What’s on the horizon for employment law? Find out what HR directors need to prepare for in the coming months and beyond, in the third edition of our bi-annual tracker.

 

Pandemic, hybrid and flexible working

What to expect?

Since our last update, the onus has shifted away from top-down government guidance on managing Coronavirus at work towards responsibility on individual employers.

The government continues to consider evidence on the impact of ‘Long-Covid’. But specific new legislation recognising Long Covid as a disability seems unlikely. Employers should be mindful that notwithstanding this, claimants may argue that Long-Covid should be treated as a disability under existing legislation, triggering the duty to make reasonable adjustments and protection from discrimination.

In our last edition we reported that the government intends to introduce the right to request flexible working as a ‘day one’ right. This remains on the legislative agenda. But, contrary to expectations, the Employment Bill introducing this change was not included in the May 2022 Queen’s Speech.

When?

Spring/Summer 2022 and ongoing.

Actions to consider now 

In line with government guidance in each of the UK jurisdictions, employers should now be managing Covid risk in line with their own risk assessments and infection control policies.

Although it is not certain that an Employment Tribunal would treat ‘Long Covid’ as a disability, commentary from the EHRC strongly suggests that this should be considered. We are aware of at least one Employment Tribunal decision which found that Long Covid was capable of amounting to a disability.

Hybrid and remote working arrangements, whether necessitated by the pandemic or in response to the cultural shift in attitudes towards atypical working, have become part of the ‘new normal’. Senior leadership should continue ensure that the health and wellbeing of staff who are out of ‘line of sight’ management is protected – both in terms of physical and mental health.

Keep a watching brief for the change to the right to request flexible working. The impact is, however, expected to be relatively limited.

Background

When we last updated on the HR issues linked to the pandemic, restrictions were being tightened in response to the emergence of the Omicron variant. The government has since rolled back almost all social and working restrictions, as we move into the next stage of Coronavirus. Whilst the government has now taken a back seat on prescriptive controls, responsibility has shifted to employers to decide how to manage the virus in their workplaces. Employees are no longer required to notify their employer if they have Coronavirus and free testing has ended.

Although there has been a volte face on restrictions since our Winter 2022 update, the widespread increase remote working - whether wholly away from the workplace or through ‘hybrid’ working arrangements – is here to stay. TUC statistics, published in May 2022, show that 22.4% of UK workers were working from home regularly in 2021, compared to 6.8% in 2021. And 91% of workers who worked remotely because of the pandemic continue to do so.

What’s next?

The roll-out of the booster vaccine programme in the early part of 2022 has meant that numbers of Covid hospitalisations have stabilised, but figures from the Office for National Statistics should sound a warning bell for employers on the possibility that Long Covid could be classed as a disability: the ONS reported in May 2022 that there are 1.8million people in the UK living with Long Covid, and 44% of those people reported symptoms that lasted for at least a year.

In our last update, we had expected that the government would introduce new legislation specifically recognising Long Covid as a disability under equalities legislation. However, the All Party Parliamentary Group on Long Covid has not published any conclusions and it now seems unlikely that specific legislation will be introduced. In May 2022, the Equality and Human Rights Commission (EHRC) recommended that employers treat employees with Long Covid as if they were disabled; although they also thought it unlikely that specific legislation would be passed. In June 2022, an Employment Tribunal made a finding that an employee suffering from Long Covid was disabled for the purposes of the Equality Act 2010. This decision is not binding on other tribunals, but gives a strong indication of how other tribunals are likely to treat Long Covid (Burke v Turning Point Scotland).

When the last edition of our HR Horizon Scanner was published, we had anticipated that flexible working as a ‘day one’ right to request would be delivered in the long-anticipated Employment Bill. However, this did not appear in the May 2022 Queen’s Speech and the government has provided no information on when this Bill is expected.

Things to consider

Employers should, by now, have updated their risk assessments and health and safety procedures to take account of the latest government guidance on controlling virus risk at work. Which is not to say that employers should be rushing to remove their Perspex screens and hand-sanitisers; sensible precautions will still need to be taken, particularly where employees cannot work home and the workforce may include vulnerable members of staff. A balance will need to be struck between taking reasonable steps to protect employees’ health and safety and scaling back precautions.

Employers should, however, continue to consider the impact of working practices and procedures on employees who are suffering from ‘Long Covid’ symptoms, bearing in mind that an Employment Tribunal could determine that Long Covid is a disability. This would trigger protection from disability discrimination, discrimination ‘arising from’ disability and the duty to make reasonable adjustments.

Keep a watching brief on the proposal to make the right to request flexible working a ‘day one’ right because policies and procedures will need to be updated when the details are published. However, we expect the impact of this be relatively limited: there may be an uptick in requests but otherwise little significant change.

