Employment law – 2018 changes in a nutshell

Time for some New Year’s resolutions? As an employer, you’ll need keep on top of the forthcoming changes to employment law if you are to avoid claims or damage to your reputation. To help you prepare, I’ve listed some of the key changes that are likely to affect your business in 2018. Read on to find out more.

General Data Protection Regulation (GDPR)

Let’s start with the biggest and most anticipated: the EU’s General Data Protection Regulation, endearingly referred to as the GDPR, will come into force on 25 May 2018. The key points are:

• Nearly all businesses will have to update are their privacy notices.
• When processing employees’ data, it would be unwise now to rely on consent – many employment lawyers already advise against that under the Data Protection Act 1998.
• Data processors, as well as data controllers, will have direct obligations.
• Some organisations will have to appoint a Data Protection Officer.
• Fines for non-compliance are expected to increase.


There’ll be some immigration law changes on 11 January 2018. Overall these are thought to be favourable for both the workers and their employers. Perhaps the most beneficial change for employers is that they’ll be able to sponsor a foreign student as soon as they complete their studies, rather than waiting for their results to be published.

These changes aren’t to be confused with the new Immigration Bill, which is due to have its first reading in January but is focused on establishing a post-Brexit immigration policy.

And, as usual, a number of changes will take effect in April 2018. Notably:

Gender pay gap reporting

By 4 April 2018, any business employing at least 250 employees must publish their first gender pay gap report. This must include specified information relating to the difference between pay of the males and females in their business.

And what will happen if you fail to publish your report? The Equality and Human Rights Commission is consulting on that issue right now. If you wish to have your say, the deadline’s 2 February 2018.


Taxation of termination payments will be changing. In particular:

• For taxation purposes, all notice pay will be treated as earnings. That means they must be taxed as earnings, irrespective of the £30,000 threshold for taxation of termination payments – currently, a somewhat confusing distinction is made between contractual and non-contractual notice pay.
• Note that, a year later in April 2019, treatment of tax and of secondary National Insurance contributions of termination payments is set to be aligned. That means that NICs will be due on termination payments above £30,000. (You may have read that this change would also take effect in April 2018, but it has been postponed.)

Statutory rates

As usual, statutory rates for numerous matters will increase in April. For example, the National Living Wage will increase to £7.83/hour and Statutory Maternity, Paternity and Shared Parental Pay will increase from £140.98 to £145.18/week (or 90% of average earnings if lower).

Tax-free child care

As you’re probably aware, the Government recently introduced a new system of tax-free childcare. Consequently, the childcare voucher system is being phased out and will be closed to new entrants on 6 April 2018.

Changes to be decided

Of course, there’ll be further changes during the year which are not yet fixed. In particular, there’ll be court judgments that may change the law. A few important ones are:

• Definition of a ‘worker’

In February 2018, the Supreme Court is due to consider the case of Pimlico Plumbers v Smith, which, following a tumultuous 2017, may clarify the meaning of ‘worker’ – i.e. that class of people that are neither truly self-employed nor employed under the Employment Rights Act 1996. The Court of Appeal ruled that Gary Smith was a worker, but the Supreme Court may disagree. And sometime later in the year, the Court of Appeal will consider Uber’s appeal about the status of two of its taxi-drivers and the Government is expected to provide a response to the Taylor Review on the same subject.

King v Sash Windows: this case should now return from the ECJ to the UK’s Court of Appeal to apply to UK law. From the ECJ’s judgment, we know that if you incorrectly classify a worker as self-employed, then over several years they may accrue copious annual leave for which they must be paid in lieu if their employment with you ends. What we need clarification on is whether this conflicts with the UK’s two-year limit on claims for past holiday pay and the rule that a three-month break between periods of holiday means that early periods cannot be claimed for.

• Parental leave

Do you pay mothers on maternity leave more than the statutory minimum? And what about fathers taking shared parental leave? If you answered yes to the first question and no to the second, employment tribunals have given conflicting judgments on whether that’s legal. We’re hoping that Employment Appeal Tribunal decisions early in 2018 will iron out inconsistencies.

• Equality Act

And, on 1 May 2018 the ‘gay cake case’ will be heard by the Supreme Court, sitting in Northern Ireland for the first time. The question they’ll be considering is – is it against the Equality Act 2010 to refuse to serve a cake that endorses gay marriage? The question can be extended to other products and other concerns that are related to characteristics protected by the Equality Act.

Raphael Prais is a content lawyer at Epoq Legal Ltd.

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