Global menu

Our global pages

Close
Print Friendly and PDF

Quarterly UK employment update

Sun / Clouds a short range forecast

   April to June 2022 – a backward glance

Development Impact on employers
Updated COVID-19 guidance for England, published on 1 April 2022, reflects a final phase of lifting restrictions. In the context of “Living with Covid”, employers are no longer required to explicitly consider the virus in their statutory health and safety risk assessments (save for limited exceptions). New Guidance for workplaces is aimed at employers and managers. Employers remain under a legal obligation to protect health, safety and welfare at work, including from respiratory infections such as COVID-19 and the flu. Policy decisions regarding attendance at work, safety measures and pay now fall within these broad health protection responsibilities, supported by risk assessments. Worker representatives should continue to be consulted over new measures or changes.
NLW and NMW rates increase from 1 April, with the NLW increasing from £8.91 to £9.50 and the 21-22 year old rate from £8.36 to £9.18. The last few years have seen a significant increase in these statutory wage rates and new resourcing for enforcement. Many employers assume that setting the correct minimum wage rate is enough, often overlooking the complex rules regulating how it is applied in practice and the risks of a shortfall. HMRC’s enforcement policy makes no distinction between deliberate and accidental breaches and HMRC investigations are expected to increase. See our guide to common NMW pitfalls for employers.
Since 6 April 2022, HMRC enforcement of the off-payroll working rules (known as IR35) is being pursued more robustly, following a more lenient approach during last year. (IR35 is intended to apply similar income tax liability and national insurance contributions to in-scope contractors and freelancers as applies to employees). With the end of HMRC’s ‘light touch’ enforcement, organisations should review their processes for hiring contract labour, or risk HMRC investigation and, potentially, significant tax liabilities and penalties. As a minimum, a review should ensure that: reasonable care has been taken in status determinations; IR35 processes are compliant; and, labour supply chains are audited for risk (read our Alert).
Reversing a significant decision by the EAT, the CA in Mercer v Alternative Future Group has confirmed that workers are not protected against detriments imposed by their employer in response to industrial action, such as being disciplined for leaving a shift to take part in strike action. This is a significant reversal of the EAT’s decision and is particularly relevant where an employer contemplates taking action against those striking, other than deducting pay for work not done during the strike. It has been reported that the trade union involved will lodge an appeal application.
From 6 April the statutory compensation limits in the ET increased, with the limit on a week’s pay rising to £571 (from £544) and maximum compensatory award for unfair dismissal rising to £93,878 (from £89,493). Guidance on Vento bands for injury to feelings and psychiatric injury awards has also been updated, with awards for less serious cases rising to between £990 and £9,900 and for very serious cases to between £29,600 and £49,300. Employers must ensure that any pay calculations have met these rates and that policies and practices have been updated.
A new “roadmap” for ET proceedings in 2022/23 has confirmed the retention of telephone or video hearings for preliminary matters, wage claims and straightforward unfair dismissal cases, subject to tribunal discretion, with in-person hearings reserved for more complex cases. Continuing to conduct hearings by telephone or video should help to reduce a backlog of cases but delays in cases being heard remain. As well as ensuring access to suitable, working IT equipment and quiet space for virtual hearings, employers should give thought to early collation of evidence and longer term witness availability. (See also our Guide to Remote Hearings)
The EAT upheld an ET decision in Rodgers v Leeds Laser Cutting Ltd 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. Although specific on its facts, the judgement provides 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 take this into account in H&S policy and enforcement.

Sun / Clouds a short range forecast

   July to September 2022 – short range forecast

Development Impact on employers
As expected, this year’s Queen’s Speech did not include the awaited Employment Bill. Progress of various government employment law proposals (such as for the extension of flexible working, more predictable working and the creation of a single enforcement body) is therefore uncertain but not ruled out in the coming months. Government comment around the Queen’s Speech suggests a pause in progressing many employment law proposals and taking stock but does not necessarily mean they are off the agenda. Employers should continue to monitor developments and further clarifications later in the year.
Further developments with the Gov’t National Disability Strategy are expected, including a Response to consultation on disability workforce reporting and recommendations for collating and disclosing workplace disability data. Whilst mandatory reporting of disability across the workforce seems unlikely in the short term, pressure upon government and employers is growing. Proposals for a more robust approach to voluntary reporting are therefore expected, along with guidance for employers over how data can be collated.
Having confirmed that it will not introduce mandatory ethnicity pay reporting, the Gov’t is expected to publish guidance this summer (read our Alert). The guidance is expected to assist employers in understanding and tackling pay gaps within their organisations and in building trust with employees. What information employers are encouraged to collect and disclose will be an essential starting point.
The Gov’t is expected to 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. Details of the Code are awaited. Tribunals will be required to take the Code into account and will have the power to apply a compensation uplift of up to 25% for non-compliance. Increasingly, “fire and re-hire” strategies also risk reputational, employee relations and legal challenges.
A SC judgment is expected in Harpur Trust v Brazel which will decide what amounts to appropriate holiday pay for part-time term-time workers and whether the CA was correct to rule that a 12.07% cap of annualised hours was unlawful. The outcome of this appeal will have implications for those workers who have no normal working hours - particularly for those who work on a term-time basis or intermittently throughout the year (read our Alert)

Telescope - a long range forecast

   September to December 2022 - long range forecast

Development Impact on employers
A new central registry has been created for modern slavery statements but the Gov’t has also pledged to legislate to strengthen and expand modern slavery reporting requirements, including introducing civil penalties for non-compliance. Changes in EU legislation are also proposed and will affect UK employers with operations abroad. The pandemic and conflict in Europe have increased modern slavery and other exploitation risks in UK and global supply chains. Anti-slavery training, risk assessments, due diligence and other initiatives remain vital to compliance, ESG objectives and reputational risk but will also facilitate reporting requirements in due course.
Legislation which will extend the ban on exclusivity clauses and protection from related detriment is expected for individuals whose guaranteed weekly income is below or equivalent to the Lower Earnings Limit (currently £123 a week). In anticipation of this change, employers are advised to audit and review use of exclusivity clauses in the contracts of low income workers.
The CA is expected to hand down its judgement in Amdocs Systems Group Ltd v Langton. A key issue is the transfer of contractual benefits where insurance underwriting of the benefit has lapsed. However the CA decodes, employers involved in TUPE transfers should carefully check the status of benefits provided by the transferor.
A new Data Reform Bill may be published, in line with a Gov’t announcement in this year’s Queen’s Speech and a declared aim of modernising the Information Commissioner’s Office; strengthening its powers and reducing data burdens on business. The impact of Gov’t proposals are currently unclear. Further consultation may follow. However, the removal of mandatory impact assessments and a requirement of data protection officers, post Brexit, seem amongst likely proposals.
Further news on the establishment of a single enforcement body, to improve the enforcement of employment rights and with new powers and penalties, is awaited. Legislation to bring the body into effect has been delayed but could be revisited by the end of the year. More proactive enforcement of shortfalls in NMW, holiday pay, sick pay and the rights of agency workers would prove significant for employers. However, HMRC enforcement is already increasing and employers should continue to audit their compliance with pay practices, to avoid penalty and reputational damage.
Legislation that would have required employers to pass on all tips to workers has been postponed or abandoned but a Statutory Code of Practice may be introduced to address this issue. If and when these changes are brought in, businesses that currently use discretionary service charges to offset expenses, or make deductions from tips, will face increased costs.
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.

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