As more widespread remote and hybrid working appears to have become permanent, we expect the focus on employee wellbeing to continue and probably increase, as the distinction between ‘home’ and ‘work’ becomes increasingly blurred. The April 2022 CIPD report on Health and Wellbeing at Work found that over half of employers surveyed were taking a more strategic approach to health and wellbeing than they were doing in the first year of the pandemic. ‘Presenteeism’ and avoiding an ‘always on’ culture are likely to be key strategic concerns.

Despite the deregulation of the government’s ‘Living with Covid’ strategy in the early 2022, a range of difficult employment law questions remain, from managing staff absence through to the well-being challenges posed by increased remote or hybrid working.” Siobhan Fitzgerald, Partner.

ED&I and ESG workforce issues

What to expect 

Equality, Diversity and Inclusion (ED&I) issues remain at the top of the social, governmental and corporate agenda.

More recently, there has been an increased focus on the role that employment law has to play in relation to employers' environmental, social and governance (ESG) credentials.

Women’s health issues at work will remain a priority area for businesses and government. The outcome of a House of Commons inquiry into menopause at work is awaited. The introduction of ‘menopause’ as a new protected characteristic was floated as possibility by the inquiry. The government has confirmed that it has no intention of taking up that suggestion; but a number of cases have found that mistreatment because of menopause symptoms may fall under sex or disability discrimination protections. The landmark Fawcett Society report on menopause and the workplace, published in May 2022, is likely to be influential. In the longer term; specific menopause leave and support requirements may be on the horizon.

Socio-economic disadvantage and the disability rights agenda are two particular areas in which we expect greater focus in the near future (see also Reporting and transparency below).

Otherwise, we expect that the government’s strategy will continue to focus on transparency, reporting and self-regulation. Simultaneously, shareholders are likely to continue to flex their muscles to exert pressure on senior leadership in relation to all matters related to corporate responsibility.

The Financial Conduct Authority (FCA) made it clear during 2021 that it will be focussing on diversity in the financial services industry. We expect this will continue to be a focus for the foreseeable future. Reports for financial years beginning on or after 1 April 2022 will need to comply with new diversity disclosures.

The government has published a Bill of Rights Bill 2022-23. If enacted in its current form, the Bill would repeal the Human Rights Act 1998 and create a new human rights framework, with courts allowed to depart from caselaw of the European Convention on Human Rights.

In Europe, the European Commission has published a proposal for a Directive on Corporate Sustainability Due Diligence, which will affect large UK companies which are active in the European Union.

When?

During 2022 and ongoing

Actions to consider now

Active Board level engagement and leadership on promoting ED&I and ESG targets will be required.

Boards must keep up to date with the latest developments and visibly lead on the prevention of all types of discrimination and harassment, beyond individual protected characteristics, and avoiding a ‘tick box’ approach.   

Regardless of whether new legislation and / or guidance on menopause issues at work is published, we anticipate that this will remain a key area of focus. Employers need to get on the front foot and take action now to raise awareness and prevent disadvantage caused to employees experiencing menopause.

Although we are very far from any firm proposals on menstrual leave and support, this is another gap which has been identified and may need addressing.

The Bill of Rights Bill 2022-2023 should be kept under review. The Bill has been widely criticised and may well be significantly amended as it progresses through Parliament.

Background

Moving into the second half of 2022, Equality, Diversity and Inclusion (ED&I) continues to be a key area of focus for those tasked with both wider engagement and avoiding the legal, financial and reputational risks linked to getting this wrong. Taking proactive steps will not only enable an organisation to utilise the defence that it took “all reasonable steps” to prevent discrimination and harassment from occurring, but the organisation will also be better equipped to withstand public scrutiny on these issues: whether this comes from social media-based movements or new reporting requirements from government.

Compliance with Environmental, Social and Governance (ESG) criteria has more recently taken centre stage as an item on the agenda for senior HR professionals. ESG are the three key factors used to measure the sustainable and ethical impact of an investment in a business. These include, for example, whistleblowing practices, ethical pay practices, a company’s carbon footprint, employee relations, diversity and working conditions.

Strong ESG and ED&I credentials will also benefit employers with staffing concerns: ESG/ED&I credentials are seen as ‘baseline’ requirements for job candidates, and a positive approach to equalities will also ensure that employers are recruiting from the widest possible pool and on merit alone.

What’s next?

As we reported in the last edition of this update, the current trend is for businesses to step in to address inclusion and diversity where government fails to legislate. We expect this to continue into the second half of 2022, with a new development the expansion of the focus on ESG criteria.

