3 legal developments that probably won’t happen in 2018

There’s any number of articles around at this time of year telling us about legal developments that are coming up in the next 6 to 12 months.

From the annual increases to tax allowances, minimum wage rates, and statutory pay for sickness, maternity and other family-related absence, to much more fundamental changes such as the new gender pay gap reporting requirements to the much heralded General Data Protection Rules (GDPR) there is a lot that UK businesses need to prepare themselves for, by springtime.

But, looking further into 2018, there is also plenty of legislation that has been proposed but is still a long way from the statute books, let alone an implementation date.

The combination of the government’s surprisingly weakened position in the House of Commons since last June’s election and the inevitable priority that must be given to the legislation necessary to deliver an orderly exit from the European Union, has greatly reduced the political capital and parliamentary time available to other legislation.

The free vote that the Prime Minister had promised on repealing the 2004 Hunting Act was an early casualty in 2018, but there are a few other initiatives unlikely to get before parliament, onto the statute books and into force by the end of the year.

Tribunal fees strike back?

As recently as October, (then) Lord Chancellor David Liddington claimed the government still wanted to replace the employment tribunal fee regime struck down by the Supreme Court last summer. However, higher priorities for the Ministry of Justice and the reduced income that any fair and workable system could raise, will make quick progress on this unlikely.

LASPOA reform

Formal assessment of the impact that five years of the Legal Aid, Sentencing and Punishment of Offenders Act (2012) has had on access to justice, was finally timetabled by David Liddington last year, and is due to report by the end of April. Given the time it has taken even to get the assessment underway, the prospect of any major reform of the legislation being implemented in 2018 seems remote.

Civil Liability Act

Another piece of MoJ business that we seem to have been talking about forever, is the Civil Liability Bill mentioned in last year’s Queen’s Speech. The proposed increases to small claims court limits of £5,000 for road traffic injury claims and £2,000 for other injuries appear to be set in stone, but the faltering progress these reforms have seen since George Osborne first announced them in 2015, makes a September implementation seem less likely than April 2019.

Unlikely as these three developments may be to see legislative action this year, there is more than enough reform taking place in 2018 to keep us all busy. The uncertainty surrounding the implications of Brexit, especially what it means for employment law, should become clearer as the year progresses. But one piece of EU reform that seems certain to survive, GDPR, should be enough to keep us all busy, at least until the summer.

Plumbers, pilots and parcel couriers: self-employment in the gig economy

Chancellor Philip Hammond’s first budget may have targeted the so-called gig economy with higher National Insurance contributions (before hastily withdrawing them a week later), but the nature of self-employment could be under the legal microscope for some time to come.

It seems that zero hours contracts and the gig economy just can’t stay out of the headlines, these days. Already this month, analysis of data from the Office for National Statistics has revealed that the number of Britons on zero-hours contracts neared 1 million last year, and more than one courier firm was found to be charging drivers who missed a shift.

A much-publicised Court of Appeal decision in February marked another skirmish in the continuing battle over workers’ rights and, specifically, the circumstances in which individuals engaged by a (third party) company to provide services can be considered self-employed.

That judgment followed a tribunal decision last year, which ruled that two Uber drivers were not self-employed, as the global taxi technology giant had claimed, but qualified as ‘workers’ and were therefore entitled to certain workers’ rights, under UK law. Uber has since appealed that decision.

The February case, Pimlico Plumbers v Gary Smith, dated back to 2011 when Mr Smith was dismissed a few months after suffering a heart attack. It took less than a year for him to get a decision from the original Employment Tribunal, but took almost another five for an Employment Appeal Tribunal in 2014 and then the Court of Appeal to uphold that original decision in his favour.

The dispute was just one of many revolving around the issue of self-employment and whether many in the so-called gig economy should really be considered “workers”” and thus be entitled to benefits such as rest breaks, holiday and sick pay and the minimum wage.

It is estimated that up to 5 million people in the UK, from delivery drivers to video producers, are paid for their work in this way. While many appreciate the flexibility that self-employment offers, such arrangements can, like zero hours contracts, be used to exploit staff and avoid employment obligations such as the minimum wage.

Questions about such arrangements are nothing new. Back in 2010, it was drivers for the delivery firm Hermes whose employment status hit the headlines. In 2013, contracts between Ryanair and pilots working for the airline came under scrutiny. The somewhat fluid definitions of "worker" and "employee" have been taxing employers, employment lawyers and journalists for at least a decade.

The 16,000-word judgment in the Pimlico Plumbers case makes for a long read, but one early line from Master of the Rolls Sir Terence Etherton, stands out:

“The case puts a spotlight on a business model under which operatives are intended to appear… as working for the business, but at the same time the business itself seeks to maintain... a legal relationship of client or customer and independent contractor rather than employer and employee or worker.”

Obviously, the Court was well aware that the issues in the case represent a wider phenomenon in the modern workplace and, while this particular decision might not be appealed, it won’t be long before other courts and tribunals will be asked to consider similar issues.

The legal tests of whether a person is truly self-employed are complex and still far from definitive, but any organisation that depends upon such working arrangements could start by considering whether or not they genuinely offer flexibility and benefit to the person doing the work or solely benefit the business.

Howell’s School could have been saved with legal insurance

The closure of Howell’s School in Denbighshire was possibly avoidable had the school in place adequate insurance arrangements against employment claims.

