Labour Research January 2019


What can we expect in 2019?

Amid Brexit uncertainty, the experts at Labour Research look at the issues likely to be impacting on UK workers and their unions in the year ahead.


In the highly-charged atmosphere of Brexit, all forecasts risk being wrong-footed by the sheer uncertainty surrounding the UK’s departure from the European Union.

One assessment, published in November 2018 by the National Institute of Economic and Social Research (NIESR), was that the draft agreement signed off by EU leaders on 15 November would lead to lower economic growth.

The economic effects of the government’s proposed Brexit deal, commissioned by the People’s Vote campaign, concluded that by 2030, economic growth would be around 4% lower than if the UK stayed in the EU, “roughly equivalent to losing the annual output of Wales or the output of the financial services industry in London”. 

If the UK were to stay in a customs union with the EU, or if the Irish “backstop” position was invoked, there would still be a hit to output — Gross Domestic Product (GDP) per capita — of 2%. 

The more immediate outlook was assessed in another NIESR report, Prospects for the UK economy, also published in November. It started by recognising that the UK economy actually gained momentum in 2018. GDP grew by 0.6% in the third quarter, the strongest growth for two years. 

Growth in 2018 as a whole is expected to come in at 1.4% and, in 2019, the NIESR estimated that it could either rise to 1.9% under a “soft Brexit”, or fall to 0.3% under an “orderly hard Brexit”. Which of those two scenarios apply would have implications for tax revenues and spending on public services and benefits. 

Surprisingly good public finance outcomes in 2018 could provide chancellor Philip Hammond with £30 billion more to spend between 2019-20 and 2022-23 under a soft Brexit, the NIESR said — “more than enough to fund the additional spending that has been pledged for the NHS”. 

On the other hand, an orderly hard Brexit would mean extra borrowing of £14 billion, fuelling continued austerity. 

The year also starts with a strong (if insecure) labour market: employment and unemployment were at record high and low levels respectively towards the end of 2018, while wages appeared to be recovering. 

Pay settlements in the 2018 Labour Research Department Pay Survey jumped from a median of 2.0% to 2.75% on lowest basic rates, while earnings growth broke through the psychologically important 3% barrier. 

Whether a stronger pay and earnings trend continues in 2019 could depend on what has actually been driving it. Some of the higher pay settlements last year were clearly affected by labour shortages, a record level of vacancies and a “tight” labour market. The labour market could get even tighter in 2019 if the net inflow of EU migrants continues to dwindle. But there are a number of ways in which that might be offset, including job losses in vulnerable sectors like retail. 

Another factor driving higher pay at the start of last year was inflation, which peaked at around 3% based on the CPI measure, and 4% based on the RPI measure. But since then, inflation has been falling. The NIESR expects CPI inflation to average 2.5% in 2018 and 2.1% in 2019, before settling at or around the Bank ofEngland’s target rate of 2%. 

However, under an “orderly hard Brexit” scenario, sterling would depreciate, boosting inflation (as it did following the 2016 referendum). 

A surge in inflation could see renewed pressure by the government and Office for National Statistics for the RPI inflation measure, the inflation measure favoured by union negotiators, to be abandoned. For its part, the Treasury will also be looking to keep a lid on public sector pay (although the two biggest bargaining groups, in local government and the NHS, are rolling out staged increases negotiated last year). 

Whatever happens with Brexit, some things will be more certain in 2019 than others: rising levels of the National Minimum Wage (NMW) and National Living Wage (going up by around 4.8%); rising minimum contributions to auto-enrolment workplace pensions (jumping from 5% in total to 8%); and the second reporting deadline under the gender pay gap regulations. 

Employment law

Reintroduction of 
tribunal fees

At the same time as proposals to introduce new rights (see below), the government is set to reintroduce fees in employment tribunals, leaving thousands unable to enforce their rights — again. 

Fees introduced in 2013, which led to a two-thirds fall in tribunal claims, had to be abolished in July 2017 when the Supreme Court ruled them unlawful in a judicial review brought by public services union UNISON. 

After the abolition, claims almost doubled and the Judicial Appointments Commission, the body that selects candidates for judicial office in courts and tribunals in England and Wales, is recruiting new employment judges to deal with the resulting backlog. 

Yet the Ministry of Justice has confirmed that it is now looking at a new tribunal fees scheme that will charge workers to bring a claim. 

Gig economy

A focus on the gig economy was sustained over the last year and is likely to continue. 

While “gig economy” may be a relatively new term, the issue of determining someone’s employment status is not. It’s something that tribunals and courts have done for decades because so many employment rights are dependent on the individual’s status as “employee”, “worker”, or self-employed (see Labour Research, January 2017, pages 16-18). 

However, the use of contracts that provide no job security by employers who offer no employment rights is so prevalent in certain service industries that it has led to a number of widely-reported claims against firms including Uber, Deliveroo, Pimlico Plumbers and Addison Lee. 

Most of these cases have revealed “workers” who are employed under contracts disguised as self-employment. The claim against Pimlico Plumbers brought by plumber Gary Smith, which was backed by the Equality and Human Rights Commission, went all the way to the Supreme Court last summer. 

While Smith had a certain amount of freedom to reject a job if it was too far away, or to ask a colleague to complete it, Pimlico exerted significant control over him, including requiring him to wear a uniform and to make himself available for work five days a week. 

This led the Court to rule that Smith was a “worker” — and therefore entitled to a range of employment rights including sick pay and holiday pay — rather than a self-employed contractor. 

It is this kind of control that has led tribunals to determine that the individuals are workers in the majority of these cases. 