Specific developments since the Winter 2022 edition of this report are as follows.

  • We previously reported that the government published its National Disability Strategy in July 2021 and awareness of the ‘disability employment gap’ is receiving more media attention. This is set to continue. A new consultation on voluntary or mandatory disability pay gap reporting was due to be published by the end of 2021 and draft legislation and / or guidance may be published by the end of 2022.
  • The FTSE Women Leaders Review (reported in our last update) on the representation of women in FTSE 350 has now been published. Key findings were that women held 39.1% of FTSE 100 board positions, against a target of 33% but 15 FTSE 100 companies had not yet achieved the target.
  • Investor pressure on companies to meet equalities targets remains high: the latest investor group to publish a statement on diversity is the 30% Club UK Investor Group which (in May 2022) set out its recommendations for companies reporting on diversity: this should be action-led, authentic and strategic, with the priority being quality over quantity.
  • The Financial Conduct Authority (FCA) made it clear during 2021 that it will be focussing on diversity in the financial services industry. In line with that commitment, the FCA has published a policy statement and new rules which require companies to make disclosures in relation to gender and ethnic diversity at Board and Executive management level. The changes apply to financial years beginning on or after 1 April 2022, but the FCA is encouraging companies to report earlier.
  • Transgender rights remain a difficult and high-profile issue at work, particularly for providers of same-sex services. New Equality and Human Rights Commission guidance has set out that there may be some circumstances in which access to certain services may be curtailed for transgender people, taking into account the impact on other service users.
  • As reported in our last edition, the impact of menopause symptoms on working women has become a key area of focus and attention on this issue has further increased. The outcome of the government’s Inquiry into Menopause and the Workplace is awaited and, in the meantime, this topic is receiving a high level of attention in the media and amongst employers. A landmark survey by Fawcett Society, published in May 2022, found that there is a significant shortfall in support for women experiencing menopausal symptoms. Caselaw has shown that mistreatment because of menopause symptoms may amount to sex and / or disability discrimination / harassment; but the government has indicated that it has no intention of legislating to make ‘menopause’ a specific protected characteristic.
  • Although there are no proposals for specific rights or support for women experiencing menstruation pain, early indications are that this is a likely new area of concern. In Spain, new legislation has been put forward which will introduce up to three days per month of medical leave for severe period pain. And UK charities have called for the government to introduce similar leave, and raise awareness of symptoms. It will be interesting to see if the UK, or other countries, follow Spain’s lead.
  • Despite business and cross-party support for the introduction of ethnicity pay gap reporting, the government announced in March 2022 that this will not be introduced. In its response to the Commission on Race and Ethnic Disparities, the government also promised guidance on voluntary ethnicity pay gap reporting in Summer 2022. Updated guidance on positive action will be published by the end of the year.
  • Concerns around the ‘pensions pay gap’ have begun to emerge, with the TUC reporting in May 2022 that the average pensions income gap between women and men is 38%; more than twice the level of the gender pay gap (which nationally stands at 15.4%).
  • A White Paper will be published later this year to address potential racial bias in algorithmic decision-making and the Equality and Human Rights Commission will be issuing guidance on how to apply the Equality Act 2010 to algorithmic decision-making.
  • The European Commission has now published its long-awaited proposal for a Directive on Corporate Sustainability Due Diligence. The Directive intends to (1) foster sustainable and responsible corporate behaviour; and (2) to embed human rights and environmental considerations into companies’ operations and corporate governance. It will introduce a corporate due diligence duty, requiring certain companies to undertake due diligence checks of their supply chain in respect of adverse impacts of their activities on human rights and the environment. UK companies will be affected to the extent that they either generate a net turnover of €150m active in the EU, or generate a net turnover of more than €40m but not more than €150m in the EU provided at least 50% of net worldwide turnover was generated in one or more “high risk sectors” i.e. textiles, agriculture and extraction of minerals. The proposal will go to the European Parliament and Council of the EU for approval. Once in place, EU Member States will have two-four years from the date the Directive is in force to implement the requirements.

In relation to legislative developments, in previous editions of this report we flagged that the government intended to change its focus on equalities: moving away from legislation linked to specific “protected characteristics” and towards removing broader barriers, such as social and geographic inequality. However, there have been no further legislative developments since then.

The government has published the Bill of Rights Bill 2022-2023. The government proposes to replace the Human Rights Act 1998 with the ‘Bill of Rights’, which would retain the UK’s membership of the European Convention on Human Rights and retain the rights listed in the 1998 Human Rights Act. However, the Bill in its current form proposes to give greater priority to domestic case law and loosens the requirement to interpret legislation in line with Convention rights. The Bill will now being its journey through Parliament and has already been subject to extensive criticism. It remains to be seen what form the final version of the ‘Bill of Rights’ will take.

