December 13th, 2017 | Sterling

Best Practices for HR Compliance in 2018

2017 brought about many changes in employment laws that impact the hiring process and 2018 looks to be just as challenging on the legislative front.  The variety of laws/rules can be overwhelming to an employer, and if regulations are not complied with properly, organisations could face stiff penalties. Sterling recently presented the “HR Compliance in 2018: Are You Ready?” webinar to share compliance-related updates that have taken place in 2017 and how they affect employment law and the background screening industry. Peter Talibart, Tessa Cranfield and Derdre Murphy of Seyfarth Shaw LLP UK, and Sterling’s Oran Kiazim walk us through the many compliance changes that took place in the past year including the removal of Employment Tribunal Fees, preparing for changes that will occur due to Brexit, how to prepare for the GDPR, requirements of the Modern Slavery Act and reporting Gender Pay Gap Data and best practices to keep compliant in 2018.

Important Changes Regarding Employment Tribunal Fees and Litigation

In 2013 a fee regime implemented with a stated aim of reducing “unmeritorious” employee claims and funding the cost of the Employment Tribunal system. Because of the fee, the volume of the Tribunal claims dropped by 70%. A major UK trade union challenged the legality of the fee regime, principally on the basis that it unreasonably restricted access to justice under both UK law and EU law, and citing the impact on women given the drop in discrimination claims. The Supreme Court unanimously ruled that requirement to pay fees to bring claims in the Employment Tribunal (ET)and Employment Appeal Tribunal (EAT) was unlawful and the fee regime was abolished on 26 July 2017.

The removal of the fees has already impacted the business world and the work of the Employment Tribunal. In just a few months since the change, there is already a sharp change in the number of claims. The Tribunals are extending the time for recent claims which were barred because of failure to pay fees. Based on the current political climate, there is unlikely to be a replacement fee regime set up anytime soon. Employers will need to be more mindful of employment law compliance than they may have been in the last four years. Tribunal decisions are now online and fully searchable on the Employment Tribunal website which could result in bad publicity for those companies who fall foul of the rules.

The financial awards given by the UK Employment Tribunals have also been updated. Currently, the uncapped awards are given based on financial loss and injury to feelings. There are three bands of award for injury to feelings, dependent on the seriousness of the ‘injury’ with each having their own monetary limit up to 42,000 pounds. The monetary award for collective consultation has also been changed. The Award is now based on a “week’s pay” pay PLUS pensions contributions. There is a potentially significant increased cost for uncapped collective claims, such as TUPE, collective redundancy and pensions change consultation. Overseas employee who are attached to a UK business are also covered by collective consultation.

Employment and Immigration Challenges to Prepare for Ahead of Brexit

Brexit leaving negotiations continue with no certainty as to where we are headed. European Union (EU) nationals who are already in the UK are expected to be allowed to remain in the UK but will be required to register under the new system.  There is no immediate impact on UK employment law but it is likely that TUPE and the Working Time Directive will be the focus of attention in coming years. Certain industries are already starting to face recruitment challenges attributed to a reduction in the pool of available workers. To prepare for the future Brexit changes, companies should consider auditing their workforce for immigration impact. Businesses may also benefit from assessing the current travel requirements between the UK and Europe to see if processes need to be streamlined where visas will be needed where they weren’t before. EU citizens will have two years post-Brexit to register under the new online system, which is supposed to be introduced in late 2018. EU citizens who already have a registration certificate/residence card will be eligible for a simpler process and reduced fee to convert it. EU citizens in the UK for over five years will be able to apply for permanent residence. Otherwise, they will be given temporary status until eligible for permanent residence.

What You Need to Know about the GDPR

The GDPR or General Data Protection Regulation is an EU law which regulates the collection, use, disclosure and processing of personal information of individuals in the EU.

The GDPR will replace existing European legislation, such as the UK Data Protection Act 1998. The GDPR introduces new requirements and additional burdens on European businesses to harmonize existing data protection across the EU. It also alters existing concepts, which means that businesses will need to review their existing processes to make sure they are compliant. The GDPR will apply to EU companies that process personal data, regardless of whether the processing takes place in the EU. The new privacy laws also apply to Non-EU companies who offer goods or services to individuals in the EU, irrespective of whether payment is required and those Non-EU companies who monitor individuals’ behaviour that takes place in the EU.

Sterling is offering a 10-part webinar series about the changes to the way personal data is protected in the European Union when the EU General Data Protection Regulation (GDPR) applies on 25 May 2018. The webinars share key steps HR and legal personnel can take now to help ensure full compliance from day one.

Requirements of the Modern Slavery Act for Companies Doing Business in the UK

The Modern Slavery Act 2015 consolidated UK offences relating to trafficking and slavery. The Act applies to large businesses in the UK which have a total turnover of £36 million or more. Companies have an obligation to prepare a slavery and human trafficking statement for the fiscal years ending on or after 31 March 2016. The statement must set out the steps taken to ensure that the business and supply chains are slavery-free. If the organisation has a website, it must publish the statement on that website and include a link to the slavery and human trafficking statement. The board of directors must approve the statement and it must be signed by a director. If the organisation fails to comply with the injunction, it will be in contempt of a court order and that would be punishable by an unlimited fine.

Gender Pay Gap Reporting Obligations

All businesses which employed more than 250 UK employees as of 5 April 2017, need to file a gender pay gap report by 5 April 2018 on pay over the previous 12 months, with an ongoing annual obligation to publish a report. Employers also have the option to include a narrative explaining any pay gaps or other disparities and setting out what action, if any, they plan to take to address them.

What must be reported for Gender Pay Gap Data Report?

• Overall gender pay gap figures for relevant employees, calculated using both the mean and median average hourly pay
• Numbers of men and women in each of four pay bands (quartiles), based on the employer’s overall pay range
• Information on the employer’s gender bonus gap, e., the difference between men and women’s mean and median bonus pay over a 12-month period
• The proportion of male and female employees who received a bonus in the same 12-month period

The report must be published on the company’s website and kept online and publicly available for three years. Business must also upload the information to a government website. A written statement confirming that the gender pay gap information is accurate must also be published. This must be signed by a director or equivalent senior individual. The UK’s Equality and Human Rights Commission can conduct investigations. It will also, potentially, run checks to assess for non-compliance, publish tables of employers’ reported gender pay gaps, and might establish a database of compliant employers.

Taylor Review and the Gig Economy

The Taylor Review is an independent review that considers the implications of new forms of work on worker’s right and responsibilities. The reviews found that workers in the ‘gig economy’ should be protected but not at the expense of those who work in them. The report recommends that the categorical name of “worker,” which describes a person providing their service through apps, be renamed as “dependent contractor”. There should also be a clearer distinction between this group of employees and those that are self-employed. Dependent contractors should be entitled to additional protections and an obligation to provide them with a written statement of terms and clearer national minimum wage rights. The Taylor Review contains recommendations and it is not clear yet whether any of the proposals will become law. Currently, there are a few court cases that are pending decisions on the status of workers in the gig economy.

Changing Compliance and Employment Law

Employment laws will continue to have a profound and continuing effect. As the laws are further developed, there will be more updates to come. For more information on changes in employment laws for 2018 listen to the OnDemand version of the webinar, “HR Compliance 2018, Are You Ready?”

Please note: Sterling is not a law firm. The material available in this publication is for informational purposes only and nothing contained in it should be construed as legal advice. We encourage you to consult with your legal counsel to obtain a legal opinion specific to your needs.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.