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Government to end free movement if a no-deal Brexit

If the UK leaves the EU without a deal in place on 31 October 2019, EU, EEA and Swiss citizens (and their family members) who are living in the UK by this date will still be eligible to apply for settled or pre-settled status under the EU Settlement Scheme and they will have until 31 December 2020 to do so.

Under Theresa May’s Government, in the event of a no-deal Brexit, temporary transitional arrangements were to be put in place for those EU, EEA and Swiss citizens arriving in the UK after exit day but on or before 31 December 2020. Under those transitional arrangements, EU, EEA and Swiss citizens would be able to come to the UK for up to three months to visit, work or study without applying for a visa. However, those who wished to stay in the UK for more than three months, would need to apply to the Home Office for the new status of “European Temporary Leave to Remain” (ETLR) and they would need to apply within three months of entry. ETLR was to be valid for a maximum of three years and would allow work and study, but it would not lead to indefinite leave to remain in the UK. A new immigration system would then take effect from 1 January 2021. Irish citizens do not need to obtain settled status and would not need to apply for ETLR.

However, the new administration, under new Prime Minister Boris Johnson, has now stated that the UK is leaving the EU on 31 October 2019 come what may, and that free movement will end immediately if the UK leaves without a deal. In the event of a no-deal Brexit, it is therefore seeking to introduce a new immigration system to take effect immediately from exit day, abandoning the proposed ETLR arrangements set out above. With only just over two months to go until exit day, there is no indication yet about what the requirements of this new immigration system will be. The Home Office has said that the new plans are being developed and will be announced shortly. In the meantime, it has confirmed that EU, EEA and Swiss citizens will still be able to come to the UK on holiday and for short trips, but what will change is the arrangements for them to come to the UK for longer periods of time and for work and study. 

As a precaution, if you currently employ any EU, EEA and Swiss citizens who have not yet applied for settled or pre-settled status, you should advise them to do so before 31 October 2019, particularly if they intend to travel outside the UK after that date, so as to reduce possible difficulties in verifying their UK immigration status on re-entry. At the same time, in the event of a no-deal Brexit, any EU, EEA or Swiss citizens proposing to relocate to the UK for work after 31 October 2019 should not assume they will be able to do so without prior immigration permission. This means UK businesses currently have no idea whether they can recruit EU, EEA and Swiss citizens for vacancies with a start date after exit day. Finally, it is also not now clear how right to work checks are to be made on EU, EEA and Swiss citizens immediately after exit day in the event of a no deal. 

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The importance of a written contract

The importance of having a written contract when deciding employment status should not be understated. Failing to make proper provision for written contracts can mean relying on oral agreements, which are obviously much harder to prove. Having a written contract can provide certainty to both parties and help avoid disputes or at the very least make it easier to handle any disputes that arise.

HMRC manuals say that where there is a written contract, the Courts will decide employment status based on the written contractual terms and on the factual matrix that existed when the contract was made. Generally, the Courts will not refer to evidence other than the written contract (for example, they will not refer what the parties did in practice).

Exceptions to this are where:

  • the contract is not comprehensive (other terms and conditions then have to be established from other evidence),
  • one or more of the written terms have been varied by agreement,
  • one or more of the written terms are a sham.

In contrast, where there is no comprehensive written contract, the Courts regard employment status as a question of fact or a mixed question of fact and law. The Courts will not disturb a Tribunal decision based on fact unless they think it is perverse.

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Pregnant women and new parents to get enhanced redundancy protections

The government has published its response to its January 2019 consultation on “pregnancy and maternity discrimination: extending redundancy protection for women and new parents” and has confirmed that it will now take action to address such discrimination.

As the law currently stands, employees who are placed at risk of redundancy when they are absent on maternity, adoption or shared parental leave have an absolute right to be offered a suitable alternative vacancy, where one is available, in priority to other employees who are also at risk of redundancy. They do not need to apply for the vacancy, nor must they undertake a competitive interview process. However, this protection does not currently apply to pregnant employees who have not yet started their maternity leave, nor does it apply to those who have recently returned to work from maternity, adoption or shared parental leave. 