It is expected that in the second half of 2022, the government will convert the non-statutory, technical guidance on preventing sexual harassment into a statutory code (meaning that an employment tribunal would be legally required to take the code into account when deciding relevant cases).

In July 2021, the government announced that it will introduce a new duty for employers to

  • take proactive steps to prevent sexual harassment, and
  • prevent third-party harassment in the workplace.

The timescales for these changes are not yet known.

Things to consider

Following on from the Winter 2022 edition of this report, our view continues to be that there are benefits in planning to meet and exceed government and societal expectations around equalities with two main areas of focus:

data gathering and voluntary reporting ahead of likely mandatory reporting requirements on disability workforce reporting and in line with investor expectations
proactively creating and maintaining equalities strategies with a broad remit, rather than focussing on specific categories of employee. However, the prevention of sexual harassment should be a priority, in anticipation of this becoming a new legal requirement.

In doing so, organisations should ensure regularly refreshed and detailed diversity and inclusion training and show that disciplinary action is taken against employees who are found to have breached policies (a key point but one that quite a few employers struggle with in practice). And visible and active Board level HR support on dignity at work, ED&I and ESG continues to be essential

Given that socio-economic exclusion is moving into the spotlight, it would be advisable to look at the Social Mobility Unit’s employer toolkit on socio-economic diversity and inclusion.

It would also be prudent to review the government’s Disability Strategy to ensure that your equalities strategy is in alignment; the strategy is currently stalled because of flaws in the consultation process, but the government is likely to proceed with its key objectives.

Reviews of equalities strategies should take into account that the government has accepted the recommendation of the Commission on Race and Ethnic Disparities that acronym BAME (Black Asian and Minority Ethnic) is unhelpful. The government has removed this acronym from its communications and will now use the term “people from minority ethnic backgrounds.” However, if the government’s approach is to be taken as a precursor to practice in business, there will be an overall move away from use of generic group terms, and instead employers should consider the disparity of outcome for specific groups.

In anticipation of the likely development of new guidance (and possibly legislation) as a result of the government’s Inquiry into Menopause at Work, it would be prudent to review support for women experiencing the menopause and what improvements can be made. There are also wider reasons for doing so, given the competitive recruitment market and the fact that women who are disadvantaged at work because of the menopause are more likely to leave, and will be leaving at the height of their knowledge and experience. This, in turn, impacts on diversity at a senior level and feeds into gender-pay and pension disparity.

When considering women’s health issues at work, it may be prudent to start thinking about issues related to severe menstrual pain symptoms because early indications are that this will be a new area of concern.

More information

In our latest podcast, which you can listen to here, our employment law experts discuss some of the complexities and challenges for employers around sex discrimination and inequalities at work and practical ways in which these can be tackled.

You can subscribe to our employment law podcasts via iTunes or Spotify – our latest episode looks at how the agenda is moving on in relation to sex discrimination at work, including the latest thinking on support for women experiencing menopause symptoms.

Fortunately, overt discrimination in the workplace is now relatively rare; but that is not to say that employers can rest on their laurels: the issues are still there but are now, arguably, more subtle and complex than ever. And we are seeing employers now pushing the boundaries and going further than the basic legal requirements, taking an ‘anti-discrimination’ approach rather than simply ‘promoting equality’” Esther Smith, Partner and TLT’s Equality, Diversity, Inclusion and Wellbeing Champion

Reporting, enforcement and transparency

What to expect

The proposed introduction of ethnicity pay gap reporting, on which we reported in our last update, has now been withdrawn. Instead, guidance on voluntary reporting will be introduced (there is no timescale published at present).

As we reported in the last edition of this update, the government published its National Disability Strategy in July 2021. The strategy has since been declared unlawful due to inadequate consultation, but it has not been quashed. The broad proposals contained in the strategy are likely to be retained.

Scrutiny of ‘green washing’ (publishing misleading information about sustainable practices) continues to rise up the corporate agenda. Following the introduction of its Green Claims Code in September 2021, the Competition and Markets Authority has launched a review of ‘green’ claims in the fashion retail sector, with other sectors likely to follow.

It is possible that the new Future of Work review, announced in May 2022, may include further details of the government’s proposal to create a new Single Enforcement Body (SEB) for employment rights; marking a shift away from individual / Trade Union backed action for breaches. The Future of Work review will be undertaken during 2022, in two parts: a strategic analysis, and then specific areas of focus.

When? 

Ongoing. No set timescale for creation of SEB – strategy will be published Autumn 2022 and will then require primary legislation.

