Employment and immigration | UK Regulatory Outlook October 2022
Published on 26th Oct 2022
IR35 regime to come into force in April 2023 | Right to work changes come into force | Extending the exemption from reporting requirements
IR35 regime to come into force in April 2023
As detailed in our previous Regulatory Outlook, the UK government had announced that the IR35 regime reforms were to be repealed from April 2023. The new chancellor, Jeremy Hunt, announced on 17 October that these repeals will no longer be going ahead and that means the current IR35 regime will stay in place. Staffing companies and end clients will continue to be liable for personal service company (PSC) contractor tax and, given HMRC's likely refreshed focus on enforcement, should keep going with their procedures relating to determination of the IR35 tax status of PSCs. See our Insight for more and you can also find previous insights on the new IR35 regime here.
Right to work changes come into force
As of 1 October 2022, employers are no longer able to conduct a right to work check via the adjusted method. Instead, employers can either continue to conduct manual checks by meeting physically with the employee and checking the appropriate documentation, or use the services of an Identification Service Provider (IDSP) who will use identification document verification technology (IDVT) to check the passport of the British or Irish national on the employer's behalf (although an employer must still ensure that they obtain and retain a copy of the document that the IDSP checked, together with a copy of the IDVT report showing that the worker has the right to work in the UK).
All employers in the UK have a legal obligation to ensure they are not employing individuals who do not have the right to work (RTW) in the UK, whatever their nationality. Compliance with right to work checks is critical. A failure to comply may lead to civil penalties of up to £20,000 per worker and potentially a custodial sentence where an illegal worker is employed without the appropriate RTW checks being conducted.
Our specialist immigration team will be happy to provide further guidance on the new rules for RTW checks.
Extending the exemption from reporting requirements
As part of its "growth" agenda, the UK government announced plans "to release from reporting requirements and other regulations in the future" businesses with fewer than 500 employees (at present, regulatory exemptions are often granted for businesses with below 250 employees). The announcement stated that the changed threshold will apply "to all new regulations under development as well as those under current and future review, including EU retained laws" and "the exemption will be applied in a proportionate way to ensure workers' rights and other standards will be protected, while at the same time reducing the burden for growing businesses".
We must wait and see how this change will impact employment regulations but potential changes could be made to the reporting threshold for gender pay gap reporting (the regulations were due to be reviewed earlier this year but there is no news on whether this has been completed). The announcement stated that the government will also look at plans to consult in the future on potentially extending the threshold to businesses with 1,000 employees once the impact of the current extension is known.
ICO consults on employee monitoring at work guidance
On the 12 October 2022, the UK Information Commissioner's Office (ICO) published its draft guidance on employee monitoring at work for public consultation. The guidance is intended to provide organisations with greater clarity and practical advice on how to ensure that employee monitoring practices comply with UK data protection law (namely, the UK General Data Protection Regulation and Data Protection Act 2018). The guidance covers practices such as monitoring telephone calls, emails and messages, monitoring employee vehicles (such as the use of dashcams), monitoring time and attendance (including through the use of biometric data), and monitoring employees' device activity. The ICO's consultation on the draft guidance is due to close on 11 January 2023. The ICO will consider the feedback before publishing the final guidance.