While the government is set to introduce new employment rights for vulnerable workers following recommendations made by the Taylor Review of modern working practices in 2017, including a right to request fixed-hours contracts after a year’s service, the TUC says that these “lack ambition and will not address the imbalance of power in the workplace”. 

On-call time

A regressive step for workers in the care sector was the surprise judgment in 2018 of the Court of Appeal in Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad [2018] EWCA Civ 1641. The Court ruled that sleep-in workers were only working — and therefore entitled to be paid the NMW — when they were “awake for the purposes of working” and not when they were asleep. 

This overturned a whole body of case law that required sleep-in workers to be paid for the entirety of their shift. UNISON, which brought the claim, has sought leave to appeal the decision to the Supreme Court, and the outcome of that appeal, if granted, will be hugely significant. 

Cases on appeal

A number of cases are due to be heard by the Court of Appeal in early 2019:

Chief Constable of Norfolk v Coffey: on whether a police officer’s request for a transfer was refused because of a perception that her current hearing problems might become a disability in the future; and whether this was direct discrimination because of a “perceived disability”. 

Kocur v Angard Staffing Solutions Ltd: on whether it was lawful to give an agency worker only 28 days’ holiday and a 30-minute rest break when his colleagues who were directly-employed received 30.5 days’ leave and a one-hour break. Ltd v Denby: on whether a pilot had been refused employment on grounds of trade union activities on the basis that in his previous employment he had argued for pilots to be represented by the pilots’ union BALPA.

Agoreyo v London Borough of Lambeth: on whether a teacher’s suspension following an allegation that she had used physical force against two children was a breach of contract allowing her to claim constructive dismissal.

Status of law

There are of course many unanswered questions over the rights of workers when (or perhaps if) the United Kingdom withdraws from the European Union on 29 March.

While existing rights will be preserved at the point of Brexit, there is nothing to prevent the erosion of those rights. And EU rights won after that date will not apply to workers in the UK.

The status of case law decided on European laws remains unclear. 

European Union

In economic terms, the 27 members of the EU remaining after the UK’s planned departure in March, can face 2019 with a fair degree of confidence. The latest forecast from the European Commission is that their economies will grow overall by 2.0% in 2019, with all countries showing a rise in GDP. By contrast, UK growth is expected to be lower. 

Politically, the year will be more turbulent for the EU institutions, with the five-yearly elections to the European Parliament taking place between 23 and 26 May, and the populist right hoping to make gains. 

The membership of the European Commission — which proposes new EU legislation and has a key role in developing and implementing policy — will also change in 2019, with Jean-Claude Juncker standing down. 

His replacement is likely to come from the political grouping with the largest bloc in the European Parliament.

Before the election, the unions are hoping that four legal initiatives, which have been going through the complex process of EU law-making, will finally be agreed. These are: 

• the draft directive on parents and carers, which improves and standardises parental and paternity leave, as well as introducing an individual right to carers’ leave for the first time; 

• the transparent and predictable working conditions directive, which provides new employees with earlier and more extensive information on their terms and conditions, as well as limiting probation periods to six months; 

• the revised carcinogens directive, which will result in additional cancer-causing substances being covered by legal limits; and 

• a regulation establishing a European Labour Authority, which is intended to improve employee protection, particularly for posted workers — those employed in one country but working in another. 

The first few months of 2019 will be decisive for the prospects of all four. 

Health and safety

Stress and mental health will remain at the top of many union health and safety agendas in 2019. The Usdaw retail union will link these issues to its Time for Better Pay campaign. 

Education unions the NASUWT, NEU and UCU all told Labour Research they will be campaigning to reduce workloads, a major cause of stress and mental health problems for their members, while professionals’ union Prospect will launch new guidance on mental health early in 2019. 

Stress and mental health are also top concerns for UNISON, which says it will also make sure musculoskeletal disorders, including repetitive strain injuries, don’t slip down the agenda. The union will run a mini campaign on RSI Awareness Day at the end of February.

The year is set to see more union action to tackle air pollution and diesel engine exhaust emissions (DEEEs). The NEU is backing a new campaign for clean air for children, Unite is campaigning for a new workplace exposure limit for DEEEs at European level, and the GMB general union is working with the British Safety Council on new guidance for reps. 

The GMB is also developing a single-use plastics audit to “get its own house in order” before issuing guidance to reps and launching a new campaign on this issue later in the year.

Usdaw will launch new violence mini-campaign packs for workers in call centres, shops and for van drivers as well as campaigning on local authority enforcement. Unite will publish new guidance on fibromyalgia, a long-term condition that causes pain all over the body. 

The NASUWT will be focusing more closely on women’s health and safety issues, as well as addressing the under-reporting of accidents in schools. 

With “exit day” on 29 March fast approaching, unions are watching Brexit developments closely. As GMB national health and safety officer Dan Shears told Labour Research, Brexit is “forming the backdrop of everything else we do”.

Learning and skills

The beleaguered Apprenticeship Levy scheme faces further reform following a government statement in October 2018 confirming that employers will, in future, be able to transfer 25% of their levy funding to employers in their supply chains (as opposed to 10% under the current arrangements). According to the statement, this will generate an extra £90 million of funding on apprenticeships.

In addition, a statement also confirmed that the government “will discontinue the old [apprenticeship] frameworks so that all new apprenticeships will be on the same higher-quality standards by the start of the 2020-21 academic year”.

The government has also committed £100 million for the first phase of the National Retraining Scheme, in a partnership between government, the CBI employers’ organisation and the TUC, now set to be rolled out in 2019.

As ever, progress in all of these areas may be affected by developments in relation to the Brexit process.