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Quarterly UK employment update

Sun / Clouds a short range forecast

   June to September 2022 – a backward glance

Development Impact on employers

The Gov’t repealed restrictions which prevented temporary agency workers backfilling employees who take part in industrial action, and it raised the maximum damages that courts can award against a trade union when strike action has been found to be unlawful. 

Hiring agency workers to replace those on strike may assist some employers with their contingency planning. However, this may not be appropriate for certain skilled roles and is not without risk, including a potential escalation of a dispute.

The Gov’t decided against reforming employment legislation governing employment status, preferring to publish new guidance. Read our update.

This means that the current three-tier approach of employee, worker and independent contractor will continue unchanged.

As a temporary measure brought in during the pandemic, employers have been able to create a statutory excuse through an adjusted right to work check process. The end of the validity of this adjusted process is 30 September 2022, requiring a return to a physical check on documents or the use of the new Identification Document Validation Technology where an online check is not possible for the candidate in question.

Penalties may be imposed or prosecution may take place by UK Visas and Immigration if employers are found to be employing workers illegally. Read our Immigration update

In Harpur Trust v Brazel, the SC confirmed that an employer was wrong to cap holiday pay at 12.07% of annualised hours for a zero hour contract worker working on a term-time-only basis at a school.

The SC held that the employer should have based their calculation on average earnings over the last 12 weeks immediately prior to the leave in which the worker worked (the reference period has since changed to 52 weeks). This decision has implications for those workers who have no normal working hours. Read our update.

The CA handed down its judgment in Amdocs Systems Group Ltd v Langton. A key issue was the transfer under TUPE of contractual benefits where insurance underwriting of the benefit had lapsed.

The CA held that a transferee employer was liable to pay the level of income protection payments set out in contractual documents provided by the original employer prior to the transfer, regardless of whether it retained insurance cover for such payments.

In USDAW v Tesco Stores, the CA overturned an injunction imposed by the HC which had permanently prevented an employer proceeding with ‘fire and rehire’ proposals to remove a pay enhancement.

While the case involved unusual facts and contractual terms, the CA decision appears to make it extremely difficult for workers and unions to obtain injunctions to prevent ‘fire and rehire’ dismissals. Read our update.

In a number of recent cases employers and tribunals are having to balance competing religious or philosophical beliefs and their interface with other equality rights. For example, where employees hold gender critical views and claim discrimination.

As the threshold for establishing a protected belief is relatively low, the focus in such cases is increasingly on whether the employer’s action is taken not because of the belief, but because the employee manifested it in a way that is “objectively offensive”. This is an evolving area of employment law and employers should take advice.

From 1 July 2022, healthcare professionals including nurses, occupational therapists, pharmacists and physiotherapists have been able to certify fit notes (in addition to GPs).

The change, which applies across England, Scotland and Wales and is mirrored in Northern Ireland, is intended to relieve GP workloads but also to support access to healthcare advice for employers and employees with a view to keeping people in work. Employer guidance has also been updated.


Sun / Clouds a short range forecast

  October to December 2022 – short range forecast

Development Impact on employers

The new Prime Minister, Liz Truss, has indicated support for employment law reform including: changing industrial action law; reviewing, with a view to removing, retained EU law by the end of 2023; and re-evaluating the application of IR35. Media reports have also suggested a willingness to review the 48 hour week and holiday pay/leave entitlements. Read our update for further information. 

Until details are announced, it is unclear which of these proposals may be pursued and their impact upon employers. However, trade unions have promised to resist any legislative change which further regulates strikes (read our update on preparing for industrial action). In addition, given the breadth of EU employment law which continues to apply after Brexit, any change in this area could have repercussions in the workplace. 

The appointment of Liz Truss throws doubt on workplace proposals previously supported by Boris Johnson’s Cabinet. These include: banning exclusivity contractual clauses for low paid workers; creating a single enforcement body for employment rights; introducing carers’ leave; and expanding modern slavery reporting requirements. In addition, earlier this summer his Gov’t had supported draft legislation, currently before Parliament, to: regulate the allocation of tips: strengthen redundancy protections for pregnant employees and adopters; introduce neonatal leave/pay. Given widespread support for many of these developments (and a 2019 Conservative manifesto promise for an Employment Bill), some may be expected to proceed under a Truss Gov’t. However, we await confirmation.

While hybrid working appears here to stay, its scope continues to evolve and this winter’s cost of living crisis may propel some employers to make further changes, For example, changes to reflect the cost of: heating a home office; commuting; and keeping offices open. 

Before changing existing hybrid working arrangements, employers should risk assess for contractual, discrimination and employee relations risks. Whether an employer is seeking to reduce, increase or improve hybrid working, read our guidance and listen to our podcast for further details.