Actions to consider now

Given that transparency obligations are expected to increase, it is prudent to consider the extent to which your organisation’s employment, equalities and sustainability data will withstand public scrutiny.

Greater scrutiny through the new SEB should be on your organisation’s radar, as an entirely new way of policing employment law rights. Compliance with holiday pay, the National Minimum Wage, modern slavery in supply chains and statutory sick pay are the key areas to audit ahead of the creation of this new body.

Keep a watching brief on the Future of Work review; it is not clear at the moment whether it will include further details of the establishment of the SEB but it will inform government strategy on its approach to employment law.

Background

Mandatory publication of data and workforce practices has, for some time now, been used to drive good practice – for example, ‘modern slavery’ statements and gender pay analytics. The government has also used the public naming of employers as a way of discouraging non-payment and underpayment of the National Minimum Wage.

And this approach has proved to be effective. Evidence suggests that that transparency is linked to improved equality outcomes at work; it’s not just another bureaucratic box to tick. Equality of outcome is closely linked to equality of opportunity (for which see the ED&I and ESG section of this report) and focus on this issue is set to stay for the foreseeable future.

Back in 2019, the government consulted on establishing a new single enforcement body for employment rights, following on from recommendations in the Good Work Plan: a major report, led by Matthew Taylor, on modern working practices and employee protections. In its 2019 manifesto, the government committed to creating an employment rights enforcement body, bringing together existing bodies into a single organisation with a remit to police employment rights and publish guidance to support employers with compliance

What’s next?

The government has committed to undertaking a review of gender pay gap reporting in 2022, and this may well include expanding the scope of reporting obligations to cover smaller employers. It could also include more detailed reporting requirements for employers already in scope.

We flagged in our Winter 2022 report that new legislation introducing ethnicity pay reporting was anticipated. However, as outlined above (see ED&I and ESG workforce issues) the government has announced that it will not be proceeding with this reform.

Summer 2021 saw the publication of the government’s National Disability Strategy, a key component of which is the government proposal to introduce disability workforce reporting for large employers. The government said it would consult on how this new reporting obligation would work, but this will be delayed now that the Disability Strategy has been found to be unlawful for lack of proper consultation (albeit that the Strategy is still in place and the government intends to appeal that finding). It is expected that disability reporting will focus on general workforce information, rather than pay.

A new development flagged in our last report was that reporting on social class was beginning to occur. PwC has now published details of the difference in salary between employees from a “lower socio-economic background” and those from a “professional” class. There is no indication at present that the government intends to legislate on this area, but it will be interesting to see if other businesses follow suit.

Modern slavery reporting is expected to be extended. The government’s response to its consultation on the remit of the Modern Slavery Act 2015 proposes to extend reporting obligations to include public bodies, and proposes to legislate for the contents of modern slavery statements; transposing ‘best practice’ recommendations into law. The government has not provided a timetable for these changes, saying only that they will be introduced “when parliamentary time allows”.

Businesses will need to prepare for more scrutiny on sustainability in the near future. The Competition and Markets Authority (CMA) will be undertaking a full compliance review of “green washing” (making misleading green claims) in 2022 and will take enforcement action against businesses. Also, in September 2021, the Financial Reporting Council published its findings of its review into reporting on emissions and energy consumption and found that more needs to be done to make those disclosures clear and transparent for investors and users of accounts.

In the longer term, even greater focus on scrutiny and enforcement is anticipated. In December 2021, the Director of Labour Market Enforcement published the UK’s Labour Market Enforcement Strategy 2021/2022. This confirmed that the government intends to press ahead with the creation of a new Single Enforcement Body (SEB) to enforce employment law rights and provide guidance for employers. The main areas of focus relevant to those reading this report will be

  • compliance with the National Minimum Wage
  • holiday pay
  • modern slavery in supply chains, and
  • statutory sick pay.

The creation of the SEB will mark a shift away from individual enforcement of employment rights through Employment Tribunals and via Trade Unions; and towards centralised, government enforcement. This change may open up non-unionised employers to greater risk in relation to the areas which have traditionally be the subject of Trade Union backed claims, such as underpaid holiday pay. The strategy document detailing these changes will be published in Autumn 2022 and will then require primary legislation.

In May 2022, the government announced its Future of Work review, which will be undertaken during Summer 2022. A report will then be presented to the Prime Minister and will inform the government’s employment law strategy. The review comprises two parts:

  • a high-level strategic analysis will be undertaken as the first part of the review, followed by
  • a more granular analysis of more selected areas of focus.

The government has indicated that the Review will build on the reforms which sprang from the 2019 Taylor Review / Good Work Plan, but it is not clear at the moment to what extent (if any) this will include further consideration of the establishment of the SEB.

