eBrief: Gordons legal Employment Update – 30 September 2016

Friday 30th September 2016

This week’s Employment Law update (a day later than planned due to lots of employment law stuff going on!) has been prepared by various members of our team, as it always is – there’s no white label short cutting going on here!

Liability of Principals for Agents under the Equality Act

In the case of Unite the Union v Nailard, the Employment Appeal Tribunal held that two workplace union officials employed by a private sector employer, but who worked exclusively on union business were agents of the union for the purpose of the Equality Act 2010.  As such, the union was potentially liable for acts of discrimination and harassment that the Claimant (a union employee) was subjected to by the union officials, even though the officials themselves were not employees of the union.

Comment: This case serves as a useful reminder as to the wide-reaching application of the Equality Act.  Employers therefore need to be aware that they can not only be held liable for the acts of their own employees, but can also be held liable by the actions of their ‘agents’ who are acting under their authority.

Fairer Pay – Is Enforcement Effective?

There have been several reports this week about pay notably focusing on the minimum wage and the gender pay gap. With new legislation, deterrents and sanctions coming into play, we look at whether enforcement measures are effective. Below is a consolidation of the key pay-related stories and how they may affect your employment decisions.

Gender Pay Gap

First up, Deloitte have reported that the gender pay gap will not close until 2069, a wait of 53 years with the current convergence (to reduce the 13.9% overall gap for full time workers) reducing at only 2.5p per year. According to the research, a simplistic solution to balancing pay quicker would be for more women to take up careers in STEM industries (science, technology, engineering and mathematics) where pay across the board is the most equal. Currently, women only account for 14.4% of workers in these industries. The managing partner for talent at Deloitte, Emma Codd, says ‘if more women study STEM subjects and pursue related careers … [it should] serve to reduce the gender pay gap.’

The research coincides with fresh criticism of the pay gap reporting agenda scheduled to be implemented by the Government. The new rules will make it mandatory for private and third sector organisations with at least 250 employees to publish an annual report detailing their overall gender pay gap. A number of concerns have been raised over how the current state of the enforcement provisions of the legislation which appear to be lacking in that they contain:

  • No financial penalties expected (from the early stages of the legislation) with ‘naming and shaming’ the only meaningful sanction
  • No obligation for offending firms to tackle any highlighted pay gap
  • No requirement to aggregate subsidiary companies meaning companies can carefully miss the 250 employee cut off point

Therefore, unless significant changes are made to the draft legislation, questions remain on how effectively the Government’s plan will actually work in practice.

In further news, although the percentage of women has risen in the top 10% and 1% of the wealthiest people in the UK since the 1990s, women remain unchanged as a ‘distinct minority’ in the top 0.1% of wealth according to a London School of Economics study.

Minimum Wage

Meanwhile, serious concerns have come to light over the enforcement of the national minimum wage legislation. The Guardian has reported that only three of 700 firms ‘named and shamed’ for illegally low pay by the government since February 2014 have actually been prosecuted. The business minister, Margot James, has pointed to the high costs and delays of prosecution leading to the lack of criminal cases being brought.

Naming and shaming of firms is hardly a positive endorsement for the organisations’ reputations but it has proven seemingly ineffective. The number of workers identified as being owed pay more than doubled to 58,000 in 2015-2016, according to the National Audit Office. In addition, 20 offending companies have been spared their blushes after being allowed to hide their identities as they face “a risk of personal harm”. As Tim Roache, general secretary of the GMB union, stated: “Companies have been allowed to lurk in the shadows by using these get-out clauses, despite flagrantly ignoring legislation to pay their workers the absolute legal minimum”. It seems, therefore, that perhaps even the relatively weak sanction of “naming and shaming” can be avoided.

Comment: There is a long way to go to equalise the gender pay gap across the board in the UK. The Government have taken steps in the right direction but the absence of effective enforcement will be a huge obstacle to effective change as has been shown with national minimum wage legislation.

Legislation Updates

What does the change to the Immigration (Variation of Leave) Order 2016 mean?

Under certain circumstances, an overseas domestic worker’s limited leave to enter the United Kingdom will be extended.  In particular, the individual’s leave will be extended until 28 days after the competent authority, which has reasonable grounds to believe they are a victim of modern slavery, notifies the person of its decision as to whether or not the person is such a victim.

The change is due to come into force on 6 October 2016.

Planning for new Data Protection Regulations

A recent report has uncovered that 57% of organisations do not understand the effect of the EU General Data Protection Regulation and whether or how this applies to their business.

The legislation is due to come into force on 25 May 2018 and if an organisation is found to be in breach of the new Regulations they will be subject to considerable fines of up to 4% of their total worldwide annual turnover.  Therefore, it is vital that businesses start to plan for the impact of the new legislation in order to ensure compliance is achieved.

Organisations need to identify the key data which needs protecting and understand where it belongs and the value it holds along with who has access to it.  The Regulations are likely to impact every organisation in a different way but the key issues for most organisations to consider are likely to be:

  • What amounts to fair and lawful processing of personal data;
  • How privacy notices are dealt with (acknowledging the statutory rights available to individuals and the mandatory information about the way in which data is processed they are entitled to);
  • Whether there is a compliance information governance framework which has been established to show that the organisation is taking active measures to protect the data;
  • Whether privacy impact assessments are carried out for all projects which may expose individuals to enhanced privacy risk;
  • Whether there is a need to appoint a data protection officer;
  • Whether the organisation is required to notify local regulators and the relevant data subjects affected by a data breach; and
  • How to deal with the contractual measures and effective due diligence when sharing data outside the EU and/or the organisation.
  • Once a firm has considered the above they will need to implement a security plan and policies to protect and govern the data.

Comment: If you would like further information on the above updates and how this could impact your business, please do not hesitate to contact a member of the employment team.

If you require any further information on the above developments please do not hesitate to get in contact with a member of the Employment Team, on the following number 0113 227 0100.