Member Article

Whether you are a start-up looking to hire your first recruit or an established multi-national business, navigating the world of employment law can be tricky. WithBrexitstill firmly at the top of the bill, we take a look at some of the challenges ahead for employers large and small. As businesses struggle with significant skill shortages, expect difficulties around international recruitment and gender pay disparities to be key issues in the year ahead.

Brexit

With the position for EU nationals working in the UK pre-Brexitalmost settled, and recent confirmation that applications for settlement in the UK will now be cost-free, we take a look further ahead and consider the recruitment challenges faced by the STEM sector and others in post-Brexit Britain.

The end of free movement following Brexit would lead to one of the biggest changes toimmigration lawin over 45 years, and is likely to bring the issue of immigration into sharp relief for businesses across the STEM sector – a sector that has already been feeling the effects of significant skill shortages even without the added complication of Brexit.

As things stand, employers need to be prepared for there to be no special treatment for EU nationals after Brexit, meaning that EU nationals will have to adhere to the same immigration rules as non-EU nationals and employers will need to become licensed Sponsors in order to attract and retain international talent. While the proposed abolition of the ‘resident labour market test’ (which, in broad terms, permits international recruitment only as a ‘last resort’ when there are no suitable home-grown candidates available) has the potential to expand international reach and will be welcomed by employers, one of the big questions is whether the current system, which is heavily bureaucratic, can cope with a huge increase in demand from employers.

The Sponsorship regime is heavily regulated, and burdensome for employers in terms of the associated record-keeping and reporting duties. For many businesses, preparing for and obtaining a Sponsor license will require a complete overhaul of HR processes and IT practices to ensure these are fit for purpose.

On top of this, a no-deal Brexit would make things even more complicated, with the government announcing this week that they will create a whole new immigration route for EU nationals arriving after 29^thMarch. This will limit their ability to work in the UK to only three months, after which they will need to apply to remain for a further three years. As we approach this deadline with no deal, employers are wise to consider bringing forward the recruitment of any EU nationals to before Brexit.

Taylor Review – Good Work Plan proposals

Around the turn of the year, the government released theGood Work Plan, which sets out its vision for the future of the UK workplace. This is the latest implementation of the Taylor Review and details how the recommendations around clarifying employment status and strengthening workers’ rights will be implemented. A number of policy and legislative changes are proposed, including:

• introducing an online employment status tool to be developed to assist employers and individuals with the notoriously difficult task of determining the status of a working relationship, and the legal rights that flow from it;
• giving casual workers the right to request a more stable and predictable contract;
• giving all employees and workers the right to receive an improved written statement of employment terms from day one of their engagement; and
• providing additional clarification on the calculation of holiday pay (introducing a 52-week reference period) and ramping up enforcement of workers’ holiday pay rights.

At present, no commitment has been made on timescales, with Brexit top of the agenda for the foreseeable future. Nevertheless, employers large and small should watch this space as they may soon have a raft of new requirements to comply with.

Employers should note that, in addition to the usual annual minimum wage and statutory leave payment increases, Aprils bring with it the right of all workers (including casual and zero-hours workers) to receive an itemised payslip.

Pay Gap reporting

Gender pay gap

The first mandatory Gender Pay Gap reports were published by employers in April 2018. Gender Pay Gap reporting is mandatory for all UK employers in the private sector with more than 250 employees. However, the government is considering lowering the employee threshold at which an employer needs to submit the report. Gender pay disparity is a key issue for the STEM sector as it seeks to attract female talent and invests in promoting STEM subjects in schools to encourage uptake from female students. As information becomes more readily available, and with the scope of reporting requirements set to grow, it is likely that the pay gap will become a key determining factor for women as they make decisions on their study and career choices.

At present, employers are required to publish only the ‘hard’ pay gap data, although many have opted to supplement this with explanatory comments. Having reviewed the first mandatory responses, the government is considering requiring employers to publish an “action plan” detailing how they will improve their gender pay gap.

Ethnicity pay gap

A consultation is also underway relating to the introduction of mandatory ethnicity pay gap reporting, building on the success of the existing pay gap reporting scheme. This may prove more difficult than gender pay gap reporting, as not all employers collect ethnicity information about their employees, and definitions/descriptions of ethnicity are not standardised.

Executive pay

2019 brings with it a requirement that UK quoted companies with more than 250 employees will also have to report on ratios between the CEO and employees' pay and benefits. The requirement applies to financial years beginning on or after 1 January 2019 so reporting will start in 2020. However, as with gender pay gap reporting, it is recommended that affected companies gather and review the evidence in good time.