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Legal update: key areas to keep an eye on

Publicity surrounding comments from prime minister Theresa May and Labour leader Jeremy Corbyn about employment rights relating to worker representation on company boards and mandatory collective bargaining (respectively), is a reminder that the fallout from the Brexit vote should not eclipse developments on the home front that will be significant for employers over the coming months.


Gender pay gap

Employers with 250 or more employees will soon have to report on their gender pay gap. Regulations on the new requirement were expected to come into force in October 2016, with the first reports required by April 2018. The Government Equality Office has now indicated that the regulations will not come into force until April 2017, although the date for the first reports is unlikely to change.

In the meantime, employers should consider the extent of their current gender pay gap and the reasons for it, as well as what they can do to address any gap. This will allow them to explain the gap as part of their ‘narrative’ reporting (a voluntary aspect of the new requirements) and chart their progress towards closing it.

Termination payments

A further consultation on changes to the tax rules on termination payments was published recently together with draft legislation, confirming that, from April 2018, all payments in lieu of notice will be subject to tax and national insurance contributions (NICs), regardless of whether there is a contractual right to make the payment in lieu of notice (PILON). The £30,000 exemption from tax for payments in connection with termination of employment (such as redundancy) will remain in place, but payments above £30,000 will be subject to both income tax and employer NICs.

HMRC has said the changes are being made to ensure the tax rules are applied "consistently and fairly". Employers may need to review their contracts and policies, given that payments on termination of employment are likely to become more expensive under the new system.


The first Court of Appeal decision on the “public interest” test in whistleblowing claims will be made in October when the court hears a case called Chesterton Global v Nurmohamed. The case involves an employee who blew the whistle about the way his bonus, and those of his colleagues, was calculated. The court has to decide whether this amounted to a protected disclosure when only around 100 employees were affected.

The law on whistleblowing was tightened in 2013 to stop employees claiming whistleblowing protection when making claims about breaches of their own employment contracts. From that time there has been a requirement that a disclosure has to be made “in the public interest” and the case will indicate whether the test’s introduction makes it significantly harder for workers to claim protection as whistleblowers.

Religious dress

The Court of Justice of the European Union (CJEU) is expected to give its decisions in the cases of Achbita v G4S Secure Solutions NV and Bougnaoui v Micropole SA later this year. Both cases involve women who wished to wear headscarves at work for religious reasons and were dismissed by their employers because of it. The Advocates General opinions were very different in the two cases. In Achbita the opinion concluded that a ban on religious clothing and symbols was indirect discrimination and could be justified. The opinion in Bougnaoui concluded that such a ban was direct discrimination and so could not be justified. If the European court follows the opinion in Bougnaoui, employers will need to review their dress code policies to eliminate any direct religious discrimination.

Holiday time

A decision from the Court of Appeal in Lock v British Gas Trading expected this autumn will confirm whether the UK’s Working Time Regulations 1998 require employers to include commission in the calculation of holiday pay. Although the CJEU has already confirmed that commission does have to be included, the Court of Appeal has to decide whether the regulations can be read in a way that is consistent with the European ruling. The decision to ‘fast track’ the appeal from the EAT to the Court of Appeal is a reminder of the issue's significance for employers, who will also have to consider possible changes to the law in this area after Brexit

Added: 17-08-2016

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