Tribunal Fees Abolished…
You will no doubt have heard over the summer that the Supreme Court abolished employment and appeal tribunal fees with immediate effect, in a ruling in the case of R (on the application of UNISON) v Lord Chancellor. Although fees are not in principle unlawful, the Supreme Court decided that the charging model adopted by the Government in 2013 undermined the rule of law and had deterred too many people from pursuing tribunal claims (approximately 14,000 per year according to the Government’s own statistics). Its decision has been described as one of the most important judicial interventions in the history of employment law and is a clear expression of support for the fundamental common law and EU right of access to justice.
While the decision will clearly be a blow to the Government given that it can no longer rely on fees to help with the running costs of the tribunal service, what are the other impacts of the Supreme Court’s decision?
- Anyone seeking to enforce their rights through the tribunal system will now no longer have to pay fees.
- If would-be claimants can show that they were deterred from issuing claims because of the fees, there may be “just and equitable” arguments for saying that they should be granted extensions of time and be permitted to issue those claims.
- The Lord Chancellor has undertaken to reimburse all fees that have already been paid, though the mechanism for doing so has not been announced.
- It remains to be seen whether or not a less onerous fee regime is introduced to replace the one that has been declared unlawful, given that the Supreme Court accepted that court and tribunal fees are, in principle, justifiable.
The ‘Good Work’ Report…
After several high-profile tribunal decisions regarding gig economy workers, the Taylor Review set out to explore and consider the impact of new models of working on the rights of workers and the obligations of employers, with the expectation that its findings and recommendations would be used to inform Government industrial strategy. Following a wide-ranging consultation with workers, employers and their representative bodies across the country, The Taylor Review of Modern Working Practices published its much heralded report – now known as the ‘Good Work’ Report – in July 2017.
It was no surprise that the report’s substantive recommendations focused on the classification of employment status. However, the report did not recommend moving away from a three-tier system (employee, worker and self-employed) towards a two-tier division between employment and self-employment as some had feared or hoped (as the case may be). Instead, it supported the intermediate “worker” status for less formal relationships, albeit renamed as "dependent contractor". One of the report’s key recommendations was that the obligation to provide personal service should no longer be crucial to the definition of a worker but that the principle of “control” should be given greater importance, with legislation being updated to reflect what this means in the modern world rather than merely the traditional view of day-to-day supervision over activities. It hopes that this will result in more people being protected by employment law and fewer employers successfully hiding behind substitution clauses in employment contracts.
The report made further recommendations and suggested that if the “high-level” criteria of personal service, control, mutual obligations and whether or not the individual is carrying on a business undertaking remain critical to the determination of employee status, they should be enshrined in primary legislation. The detail should then be covered by secondary legislation and guidance that can be quickly updated to reflect changing conditions.
The report also commented on the treatment of gig economy workers and particularly those who provide their services through apps and other digital platforms, stating that there should be some genuine two-way flexibility when it comes to availability of work. The report suggested that the definition of “output” work under the National Minimum Wage Regulations should be adapted to distinguish between platform work and work that the worker has chosen to accept in the knowledge there is low demand. The report suggests that digital platforms could be used to provide individuals with an accurate guide to their potential earnings, particularly during periods when labour supply outstrips demand.
Other recommendations made in the report were:
- the definition of self-employment for employment purposes should be aligned with that of HMRC for tax purposes so that being employed for tax purposes would mean that an individual is either an employee or a dependent contractor;
- dependent contractors should have the right to a written statement of terms from the start of their engagement;
- a higher national minimum wage for hours not guaranteed by contract so that businesses could continue to use zero-hours workers but would pay more for the flexibility;
- zero-hours workers should have the right to request a contract that guarantees hours that better reflect what has actually been worked over the past 12 months;
- Statutory Sick Pay should be a basic employment right but accrue according to length of service; and
- HMRC should have jurisdiction to enforce the right to holiday pay for low paid workers.
Tackling tax evasion…
A new corporate offence of failing to prevent the facilitation of tax evasion, which potentially imposes liability on employers as a result of their employees’ actions, came into force on 30 September 2017. Put simply, an employer may commit an offence under the Criminal Finances Act 2017 if it fails to prevent an employee, agent or any other person who is performing services for that organisation from criminally facilitating the evasion of tax, whether the tax is owed in the UK or in a foreign jurisdiction. A person commits a UK tax evasion facilitation offence by being knowingly concerned in, or taking steps with a view to, fraudulent tax evasion by another person; aiding, abetting, counselling or procuring the commission of tax evasion.
An employer who falls within the scope of this new offence will be able to offer a defence if it can prove that, at the time the offence was committed, it had all reasonable preventative procedures in place to prevent an associated person from committing an offence.
The new offence doesn’t alter what is criminal, it merely focuses on who is held to account for acts contrary to the current criminal law. It does this by focussing on the failure to prevent the crimes of those who work for and on behalf of a corporation, rather than trying to attribute criminal acts to that corporation.
To put it more simply, there are three stages to both the domestic and foreign jurisdiction tax evasion facilitation offences: firstly, there must be criminal tax evasion by a tax payer under existing law; secondly, there must be the criminal facilitation of that evasion by an associated person of the relevant body; and finally, the relevant body must have failed to prevent its representative from committing the criminal facilitation act.
The penalties for this offence will include unlimited fines as well as ancillary orders such as confiscation orders or serious crime prevention orders. A criminal conviction may also have consequences for the relevant body: it may require disclosure to regulatory bodies and prevent the relevant body being awarded public contracts.
Government Guidance, available at www.gov.uk, offers six guiding principles, including risk assessment, due diligence, communication, monitoring and reporting, to help inform relevant bodies of the prevention procedures they should consider putting in place to help prevent tax evasion being committed on their behalf.
