The turbulent political events of 2016, technology trends and the changing economy will have far reaching consequences for the UK workplace over the next 12-months. Roger Spence, head of employment law at Harrison Drury, details how employers may be affected and how they can stay ahead.
The changing nature of the ‘gig-economy’
The so-called gig-economy, which has allowed thousands of workers to become their own boss and manage their own hours, is under scrutiny like never before. This casualisation of work has frequently been dubbed ‘bogus self-employment’ and it has been depicted as a way for employers simply to avoid paying employees the benefits they would normally be entitled to.
But things are changing after a court decision last October that ruled that the UK’s 40,000 UBER drivers are not self-employed and the company should pay them the national minimum wage and benefits like holiday pay. While UBER is contesting the decision, it has been billed as a test case which could have far reaching changes for the gig-economy.
Meanwhile, HMRC’s executive chairman recently stated that “if they find that companies have misclassified individuals as self-employed, we will take all necessary steps to make sure they pay the appropriate tax, national insurance contributions, interest and penalties”. Thus, HMRC is clearly committed to tackling ‘false’ self-employment and is setting up a new employment status and intermediaries team to investigate employers and enforce compliance.
With this scrutiny in mind, there is a huge benefit in businesses ensuring they have well drafted and compliant internal documentation in place. The more accurately the intention of the parties as to the relationship between them is recorded, the less likely your business is to fall foul of employment status issues and incur penalties.
Increasing automation and flexibility
Robotics and AI technology is substantially changing many existing jobs and making others obsolete. In Japan an insurance company recently fired all of its workforce because the job could now be done by AI.
While technological innovation often leads to greater productivity and prosperity, the speed of change could put unprecedented stress on a transitioning labour force. Adapting to and benefitting from these profound changes requires new skills, now and in the future. Managing this transition is an important challenge for businesses.
With workers having increasingly insecure employment it is not surprising that a growing number of people are now opting for temporary/short term employment or choosing the self-employment route where they can be their own boss, work in more flexible contracting arrangements, or achieve a better work-life balance.
This erosion of the conventional concept of the workplace and traditional working hours, together with the rise of remote working, has meant that many employees are now working from anywhere and at any time.
Companies that don’t offer this flexibility may lose the best talent to the competition. Embracing the changes as an opportunity to innovate and to create new ways of working are likely to be more successful.
It is impossible to predict the full scale of the impact of Brexit as the complexity and lack of precedent bring significant legal, financial and commercial uncertainties. There may be a desire on the UK government’s part to remove or change some aspects of existing UK employment regulation which have proved unpopular with UK business.
While significant changes are not predicted for the immediate future, it is still advisable for businesses to prepare in advance of any consequent changes to employment laws and practices. One of our recent employment law blogs has more detail on how Brexit might impact on employment regulation.
Reporting the gender pay gap
Recent research suggests UK employers are making slow progress on closing the gender pay gap. To combat this, the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 will come into force in April 2017. The regulations provide clarity and set out how employers with over 250 employees should calculate and report on the gender pay gap within their organisation.
Gathering the information needed will be a challenge for many employers. It is therefore advisable to consider the new regulations as soon as possible to ensure the true gender pay position is captured. Employers are also advised to review and to update their policies to help address any gender pay gap issues. Relevant policies to review may be those relating to equality and inclusion, bullying and harassment and flexible working.
The Living Wage
In April 2016, the National Living Wage came into effect, meaning workers aged 25 and above receive a minimum wage of £7.20 an hour. In April 2017, this will increase to £7.50 an hour. It is inadvisable for employers to try and circumvent the increase in pay by amending recruitment practices.
It is also important to note that there is no legal requirement to maintain employee pay scales that are disrupted by the living wage. However, businesses may want to take into account the potential concerns of employees that are currently higher up the pay scale, that the pay rates no longer represent the difference in value of their respective skill sets. This will help to increase employee satisfaction and staff retention.
While these impending changes hold some promise for future prosperity and job creation, many also pose challenges. Anticipating and preparing for transition is therefore critically important. It is recommended that businesses keep abreast of legislative changes to ensure they are compliant.
Businesses are also advised to keep their business models under review and to take an active role in supporting their current workforce through the provision of retraining and, depending on the nature of the business, considering opportunities for flexible working.
Ensuring your business is relevant and adaptable, along with the provision of suitable opportunities for career progression, will enable your business to retain the best people and to prosper.
For more information on how any of these employment law issues might affect your business, contact Roger Spence, head of employment law at Harrison Drury, on 01772 258321.
Find out more about HR Compass, Harrison Drury’s specialist employment law product. HR Compass comprises three core components designed to offer seamless financial and business continuity protection for businesses. These include an employment law health check, expert fixed-fee employment law advice and an insurance policy to protect against the cost of employment claims.