Key areas being examined by the Future of Work Review are:

  • the importance of place and local labour markets in creating and facilitating access to good jobs
  • the role of automation and how quickly it is happening
  • how to build on the ‘good’ flexibility in our labour market and the gig economy, whilst ensuring sufficient protections are in place to prevent exploitative practices.

Things to consider

The focus on openness and transparency is here to stay and set to expand in future.

It is ever more important when considering any workforce strategic or operational matters which could impact on fairness, equalities or pay, consider that these decisions may need to withstand public scrutiny.

Although ethnicity pay reporting will not be made compulsory, some employers are already reporting voluntarily and others may want to follow suit – given the importance of proving ED&I and ESG credentials in a competitive recruitment market, and the proven link between data gathering and improvements in equalities. Points to think about if you are considering voluntary ethnicity pay reporting include:

  • sample size and maintaining confidentiality within pay bands from the disclosed data
  • data protection rights
  • how to gather data and encourage a good response rate
  • how to categorise data on different racial backgrounds effectively.

Forward thinking employers will be considering the groundwork needed to get ahead of the curve on the likely introduction of disability workforce information, before that information goes public. For example, to what extent to you understand the profile of your workforce in terms of disability, should be asked of employees and how will you gather data on workforce disability issues?

Ahead of the creation of the SEB, it would be advisable to audit your practices in relation to the areas likely to fall within the SEB’s remit, outlined above. Holiday pay and National Minimum Wage, in particularly, can be highly complex and technical, so it would be a good idea to ahead of the curve now.

We are seeing more of our clients positively embracing the power of data to drive improvements in equalities, largely because measuring an issue is the first step on the road towards fixing it.” Stuart McBride, Partner.

Employment contracts, staffing pressures and pay  

What to expect

In response to Union pressure and the P&O Ferries debacle, the government will issue a new statutory Code of Practice on dismissal and re-engagement processes. There is no specific timescale for its introduction or for publication of a draft for consultation.

The pressure on businesses to recruit and retain staff is set to continue, in a highly competitive market. Post-termination restrictions are, therefore, likely to become more prevalent/relevant, but remain the subject of government review.

Due to a combination of the 2021 Uber case and, longer term, a Law Commission Review to follow the Taylor Review, this has become higher risk and also subject to likely further change.

A new EU Directive has been proposed which would require online platform companies, such as Uber and Deliveroo, to reclassify workers as employees.

A major pilot of a four-day working week (without any linked reduction in pay) is running from June-November 2022, led by Oxford and Cambridge Universities.

The landmark holiday pay case of Agnew v the Police Service of Northern Ireland (PSNI) has now been listed for 14 and 15 December 2002, in the Supreme Court. However, a decision is unlikely to follow until some months later.

When?

  • Employment status reform TBC but within 5 years.
  • Proposals for reform of post-termination restrictions (if any) expected in second half of 2022 / early 2023.

Actions to consider now

Be aware that dismissal and re-engagement procedures will soon be subject to a statutory code. When the draft Code is published for consultation this will need to be reviewed, ahead of the Code coming into force.

In response to increased competition for staff, employers may wish to consider amended/new employment contract provisions as part of a recruitment, retention and business protection strategy.

Keep developments on employment status under review and be mindful that the traditional categories of ‘worker / self-employed contractor / employee’ are likely to be eroded. Significant workforce redesign may be required in response to any reform of existing structures.

The proposed EU Directive will not apply to businesses operating in the UK, but will apply to EU operations and my affect government policy in the UK.

Now that mediation in the case of Agnew v the Police Service of Northern Ireland (PSNI) has broken down, employers in Northern Ireland will need to keep the outcome of the Supreme Court hearing in December 2022 under careful review. Increased holiday pay costs could be on their way for Northern Irish employers and may need to be included in budgets.

Look out for the conclusion of the four-day week trial at the of 2022. Depending on the outcome, a truncated working week may form part of employers’ long-term strategic planning.

Background

Private contractual arrangements between employers and employees are only ‘private’ to a certain extent: the legal framework operates alongside individual contractual arrangements to regulate arrangements between parties – for example, by implying a contractual duty of mutual trust and confidence and setting a lower limit on wages.

Focus on contractual arrangements has largely centred around vulnerable workers in recent years. In particular, those working under ‘zero-hours’ arrangements and online platform workers, engaged via mobile phone ‘Apps’.

The government’s Good Work Plan, published in 2018, made a wide range of recommendations and proposals relating to employment status and enforcement of employment regulation (see section on Reporting, enforcement and transparency for more information on the enforcement side of the Good Work Plan. This forms a key aspect of the government’s agenda for regulation of employment relationships, alongside other areas of reform.