Current case law decisions have acted to limit holiday pay claims presented as an unauthorised wage deduction in England and Wales if gaps of more than three months have occurred between each claimed deduction. However, there is a divergence of decisions in Northern Ireland and this question is due to be considered by the UK SC in Chief Constable (NI) v Agnew.

If the SC were to reverse the "three month gap rule" for unlawful holiday pay reductions, this could pave the way to backdated holiday pay claims, including those for misclassified workers.

The CA will hear the appeal in Rodgers v Leeds Laser Cutting Ltd. The ET held that the dismissal of an employee who declined to come into work, believing that COVID-19 presented circumstances of serious and imminent danger “all around” but not specifically in his workplace, was not automatically unfair. The EAT dismissed his appeal.

Although specific on its facts, the EAT judgment provided useful clarifications concerning automatically unfair dismissal related to H&S, including that a reasonable belief in risk of serious harm can relate to circumstances outside of the workplace. Employers should note the CA decision, when available, when formulating their H&S policy.

The Gov’t may publish a new Statutory Code of Practice to detail practical steps, including the need for meaningful consultation, when employers change employment terms by dismissing and re-engaging (termed 'fire and rehire'). Acas has also published guidance.

Again, it remains to be seen whether the new Business Secretary and Prime Minister will take this forward. It was proposed that tribunals would have the power to apply a compensation uplift of up to 25% for non-compliance. Fire and re-hire strategies also risk reputational, employee relations and legal challenges.


Telescope - a long range forecast

   January to June 2023 - long range forecast

Development Impact on employers

The 2019 manifesto committed to increasing the National Living Wage to two thirds of median earnings and widening its reach to workers over 21 by 2024. New minimum wage rates will apply from 1 April 2023.

Reflecting current economic challenges, employers paying at or near the minimum wage should prepare for the new April 2023 rates (typically they are announced in the preceding October or November). Read our guidance on minimum wage pitfalls.

Legislation to reform the UK’s data protection framework, introduced in July 2022, is expected to be finalised in 2023, although the detailed provisions may differ reflecting the new Prime Minister.

Easing the burden of compliance, such as introducing more flexibility, will be welcomed by employers. However, many will wish to avoid repercussions for international data transfers (such as if the EU decides that new UK law has unacceptably diverged from the EU’s GDPR). 

The EU is seeking to enact legally-binding due diligence and directors' duties in relation to the environment and human rights - duties that would apply to some UK companies that operate in the EU. 

While the draft proposal is unlikely to be implemented before 2024 at the earliest, the legal duties envisaged for supply chains (and the potential penalties/liabilities) would be significant. Reflecting the increasing importance of the ESG agenda which transcends borders, companies should take note of this direction of travel.

Resources aimed at supporting employers in improving fairness, diversity and inclusion are expected to be published following the Gov’t Response to a report by the Commission on Race and Ethnic Disparities. This may include guidance regarding voluntary ethnicity pay gap reporting. 

The Gov’t (under Boris Johnson) committed to publishing employer guidance on these issues. In addition, having rejected mandatory ethnicity pay gap reporting, their Response confirmed support for voluntary reporting and guidance to support employers is expected to include case studies. Read our update.

The EAT is due to consider the fairness of an employer’s decision to effect redundancies rather than place an employee on furlough in the case of Mhindurwa v Lovingangels Care Ltd. The ET held that dismissal was procedurally unfair.

ET claims, and appeals, related to the COVID-19 pandemic continue to filter through the system. It will be some time before a clearer picture emerges, including employer decisions over the use of furlough. Retaining records of decisions and decision-making processes will be particularly important for employers facing such claims.

NB. Employment law is a devolved matter in Northern Ireland and the issues set out above may not all apply in NI. For NI specific advice contact our Belfast office.

 

For further information, please contact:

Key        
Key
CA Court of Appeal
EAT Employment Appeal Tribunal
ESG Environmental, Social and Governance
ET Employment Tribunal
Gov't The UK Government
HMRC Her Majesty’s Revenue and Customs
NLW National Living Wage
NMW National Minimum Wage
H&S
Health and Safety
SC Supreme Court
TUPE The Transfer of Undertakings (Protection of Employment) Regulations 2006

Diane Gilhooley
Global Head of Employment, Labor and Pensions

dianegilhooley@eversheds-sutherland.com
Tel: +44 207 919 0533


The appointment of Liz Truss throws doubt on workplace proposals previously supported by Boris Johnson’s Cabinet. These include: banning exclusivity contractual clauses for low paid workers; creating a single enforcement body for employment rights; introducing carers’ leave; and expanding modern slavery reporting requirements. In addition, earlier this summer his Gov’t had supported draft legislation, currently before Parliament, to: regulate the allocation of tips: strengthen redundancy protections for pregnant employees and adopters; introduce neonatal leave/pay.