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Employment Update - March 2021

Employment Update - March 2021

Overview

Key employment and business immigration developments for employers.

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In the news

Furlough extension

The Chancellor has announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 30 September 2021. Under the CJRS, employers can put staff on furlough (full or partial paid leave) provided the employee receives at least 80% of their usual wages for any hours not worked, up to a cap of £2,500 per month (prorated for any hours worked).

The Government currently funds the 80% of wages up to the cap and will continue to do so until 30 June 2021. The Government subsidy will then taper from July to September as the CJRS winds down. For July, the Government will contribute 70% of wages up to £2,187.50 per month, with the employer having to contribute 10% of wages so that the employee receives 80% of their usual wages. For August and September, the Government subsidy will drop to 60% up to a cap of £1,875 per month, with the employer having to top up the additional 20% so that the employee receives 80% of their wages (up to the cap). Employers will continue to have to pay the employer NICs and pension contributions on the Government subsidy plus normal pay for any hours worked during furlough. This is summarised in the table below.

The extension of the CJRS will be welcome news for many employers and will provide greater flexibility as the path out of lockdown unfolds.  For further information on the CJRS, see our Q&A briefing note.

 

Immigration radar

Hiring graduates

On 1 July 2021, a new Graduate visa route will open, making it easier for employers to recruit university graduates. The new Graduate route is for international students studying at a UK university who wish to remain and work following completion of their course. Provided the student has completed a UK bachelor's degree or higher, they will be able to remain in the UK and work for up to two years (or three years for doctoral students). This is good news for employers hiring graduates from July 2021 onwards as the Graduate route does not require employer sponsorship, meaning the additional fees and admin associated with sponsorship will not apply.

Future changes

As part of the Spring 2021 Budget, the Government has announced a number of future changes to the UK immigration system, including:

  • introducing a new unsponsored points-based visa for 'highly skilled talent' in science, research and tech, to be in place by March 2022

  • introducing a new fast-track visa for those with a job offer from a recognised UK scale-up business by March 2022

  • introducing a new Global Business Mobility visa for overseas businesses to establish a UK presence or transfer staff to the UK, to be in place by spring 2022

  • reviewing the existing Global Talent visa (for leaders and emerging leaders in the fields of research, arts and digital technology) and the Innovator visa (for those setting up innovative businesses) to make these visas easier to obtain

  • modernising the immigration sponsorship system to make it easier to use.

Employment Update will report developments.

Case watch

Diversity training - when did you last refresh?

The employee in this case made a number of racist comments to a colleague, who was of Indian origin. When confronted about this, the employee described it as "racial banter". Two managers were aware of the racist comments but took no action, other than one giving the employee a mild rebuke. When the victim brought claims for race discrimination and harassment, the employer argued that it could not be responsible for the employee's behaviour, as the employee and the two managers had received equality and diversity training.

The Employment Tribunal and Employment Appeal Tribunal disagreed. They ruled that the employer was liable for the harassment, despite having provided equality and diversity training. According to the Tribunal, the training had become "stale" and needed to be refreshed as it had happened almost two years before the relevant incidents and, despite the training, the employee still made the racist comments and the two managers failed to respond appropriately. The EAT also noted that, following its investigation, the employer had decided to provide the employee with further diversity training; it would not have done so unless it thought additional training might be effective.

ALLAY (UK) LTD V GEHLEN

This case is a stark reminder of the importance of regular and effective training on equality and diversity. The case makes it clear that simply having superficial or 'one off' training will not be enough to prevent employers being liable for discrimination and harassment carried out by employees. The training must be detailed and regularly refreshed so that it remains relevant and front of mind for staff. The EAT commented in this case that "brief and superficial training is unlikely to have a substantial effect in preventing harassment nor will it have long-lasting consequences". Tribunals may therefore scrutinise at the quality, as well as the frequency, of the training.

We regularly provide equality and diversity training and refresher sessions for our clients' staff and their managers, which is typically workshop and case study based. Please get in touch with your usual Employment department contact if you would like to discuss.

Uber drivers - Supreme Court ruling

In 2016, two Uber drivers brought, and won, a test case in an Employment Tribunal, claiming that they are workers and therefore entitled to statutory holiday and national minimum wage. The case was appealed several times and now the Supreme Court has upheld the ruling that the drivers are workers.

Uber argued throughout the proceedings that it is a technology platform that simply connects self-employed drivers with customers. The relevant documentation described drivers as self-employed and stated that Uber acted as their booking agent. However, the Supreme court focussed on the reality of the relationship rather than the contractual documentation. The Court pointed to five factors which supported the conclusion that the drivers were working for Uber:

  • the drivers' pay was fixed by Uber and they were not allowed to charge more than the fare calculated by the Uber app

  • the drivers had no scope to negotiate the terms on which they provided their services – these were set by Uber

  • once drivers were logged onto the app, they had limited choice about which rides to accept, as Uber imposed penalties for low acceptance and high cancellation rates

  • Uber exercised a high degree of control by dictating routes and through the use of a performance rating system

  • Uber restricted communications between passenger and driver to the minimum necessary to complete the particular journey and prevented relationships beyond the individual ride.