Meanwhile, a series of cases on agile workers have been making their way through the judicial system, in an effort to make sense of how new models of working apply within the pre-existing legal framework for assessing employment status.

What’s next?

Employment status

As we reported in our last update, the impact of the decision of the Supreme Court in the landmark case of Uber v Aslam will continue to make itself felt. Employment tribunals (and, by extension, employers) will continue to assess their models of engaging staff with an increased focus on the economic substance of the relationship rather than the written contractual position.

We are still awaiting the promised proposals for reform of the employment status tests under the Employment Rights Act 1996. We understand that the government feels that a Law Commission report is required. Therefore, we are not expecting any concrete proposals on reform of employment status within the next five years.

A new EU Directive has been proposed by the European Commission, which would require online platform companies, such as Uber and Deliveroo, to reclassify workers as employees. The Directive would be intended to improve protections for platform workers in the ‘gig economy’. Businesses would also be required to inform workers of how algorithms are used for monitoring and evaluation, allocating work and setting fees.

Right to request a more stable contract

In our Winter 2022 update, we anticipated that a new Employment Bill would be introduced in 2021, containing a new right for employees to request a more predictable contract of employment. However, surprisingly, the May 2022 Queen’s Speech made no mention of an Employment Bill. However, it was reported that the government will introduce this Bill “when the time is right”, so it seems that this is still on its way.

Post-termination restrictions

We reported in the Winter 2022 edition of this update that the government was seeking views on whether post-termination restrictions in employment contracts should be (1) banned entirely; or (2) whether new restrictions on these clauses should be introduced, such as requiring that ex-employees are paid for the duration of the restriction or whether they should have a statutory maximum duration.

The consultation has now closed and the outcome is still awaited. There is no timescale for the response. It remains our view that it is highly unlikely that post-termination restrictions will be outlawed entirely; a 2016 Call for Evidence found that most employers felt that restrictive covenants worked well and did not unfairly impact on an individual’s ability to find new work. However, the government has stated that it has issued its consultation in response to the economic impact of the pandemic, in order to explore ways to increase competition and create new jobs.

In the meantime, the use of such clauses is on the increase. As a result of the UK’s withdrawal from the European Union and the ‘great resignation’ triggered by the Coronavirus pandemic, employers are now facing an extremely tough recruitment and retention market. We are seeing an uptick in the use of contractual restrictions, such as post-termination non-compete and ‘garden leave’ clauses, being deployed more widely in a bid to retain staff and prevent employees from being ‘poached’ by competitors.

Dismissal and re-engagement

In the wake of widespread public concern following the mass dismissals implemented by P&O Ferries, in March 2022, the government announced that it will introduced a new statutory Code of Practice on changing terms and conditions of employment. The legislation underpinning these processes will remain unchanged, but Employment Tribunals will be required to take the Code into account and any failure to do so is likely to result in an uplift on compensation of up to 25%. Further details and the draft Code for consultation are awaited.

Four-day working week

A four-day working week (without any linked reduction in pay) is being trialled from June-December 2022, involving over 3000 employees at 60 companies across the UK. This is running alongside similar schemes in America, Canada, Australia and New Zealand and is an idea which seems to be gaining traction. Depending on how the pilot plays out with the employers taking part, a truncated working week may be an idea that will gain traction in the medium-term future.

Holiday pay

Mediation in the Northern Irish holiday pay case of Agnew v the Police Service of Northern Ireland (PSNI) has broken down. The Supreme Court in the UK will, therefore, hear this case in December 2022. If the Supreme Court finds against the PSNI, this could result in significantly higher holiday pay costs, including backpay, for employers in Northern Ireland. There may also be indirect ramifications for employers in Great Britain in terms of existing holiday pay caselaw being thrown into doubt – in particular, the concept that a ‘series’ of deductions for underpayment of holiday pay purposes is broken if there is a break of more than 3 months between underpayments.

Things to consider

Employment status

Following on from the Uber decision at the start of 2021, we continue to expect employers review their contractual documentation to ensure it reflects the reality of the working relationship between the parties.

The proposed EU Directive is not directly relevant for businesses operating solely in the UK, but will affect businesses with operations in the EU if passed. It may also inform government thinking and policy in the UK. There is no action to take now in response to this development, but it’s one to watch.

Right to request a more stable contract

With many other priorities for government, we do not expect this reform to be hitting the statute books soon but it is a firm proposal. As a firm, but fairly long-term, reform this is one to watch but no action is required in the short term.

