Employment law updates 2017: important changes for employers

The latest UK employment law changes for employers, HR professionals and in-house lawyers.

19 May 2017

Employment law is constantly on the move. We keep track of the latest employment law changes so you don't have to. Below you'll find our regular round-up of legislation, case updates and helpful guides. For a list of key dates for 2017, see our employment law timeline.

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Employment law updates

Update posted 19 May 2017

Three month gap breaks series of deductions for holiday pay

Fulton and anor v Bear Scotland Ltd

Case: The Employment Appeal Tribunal (EAT) has confirmed that a gap of more than three months in a series of deductions is sufficient to break the series for the purpose of bringing an unlawful deduction from wages claim.

The claimants had previously been successful in establishing that non-guaranteed overtime should be included in the calculation of holiday pay. However, some of their claims have been found to be out of time because a period of more than three months had elapsed between successive non-payment or underpayments of holiday pay.

This is good news for employers as it severely restricts the ability for workers to bring backdated claims; a claim will be out of time if there has been a gap of more than three months between successive underpayments.

Reasonable adjustments

The Government Legal Service v Brookes

Case: The EAT has upheld a tribunal decision that a job applicant with Asperger's syndrome was placed at a particular disadvantage and suffered indirect disability discrimination when she was required to undergo a multiple choice test as part of the first stage of a recruitment process.

The EAT was of the view that a reasonable adjustment would have been to allow her to provide short written answers and, as the employer had refused her request to do this, her claim for failure to make reasonable adjustments succeeded.

Employers who use psychometric or multiple choice tests for job applicants should therefore consider whether their recruitment procedures should allow some flexibility to make any necessary reasonable adjustments for disabled applicants.

Jurisdiction – where does an employee habitually work?

Nogueira and others v Crewlink Ltd C-168/16; Moreno Osacar v Ryanair, formerly Ryanair Ltd

Case: The Advocate General has given an opinion in an important case concerning the factors that determine the jurisdiction of an employment contract where an employee works in more than one EU member state.

In his opinion the employment contracts of cabin crew fall within the jurisdiction of the country where, or from which, the employee principally carries out his/her obligations vis-à-vis his employer.

It remains to be seen whether the ECJ will follow this opinion but it serves as a reminder that express jurisdiction clauses can be overridden by the facts.

Legal update: Employment contract jurisdiction: where does an employee habitually work?

Update posted 4 May 2017

Taxation of termination payments

Legislation: The changes to the taxation of termination payments, which were due to come into force in April 2018, have been dropped from the Finance Bill. The Bill was significantly amended in order for it to be fast-tracked through Parliament before Parliament was dissolved ahead of the forth-coming General Election on 8 June 2017.

The Bill has now received Royal Assent and become the Finance Act 2017. However, we expect that many of the provisions which were dropped, will be included in a second, post-Election, Finance Bill.

Sleeping at work

In a decision of particular significance to employers who have workers who are required to sleep on the employer’s premises, the EAT has considered the question of whether “sleep-in” time counts as “time work” for the purpose of the National Minimum Wage Regulations. 

The EAT disapproved of the cases which decided that a worker was working just by being present or “on call”. It held that each case would turn on its own facts and a number of factors needed to be considered in order to decide if the worker was working whilst present at the premises. 

These factors include the employer’s purpose for having the worker on the premises, the extent to which the worker’s activities are restricted, the degree of responsibility and the immediacy of the requirement to provide services if an emergency occurs.

Dress codes

In its response to the report, 'High heels and workplace dress codes', the government has rejected the need for a change to legislation, as it believes that the existing law is sufficient to protect women who are subjected to discriminatory dress codes. 

However, it has accepted the recommendation that there should be an awareness raising campaign and new guidance for employers to help them understand how discrimination law and health and safety law apply to workplace dress codes. This is expected in July 2017.

Update posted 21 April 2017

Apprenticeship Levy

Legislation: The apprenticeship levy came into force on 6 April 2017 and the first payments are due in May 2017. All employers with a paybill in excess of £3 million must pay the levy, regardless of whether or not they employ any apprentices. The levy is set at a rate of 0.5% of the employer's gross paybill and is paid in monthly instalments via PAYE. It is an employer’s responsibility to notify HMRC each month whether they are required to pay the levy.

All employers, whether they are required to pay the levy or not, are able to access funding to cover the costs of apprentices' training (up to certain limits) and this has led to more businesses considering apprenticeship arrangements where they have not previously.

Gender pay guidance

Guide: Acas and the Government Equalities Office (GEO) have published revised final guidance on gender pay gap reporting. The guidance has been expanded to cover the obligations for both private and public sector employers and has been renamed Managing gender pay reporting (PDF).

A number of changes have been made to the guidance to help employers deal with some of the practical difficulties in determining what pay and bonuses to include in the calculations and to clarify how different workers should be treated, including partners and workers who receive no pay during the relevant pay period.

Corporate governance

The Business, Energy and Industrial Strategy (BEIS) Select Committee inquiry into corporate governance has now published its report. The inquiry focused on three key areas: directors' duties, executive pay, and board composition.

The Committee makes a number of recommendations to make board diversity a key priority and to increase the number of women appointed to senior and executive management level positions within the FTSE 350 and listed companies. Other recommendations include the introduction of controversial pay ratio reporting and the development of a voluntary corporate governance code for the largest privately-held businesses.

The government has yet to publish the outcome of its consultation, which focuses on executive pay, employee and stakeholder voice, and large privately-held businesses. We will have to wait and see if they decide to take any of the Committee's recommendations forward.

Legal update: Corporate governance: BEIS Select Committee makes its recommendations

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