The Court also ruled that the drivers were working, and therefore entitled to national minimum wage, whenever they were logged onto the app ready to accept trips, not just when driving passengers.

UBER AND OTHERS V ASLAM AND OTHERS

The ruling in this case is not surprising and is consistent with the trend for workers in the gig economy to be given "worker" status, rather than being classed as self-employed contractors. Under employment law, "workers" are entitled to basic minimum employment protections such as national minimum wage, paid statutory holiday, pension automatic enrolment and whistleblowing protection.

The Supreme Court in this case focused on the degree of control exercised by Uber and also the fact that the drivers were in a subordinate relationship and dependent on Uber for work. The only way the drivers could make money was by working longer hours rather than through their own professional or entrepreneurial skill, suggesting they were not genuinely self-employed. The ruling is likely to have an impact beyond the gig economy and employers in all sectors should review the workers they engage to ensure they are properly characterised and are given the correct employment rights.

New law

Unfair dismissal compensation

On 6 April 2021, the maximum compensatory award for unfair dismissal will increase from the lower of a year's pay and £88,519 to the lower of a year's pay and £89,493.

Statutory redundancy pay

On 6 April 2021, the maximum amount of a week's pay, used for calculating statutory redundancy pay (among other things) will increase from £538 to £544 per week. The maximum statutory redundancy payment will therefore increase from £16,140 to £16,320.

Off-payroll rules

The changes to the off payroll rules are set to come into force on 6 April 2021. There was speculation that the rules might be delayed as part of the Spring 2021 Budget but no delay was announced, meaning the rules will come into force as planned.

The rules affect large and medium sized businesses in the private sector with workers who supply their services via a personal services company. The rules are designed to ensure that workers (such as contractors and consultants) who provide their services like employees are taxed like employees, even if there is a personal service company in place.

From 6 April 2021, businesses caught by the rules will have to decide whether without the personal service company the worker would be regarded as an employee for tax purposes. If so, if the business (or the body responsible for paying the personal service company) must account for tax and national insurance contributions on payments to the personal services company.

With the implementation deadline fast approaching, those in scope should ensure they are prepared for the new rules ahead of 6 April 2021. We have been working with a number of employers on such projects and have produced a 'toolkit' of template documents to assist with this. Please speak to your usual Employment team contact for more information. You can also view our webinars on the practical aspects of implementing the off-payroll rules here.

Gender pay gap reporting 

Employers with 250 or more employers are required to report specific figures related to their gender pay gap annually. In the private sector, the deadline for reporting is normally the 5 April each year. However, the Equality and Human Rights Commission has announced that, due to the COVID-19 pandemic, it will not enforce the gender pay gap reporting requirement this year until 5 October 2021. This means employers effectively have a six-month extension in which to report their figures. The EHRC is still encouraging employers to report ahead of the usual deadline of 5 April 2021 but no enforcement action will be taken provided the employer reports by 5 October 2021.

Reports this year will cover pay as at 5 April 2020, when some employers will have had staff on furlough. Generally, employees receiving less than full pay on furlough should be excluded from the pay gap figures which are based on a 'snapshot' as at 5 April 2020 but such employees should be included in the calculation of bonus pay gap figures, which cover the year ending 5 April 2020.

Cap on public sector exit payments

On 4 November 2020, the Government introduced a cap on public sector exit payments. Under the cap, payments by a public sector body in respect of an employee's termination of employment were to be limited to £95,000. However, the Government has now decided to revoke the cap, due to it having "unintended consequences". An HM Treasury Direction has been published that will disapply the cap until the relevant regulations have been revoked, and public sector employees who were affected by the cap can request the amount they would have received had the cap not been applied. HM Treasury has said it will bring forward alternative proposals to tackle unjustified exit payments in the public sector in future.

Our work

Since the last Employment Update, our work has included:

  • advising on whistleblowing issues in a number of regulated businesses

  • advising around the implementation of the off payroll rules, including status assessments and updating contractual documents

  • advising on an internal reorganisation within a business across Europe, including the implications of TUPE and local implementations in other countries under the Acquired Rights Directive

  • advising on the departure and settlement agreement arrangements of a senior executive with parallel UK and overseas employment contracts

  • advising on a number of requests for regulatory references under the Senior Managers and Certification Regime

  • assisting a UK start up with an immigration sponsor licence application to enable it to hire key European nationals

  • advising on the implications of an office move and moving some staff to homeworking

  • carrying out a national minimum wage audit and advising on measures resulting from that exercise

  • advising on the secondment of an EU-located executive to the UK

  • advising on the enforcement of cross-border post-termination restrictions and corresponding recruitment tactics to reduce the risk for our client

  • advising a client regarding dealing with multiple complaints and grievances raised by one employee whilst on long-term sick leave.
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