The government has now stated that it will:

  • Ensure the redundancy protection period applies from the point the employee informs the employer that she is pregnant, whether orally or in writing
  • Extend the redundancy protection period for six months once a new mother has returned to work (and it is expected this period will start immediately once maternity leave is finished, notwithstanding any additional leave which may immediately follow)
  • Extend the redundancy protection into a period of return to work for those taking adoption leave, following the same approach being provided for those returning from maternity leave, i.e. protection for six months
  • Extend the redundancy protection into a period of return to work for those taking shared parental leave, taking account of the following key principles and issues: (a) the key objective of the policy is to protect pregnant women and new mothers from discrimination; (b) the practical and legal differences between shared parental leave and maternity leave mean that it will require a different approach; (c) the period of extended protection should be proportionate to the amount of leave and the threat of discrimination; (d) a mother should be no worse off if she curtails her maternity leave and then takes a period of shared parental leave; and (e) the solution should not create any disincentives to take shared parental leave. The government will therefore consult further on the design of this protection over the coming months
  • Establish a taskforce of employer and family representative groups to make recommendations on what improvements can be made to the information available to employers and families on pregnancy and maternity discrimination. It will also develop an action plan on what steps the government and other organisations can take to make it easier for pregnant women and new mothers to stay in work.
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Lowest paid to be eligible for sick pay

A new consultation launched jointly by the Department for Work and Pensions and the Department of Health and Social Care, is seeking views on different ways in which both the Government and employers can take action to reduce ill health-related job loss.

The consultation is examining a number of specific proposals including:

  • Reforming Statutory Sick Pay (SSP) so that it is better enforced, more flexible and covers the lowest paid employees. This would extend SSP protection to around 2 million low-paid employees.
  • Offering more support to employees with health issues affecting their work.
  • Refining occupational health provision especially for small employers and self-employed people.
  • Improving employers’ and self-employed people’s access to good advice and support.

The consultation is also examining how a rebate of SSP for SMEs could better help support small businesses, who effectively manage employees on sickness absence and help get them back to work. For example, changing shift patterns for employees can have a big effect.

Research has shown, that each year more than 100,000 people leave their job following a period of sickness absence lasting at least 4 weeks. The longer an employee is out of work on sickness leave, the less likely they are to return to employment and this can also result in further health deterioration.

Work and Pensions Secretary Amber Rudd said:

'I want Britain to be an environment where disabled people and those with health conditions can thrive, not just survive – not only in work but every area of their lives. Good work is good for our mental and physical health, and by working closely with employers we can help prevent the loss of talent when people unnecessarily leave the workplace.'

The consultation is open for comment until 7 October 2019 and it will be interesting to see what new proposals will be put forward.

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NIC Act 2019 receives Royal Assent

The National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill has received Royal Assent, to become the National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019.

The Act aligns the employer NICs treatment of termination awards in excess of £30,000, received in connection with the termination of an individual’s employment, with the Income Tax treatment for such payments, by introducing a new 13.8% Class 1A employer NIC charge to any part of a termination award that is already Income Tax liable. Termination awards will remain exempt from employee NICs. The provisions are expected to take effect from 6 April 2020.

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The Pensions Regulator launches new re-enrolment tool

Every three years, employers must put certain eligible workers who have left their automatic enrolment workplace pension scheme back into it. This is called re-enrolment. Employers must also complete and submit a re-declaration of compliance to tell The Pensions Regulator (TPR) how they have met their re-enrolment duties, even if they do not have any workers to re-enrol. This re-declaration confirms the employer has checked whether it needs to re-enrol any of its workers or not. Re-enrolment and re-declaration are legal requirements and a failure to comply could result in a fine.

As thousands of small and micro employers are reaching their re-enrolment dates in the coming months, TPR has now launched a new online resource to enable employers to re-enrol their staff into their workplace pension scheme more simply. The tool asks a series of questions and employers’ answers will enable them to find out what they need to do and by when.
 

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What are zero-hour contracts?

The use of zero-hour contracts has become widespread in many sectors including the food service, retail, healthcare and leisure sectors. For employers, zero-hour contracts offer many advantages, for example, that the employer does not have to guarantee any hours of work and can offer workers changeable working hours at short notice.  The workers may or may not be required to accept any work that is offered depending on the terms of the contract.

On the flip side, for many employees there is great insecurity with these contracts and they are often at the beck and call of their employers. Employees do not have any certainty on the minimum number of hours they will be able to work each week. Apart from not knowing how much they are going to earn on a week-by-week basis, a number of employees on zero-hours contracts also find it difficult to obtain financing due to not having a guaranteed income. The flexibility of these arrangements does suit some workers.

