery and human trafficking taking
place and the steps taken to assess and manage that risk
• the effectiveness of such steps measured against
appropriate KPIs
• the relevant training available to staff
─ Organisations may comply with the Home Office Guidance
(“Transparency in supply chains: a practical guide”)

Some factors to consider:
─ if Companies Act/EU Directive/MSA/other legal reporting
duties apply
─ risk profile including supply chains, size and resources
─ whether reputation/best practice approach is important
─ investor/trade union/NGO/other human rights pressures
─ procurement pressures
─ board commitment
─ difficulty, cost and resources
Report? Don’t report? Report what?
Deciding how to respond

─ “Sexual harassment at work is illegal, but sadly that disgusting
behaviour is something that many women still experience today”
Victoria Atkins, Minister for Women
─ ComRes findings:
• 40% of women have experienced sexual harassment at work
• 18% of men have experienced sexual harassment at work
─ Why now……see previous slides on NDAs!
Background
Sexual harassment

─ Statutory Code of Practice
• Contents TBC
• Developed with EHRC
What’s changing?
Sexual harassment

─ Consultation on:
• a new legal duty for employers to prevent sexual harassment in
the workplace
• strengthening and clarifying the laws on third party harassment
• further legal protections for interns and volunteers
• increasing ET time limits for cases of sexual harassment
─ Other steps:
• work with regulators to ensure they take appropriate action
• consider whether learnings on vulnerable witnesses from
criminal system can be transposed into Tribunals
What’s changing?
Sexual harassment

2019
Presentation by Andrew Moore
Senior Associate
(International) LLP

Background
The Good Work Plan
July 2017: Taylor report on Modern
Working Practices
Feb 2018: Gov’t’s initial response and
consultations
May 2018: Director of Labour Market
Enforcement 2018-19 strategy
Dec 2018: Low Pay Commission report
on ‘One-sided flexibility’
Dec 2018: Gov’t Good Work Plan and
response to DLME strategy

Director’s Strategy for 2018/19
Labour market enforcement
Significant increase in
financial penalties for
non-compliance
Accountability and
leverage through the
supply chain
Provide greater
resources to EAS to
enforce current Regs;
expand remit to include
umbrella companies and
intermediaries
State body (likely
HMRC) to be granted
power to enforce holiday
pay for all workers,
including recovery of
arrears
Improved guidance and
clarity on technical
areas of NMW; reserving
“naming and shaming”
for serious breaches
N.B. Call for evidence (until 28/9/18) regarding 2019/20 strategy includes
focus on 3 sectors: hotels, restaurants and food services, warehousing

Commitments
Good Work Plan
Casual/zero-hours/flexible workers
Right to request more predictable
and stable contract
• after 26 weeks' service
• all workers
• include right for agency worker
to request direct contract with
hirer?
Continuity of service
• Gap of up to 4 weeks without
contract will not break continuity

Commitments
Good Work Plan
Employment /worker status tests
Legislation
• to ‘clarify’ tests ‘to
reflect the reality of
modern working
relationships’
• Define worker
• to prevent
misclassifying or
misleading
Proposals on how
legal frameworks for
rights and tax ‘could’
be aligned
Online tool

Commitments
Good Work Plan
Transparency
Payslips
• Right extended to workers
• Must state hours where paid by
reference to time worked
• Pay periods starting on/after 6
April 2019
• Purpose: improve NMW
compliance
Statement of Ts & Cs
• Right extended to workers
• Additional information required
• Applies from day one for all
• From 6 April 2020
• new workers
• existing employees where
statement requested or terms
change

Commitments
Good Work Plan
Agency worker reforms
AWR: removal of ‘Swedish
derogation’
Other:
• Key facts page: to provide
further info on pay and
deductions
• EAS to regulate umbrella
companies

Commitments
Good Work Plan
Information and consultation
• Reduction of threshold for request to set up ICE arrangements
• New threshold = 2% (currently 10%)
• From April 2020

Commitments
Good Work Plan
WTR paid holidays
Reference period increasing to 52
weeks
State enforcement with penalties
• ‘For the most vulnerable
workers’
• Role for HMRC?

Commitments
Good Work Plan
Enforcement
Repeated breach
• ETs to be required to
consider sanctions
• eg comp uplift,
costs, aggravated
breach penalty
Penalty for
aggravating features
• Max increased from
£5,000 to £20,000
• Breach on/after 6
April 2019
Naming scheme for
those who fail to pay
awards
“Simplify the user’s
journey” through an
ET.

Further consultations
Good Work Plan
Launched
• NMW: problem areas for employers eg salaried hours;
salary sacrifice
Expected in 2019
• Employment law non-compliance in supply chains
• making those at top responsible for compliance further
down
• embargo of ‘hot goods’ where significant non-compliance
• SSP: for workers? state enforcement? phased returns
• Redundancy protection for new mothers
• Requiring all jobs to be advertised as flexible

Under consideration
Good Work Plan
One-sided flexibility: gov
considering LPC
recommends inc:
• right to compensation where shift cancelled without reasonable
notice
• right to reasonable notice of work schedules
• right to move to a more stable contract

eversheds-sutherland.com
This information pack is intended as a guide only. Whilst the information it contains
is believed to be correct, it is not a substitute for appropriate legal advice.
Eversheds Sutherland (International) LLP can take no responsibility for actions
taken based on the information contained in this pack.
© Eversheds Sutherland 2019. All rights reserved. MAN_002-#8485725MAN_002-#8485725MAN_002-#8485725MAN_002-#8485725MAN_002-#8485725

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