What now for employment law?

01 November 2015, at 12:00am

MARK STEVENS details some of the key areas of likely and actual change in employment law and assesses what impact the hanges will have upon employers in 2015 and beyond

National Living Wage

The Chancellor of the Exchequer has
announced that the new government
will be introducing
a new level of
minimum wage that
will apply only to
workers aged 25
and over, known as
the National Living

The National
Minimum Wage will remain in place.
The National Living Wage – which
will apply from April 2016 – will be
£7.20 (50p above the level of the
National Minimum Wage at that date).
Employers will need to consider
whether their rates of pay will need to
be increased to reflect this increase.

gender pay data

In July 2015 the government
confirmed that it was seeking views
as to what more it could do in order
to close the gender pay gap. The
Conservative manifesto indicated
that the party would require larger
employers to publish gender pay

If this becomes law, the obligation is likely to impact on private and
voluntary sector employers in England,
Wales and Scotland with at least 250
employees. This will require a large
employer to collect and publish pay
data by gender – although the specific
details of what form the reporting
process will take is not yet clear. The
Government Equalities Office is
seeking the input of employers on this

The European Union

The government plans to renegotiate
the UK’s relationship with the
European Union through the
European Union Referendum Bill.
The proposed time frame for an in-out
referendum on membership of the EU
is the end of 2017.

However, there has been speculation
as to whether a referendum will take
place at an earlier date. The Prime
Minister has already begun negotiations
with his European counterparts over
Britain’s membership of the EU.

Many of our employment laws are
rooted in the UK’s membership of the
EU. If the UK were to leave the EU,
the UK parliament would, in theory,
be able to repeal or adapt laws which
it did not agree with and the courts
would not be required to interpret UK
laws in accordance with European
case law. While it is unlikely that an
exit from the European Union would
give rise to immediate and significant
change to UK employment law, a
gradual movement away from the
positions taken in European Union
case law would be inevitable.

Human rights

The Conservative government has
indicated that it will replace the
Human Rights Act 1998 with a British
Bill of Rights, although it is unclear
whether this would also involve the
UK withdrawing from the European
Convention on Human Rights. This
would raise questions as to whether the
UK Supreme Court would therefore
become the ultimate arbiter of human
rights matters in the UK.

This is a separate question to that of
the UK’s membership of the EU and
no indication of a time frame for this
has been given.

The content of a British Bill of
Rights will no doubt attract significant
consultation and debate. A repeal of the Human Rights Act 1998 is likely to
have an impact on discrete areas such
as privacy, discrimination and trade
union issues.

Income tax and NI

The National Insurance Contributions
Bill together with the Finance Bill
will contain provisions ensuring that
there are no rises in income tax rates,
VAT rates or National Insurance
contributions rates for individuals,
employees and employers in the fiveyear

The freeze on rates is intended
to assist the government’s plans to
create two million jobs and three
million apprenticeships over the
course of the Parliament. Overall
the government aims to reduce red
tape and bureaucracy for employers
as a means to create jobs and
increase employment, although
interestingly the government has
said that it will introduce a levy on
large UK employers to fund the new

The government consulted over the
summer on the simplification of tax
and National Insurance Contributions
treatment of termination payments.
Back in 2012, the Chancellor asked the Office of Tax Simplification (OTS) to carry out a review of termination payments and the way
they are taxed. In its final report on
employee benefits and expenses,
published in July 2014, the OTS
made a number of recommendations
relating to termination payments, the
most interesting being that the current
£30,000 exemption to income tax
(when paid by an employer to a worker
as compensation for loss of office)
should be replaced with a new system
of income tax relief, applicable only
in redundancy situations. How this
will impact on compensation paid for
other reasons, such as compensation
for unfair dismissal or damages for
wrongful dismissal, remains to be seen.

The government has also indicated
that it will be scrutinising salary
sacrifice schemes and will consider
reforms to the IR35 rules – which
will impact upon the way in which
organisations engage consultants/


An Immigration Bill will introduce
an offence of illegal working and will
allow wages paid to illegal migrants
to be seized as the proceeds of crime.
A new enforcement agency will be
created with powers to take action
against employers who exploit migrant
workers. The Immigration Bill will also
make it illegal for employment agencies
to recruit solely from abroad without
first advertising those jobs in the UK.

Full Employment and Welfare Benefits Bill

The Full Employment and Welfare
Benefits Bill will introduce statutory
duties on ministers to report annually
on progress towards achieving
full employment and meeting the
government’s target of three million
new apprenticeships.


An Extremism Bill will introduce
a number of measures to tackle
extremism, including the ability
for employers to check whether an
individual is an extremist and bar them
from working with children.

Employment tribunals

Under new regulations, the
government has imposed a penalty
from 1st October on employers who
fail to pay employment tribunal awards
or sums due under a settlement agreed
following ACAS conciliation. The new
scheme will give enforcement officers
the power to impose a financial penalty
of 50% of the unpaid award subject
to a minimum of £100 and maximum
of £5,000. The penalty will be payable
directly to the Secretary of State.

The introduction of fees in
employment tribunals in July 2013 has
proved a controversial decision. Many
attribute the introduction of the fees
to a dramatic decrease in the number
of claims brought to tribunal. The
total number of claims heard between
April 2014 and March 2015 was
61,306; down from 105,803 over the
same period in 2013/14 and 191,541
in 2012/13, the last 12-month period
before the introduction of fees.

Following the election, the
government announced a review
of the impact and effectiveness of
employment tribunal fees and the fee
remissions scheme for low earners.
This review began in June 2015.

It is clear that the government’s
agenda for the coming session contains
a number of significant reforms
for employment law. Alongside the
headline issues of the Human Rights
Act 1998 and an EU referendum,
employers will need to ensure they
get to grips with the impact of
other changes for employment law.
Employers should seek to keep on top
of changes in the employment law
landscape as they emerge and amend
their procedures accordingly.