All zero-hours workers are entitled to statutory annual leave and the National Minimum Wage in the same way as regular workers. Employers are also powerless to stop a zero-hours worker from getting work elsewhere. The law says they can ignore a clause in their contract if it bans them from looking for work and / or accepting work from another employer.

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Holiday entitlement

As the summer holiday season is upon us, we thought that it would be useful to remind employees of their annual holiday entitlement. Almost all full-time workers in the UK are legally entitled to 5.6 weeks' (or 28 days) paid holiday per year. This is known as statutory leave entitlement or annual leave. Legally, employers can include bank holidays as part of statutory leave, although not all employers do this. Employers are also free to provide additional non statutory holiday entitlement.

An employee’s actual statutory entitlement depends on how many days they work per week, but all employees including part-time, agency or casual workers are entitled to holiday. There is no statutory entitlement to holidays for the self-employed and there are special rules for those in the armed forces, police and civil protection services.

Part-time workers are entitled to a pro-rata entitlement. For example, 5.6 days holiday per year if they work one day a week. Employees who work irregular days or hours or that are in the first year of a new job can use HMRC’s holiday entitlement calculator to work out how many days they are entitled to.
  
HMRC is clear that workers have the right to:

  • get paid for leave;
  • build up holiday entitlement during maternity, paternity and adoption leave;
  • build up holiday entitlement while off work sick;
  • request holiday at the same time as sick leave.

Any employee that has a problem with their holiday pay should try and resolve the issue with their employer. If this does not work, there are a number of ways to resolve the dispute including contacting ACAS or taking the employer to an employment tribunal.

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ICO issues notices of intention to fine BA and Marriott

Following an extensive investigation, the Information Commissioner’s Office (ICO) has announced that it has issued a notice of its intention to fine British Airways (BA) £183.39 million for infringements of the General Data Protection Regulation (GDPR). If imposed, the fine will be a record amount in the UK for breach of data protection laws. The infringements relate to an incident in summer 2018 when cyber attackers gained access to the personal data of around 500,000 BA customers, due to poor security measures. User traffic to the BA website was diverted to a fraudulent site, where customer details were harvested by the cyber attackers. A variety of information was compromised by the poor security arrangements, including log in, payment card and travel booking details, as well as name and address information. BA will have the opportunity to make representations to the ICO before it makes its final decision. The ICO noted in its announcement that BA has cooperated with its investigation and has made improvements to its security arrangements following the breach.

The ICO has also announced that it has issued a notice of intention to fine Marriott International, Inc. (Marriott) £99,200,396 for infringements of the GDPR in connection with a cyber incident affecting approximately 339 million guest records held globally in Starwood hotels' guest reservation database. The vulnerability apparently began when the systems of the Starwood hotels group were compromised in 2014. Marriott acquired Starwood in 2016, but the exposure of customer information was only discovered in 2018 and Marriott then notified the ICO. The ICO found that Marriott had failed to undertake sufficient due diligence when it bought Starwood and should also have done more to secure its systems. Marriott has again cooperated with the ICO's investigation and has made improvements to its security arrangements following the breach. Marriott will now have the opportunity to make representations to the ICO as to the proposed findings and sanction.

The ICO is dealing with both cases as the lead supervisory authority on behalf of other EU member state data protection authorities. Under the GDPR, the data protection authorities in other EU member states whose nationals have been affected by the two breaches will also have the chance to comment on the ICO's findings.

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Rules for off-payroll working from April 2020

The rules for individuals providing services to the public sector via an intermediary such as a Personal Service Company (PSC) changed from April 2017. The new rules shifted the responsibility for deciding whether the intermediaries’ legislation applies, known as IR35, from the intermediary itself to the public sector receiving the service.

In the Autumn Budget 2017 the government announced plans looking to extend these rules to off-payroll working in the private sector. A consultation on the proposed changes was published in May 2018 and the government announced at Autumn Budget 2018 that it would extend the public sector reform to all engagements with medium and large-sized organisations. The new rules will come into effect from April 2020 and are expected to raise over £1.1bn for the public purse in 2020-21.

A 5% allowance is currently available to those who apply the off-payroll working rules to reflect the costs of administering them. This allowance will be removed for those engagements with medium and large-sized organisations. The allowance will continue to be available to small firms who will be exempt from the new rules.