5 Employment law changes to be aware of in 2019
1. Executive pay gap reporting in force – 1 January 2019
Under the Companies Act 2006 regulations UK listed companies with 250 plus UK employees are required to provide an annual report (with the first reports due in 2020) on the gap in pay between their average UK workers and their chief executive.
2. Brexit – 29 March 2019
It was agreed in March 2018 that a transitional framework would be put in place from 29th March 2019 – 31st December 2020 whereby:
- Northern Ireland are to remain in the customs union and single market avoiding a hard border with the ROI;
- free movement of European Union citizens will be permitted; and
- the United Kingdom will remain bound by European trade agreements whilst negotiations take place regarding international trade deals.
The two-year time frame is ticking from 29th March 2017 when the UK gave notice of decision to leave the European Union. Under the Lisbon Treaty the two-year time frame can be extended by agreement, but the current end date is 29th March 2019.
3. Requirement for payslips to state hours worked where pay varies – 6 April 2019
The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) Order 2018 (SI 2018/147) states that, where an employee’s pay is varied as a result of time worked, employers will have to set out on the employee’s itemised payslip the number of hours for which the employee is being paid. This amendment to the legislation should allow for greater transparency in relation to staff being paid via an hourly rate and should assist employees to easily highlight any potential underpayments. The Employment Rights Act 1996 (Itemised Pay Statement) (Amendment) (No.2) Order 2018 (SI 2018/529) will also extend the same right to workers.
4. Regulations on executive pay ratio reporting introduced – 1 January 2019
The Companies (Miscellaneous Reporting) Regulations 2018 (SI 2018/860) introduce new reporting requirements on certain companies. The reporting requirements under the Regulations apply in respect of financial years beginning on or after 1 January 2019. Therefore, the first reporting will therefore start in 2020.
|Quoted companies (with more than 250 UK employees) are required to:||Large companies (with more than 250 UK employees) are required to:|
|· include certain pay ratios for the relevant financial year in the directors’ remuneration report. The pay ratios compare the total annual remuneration of the CEO to UK employees whose pay and benefits are on the 25th, 50th and 75th percentiles.|
|· provide a statement as part of their directors’ report, and on their website, as to which corporate governance code or the corporate governance arrangements they applied in the financial year.|
|· include in the directors’ remuneration report how share price changes impact on shares receivable by directors under long-term incentive schemes during the relevant financial year.||· include a statement as part of the directors’ report on how the directors have engaged with employees and had regard to their interests when making business decisions.|
|· include a statement as part of their strategic report setting out how directors have had regard to the duty to promote the success of the business. The statement must be made available on their website.|
|· to include a statement as part of their directors’ report on how they have had regard to the duty to promote the success of the company in their business relationships with customers, suppliers and others.|
5. New check-off arrangements take effect – Expected early 2019
The finalised Regulations, which were due to come into effect on 10th March still remain unpublished and we anticipate they will be implemented before the end of 2018 or more likely early 2019.
The draft Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2017 incorporates new arrangements for check-off for public-sector employers. Where a collective agreement or contract of employment contains arrangements for check-off, the arrangement can only continue where workers have the option to pay their trade union subscriptions by other means and the trade union themselves meets the administrative costs in respect of making the deductions.
If you would like some more information or assistance in relation to employment rights, our experienced employment team would be more than happy to help either on firstname.lastname@example.org or 0113 3229222.