The school, which had a loss of £162,733 in its accounts filed in August 2012, had lost a case for unfair dismissal in which a teacher was awarded £38,000. The compensation is still unpaid. The finances are further complicated by another claim for unfair dismissal for a case lost in March this year against the former head teacher and his partner, who was head of PE and pastoral care in which compensation is still to be agreed.

Legal insurance is widely available to cover such disputes, paying both the legal costs to represent the employer, in this instance the school, and paying the awarded compensation to the ex-employees.

The closure of the school that had been at the heart of the community for more than 150 years is a catastrophe, particularly for the pupils and parents who have very little time to find a new school before the new term in September.  The closure will be even more difficult to accept by pupils and parents in knowing that had the school taking out appropriate legal insurance then some of the financial burden could have been removed, possibly leaving the school to serve the community for years to come.

Read the full story

Employment tribunals – an update

With cost-cutting high on the Government agenda another set of measures to reduce taxpayer costs have been tabled in the latest consultation on employment tribunals - Charging Fees in Employment Tribunals and the Employment Appeal Tribunal.

Currently costing around £84 million a year the consultation aims to lower this amount by proposing that those who use the “system make a financial contribution”. Two options are laid out in the consultation:

• Option 1: an initial fee of between £150-£250 for a claimant to begin a claim, with an additional fee of between £250-£1250 if the claim goes to a hearing, with no limit to the maximum award; or
• Option 2: a single fee of between £200-£600 – but this would limit the maximum award to £30,000 – with the option of an additional fee of £1,750 for those who seek awards above this amount

There are a number of benefits listed in the press release issued by the Ministry of Justice on 14 December, including:

• Access to justice for those on low incomes or limited means will be protected by fee waivers
• Discourage unmeritorious claims
• Encourage early settlement of claims
• Small businesses will be encouraged to recruit new staff without the fear of unnecessary actions
• Incentivise complainants to choose conciliation or mediation
• Reduce taxpayers costs

On the other hand, an article in the Law Society Gazette has comments from Victoria Phillips, head of employment rights at national firm Thompsons, who is concerned that “fees at any level will make it more difficult to pursue a claim against an employer.”

With the number of employment tribunals increasing every year and money spent by both parties unnecessarily on applications that often do not reach a full hearing, how well will these proposals tackle the problems going forward and who else will be affected by the changes? Your comments are of course very welcome.

Employment Tribunal System Part II

Following from the last blog post on the Employment Tribunal System a consultation paper was released on 27th January which seeks views on a number of proposals which if successfully implemented are intended to address concerns raised by the British Chamber of Commerce by reducing costs and making workplace disputes easier to resolve.

Citing the government’s aim to review employment law in order to make “the UK to be the best place to start and grow a business” the paper set outs a number of proposals that it hopes will “encourage parties to use early dispute resolution”, and if the dispute does go through an employment tribunal to make “cases move more swiftly to conclusion, so as to contain costs for employers, employees and the taxpayer”. (i)

With proposals ranging from “increased awareness of mediation”, to putting forward “legislative proposals to simplify the employment tribunal process” and amending the qualifying period for employees from one year to two before they can bring a claim for unfair dismissal to an employment tribunal, the consultation paper is bound to attract many responses before its April deadline. You can read all of the proposals and background information in the consultation paper online. (ii)

If implemented the proposals could benefit both the employee and employer with improved efficiencies, early resolution and a reduction in cases escalating to employment tribunals. Although there may also be some negative financial implications for unfair dismissal claimants in the form of introducing a fee and for employers in the form of introducing fines if the employer is found to have treated their employee unfairly. Moreover, some proposals could have unforeseen consequences which add costs to the system.

ARAG policyholders will be well-placed to welcome these proposals with 24/7 legal advice, updated downloadable legal documents and the assurance that policy coverage will reflect any future changes to the law.

(i) & (ii): Department for Business, Skills & Innovation and Tribunals Service (2011); Resolving workplace disputes: A consultation January 2011

Employment Tribunal System

Following a research paper on Business and the Employment Tribunal System (i) the British Chamber of Commerce issued a press release calling for reforms to the employment tribunal system. According to the press release “the average cost for an employer to defend themselves at tribunal is £8,500”, as compared to an average payout of £5,400 if the employer settles. The problem that this highlights is that employers will be persuaded to settle “even if faced with a spurious claim” because it keeps costs down and is “more convenient to do so”.(ii)

As Dr Adam Marshall, Director of Policy and External Affairs at the BCC, points out in the press release:

“The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee - whereas they should be fair for employers and employees alike.”

ARAG’s range of commercial legal expenses insurances provides vital protection which will help to level the playing field so that the employer feels confident fighting unfounded claims at employment tribunals. For instance, Absolute Business Legal responds to a generous range of legal disputes that can arise from your day-to-day business activities, including:

• employment disputes and compensation awards


• defence of prosecutions


• representation for compliance and regulatory matters


• pursuing claims for property damage nuisance and trespass


• license appeals


• representation for full and aspect tax enquiries


• VAT appeals

Find out more about Absolute and ARAG’s other commercial legal insurance products on the ARAG website.

(i) British Chamber of Commerce (2011) Business and the Employment Tribunal System, Abigail Morris
(ii) British Chamber of Commerce (05/01/2011) Press release: BCC calls for reform to employment tribunal system