Dismissal and re-engagement

Whilst this practice will not be outlawed, the new Code of Practice will need to be incorporated into planning for any dismissal and re-engagement processes which take place after the Code comes into effect. Its impact is, however, likely to be fairly limited as its requirements will probably echo statutory processes and good employment practice already undertaken by employers – for example, undertaking fair and transparent consultation on proposed changes, in good time before the changes take effect.

Four-day working week

At the end of 2022 / early 2023, the outcome of the four-day working week pilot will be published and its results are awaited with interest. Although there are no proposals from the government in relation to reducing the working week, many employers will be interested in the findings of the pilot and may take them into account when considering long-term workforce and productivity strategies.

Post-termination restrictions

Keep a watching brief on the outcome of the government’s consultation on post-termination restrictions. We anticipate the impact will be limited, but even minor changes may affect your organisation if you rely heavily on such clauses to protect your business – and businesses are increasingly doing so, in response to current recruitment pressures. If post-termination restrictions are tightened up, consider whether other contractual clauses can be used to protect your business, such as confidentiality or intellectual property clauses.

Employment contracts in a highly competitive recruitment market

Recruitment and retention strategies may need to be refreshed in the light of the current ‘seller’s market’ for staff. Consider using increased flexibilities around working arrangements to provide a competitive edge and expand your geographical recruitment base. Other options for attracting and retaining staff could include staff retention and recruitment bonuses, upskilling employees through Learning and Development programmes, undertaking pay reviews and introducing contractual provisions designed to encourage staff retention – for example, ‘bad leaver’ provisions in incentive schemes, repayment clauses for staff training, non-compete/non-solicitation clauses and ‘garden leave’ provisions.

Holiday pay

Budgeted payroll costs for employers in Northern Ireland may need to re-visited depending on the outcome of the Agnew Supreme Court hearing in December 2022. GB employers may also want to keep developments on the other side of the Irish Sea under review.

It’s an interesting sign of the times that we are seeing a real uptick in employers using post-termination restrictions and ‘garden leave’ for staff at all levels of seniority, as employers attempt to stay ahead of a challenging recruitment environment – up until recently, these types of clauses were usually reserved for senior executives and people working in fast-moving industries such as IT and recruitment.” Ed Cotton, Partner.

EU withdrawal and workplace rights

What to expect

There is no immediate substantive change to the employment law framework resulting from the UK’s departure from the European Union. We do not anticipate that any major EU derived legislation will be repealed in its entirety; but some aspects may be reformed over time. Decisions of the European Court of Justice remain applicable to EU derived employment law but specified UK appeal courts have the power to depart from that case law if it is “right to do so”.

When? 

Effective since the start of 2021 - but real changes likely in the medium/longer term

Actions to consider now

For now, HR Teams should operate on the basis that EU derived rules and laws remain effective. No major changes are currently expected. However in the context of what is a developing relationship between the UK and the EU, it is a watching brief.

Background

Employment law is one of the key areas of jurisdiction of the European Union (EU). Some pre-existing domestic rights were reproduced at an EU level (such as maternity rights and equal pay); and some new rights were transposed into UK employment law as a consequence of our membership of the EU (for example, limits on working time and protections on the transfer of undertakings).

What’s next?

Employment law derived from the EU has been retained post-Brexit. When the period of transition away from membership of the European Union ended on 31 December 2020, all EU derived employment law was retained, along with employment law decisions of the European Court of Justice. This body of law is known as ‘EU retained law’.

A post-Brexit Trade and Co-operation Agreement (TCA) came into force on 1 January 2021. This contains “level playing field” provisions, including brief provision for workers’ rights. These provisions cover

  • fundamental rights at work
  • occupational health and safety
  • fair working conditions and employment standards
  • information and consultation rights; and
  • restructuring of undertakings.

Under the provisions, the UK commits not to weaken or reduce workplace rights below the levels of protection in place at the end of the transition period. However, this only applies in so far as it affects trade or investment between the UK and the EU, meaning it does not act as an absolute commitment not to weaken workplace rights. It may be the government is deterred from weakening workplace rights as this could have trade implications under the TCA.

The UK government has made several statements about its commitment to workers’ rights post-Brexit, and has stated that it considers that the TUPE Regulations do not require reform. A review of workers’ rights, which would have look at proposals such as ending the 48-hour maximum working week, was cancelled in January 2021.

Taking the above into account, there will be no immediate employment law landscape following the end of the transition period.

Any forthcoming changes are likely to be phased in, as a medium priority for government, with little prospect of key areas of EU law (such as the TUPE Regulations and discrimination protections) being repealed in their entirety or significantly amended.

To the extent that there may be some divergence from EU employment law over time, we consider that the likely candidates for reform are

  • restrictions on working time
  • information and consultation obligations
  • uncapped discrimination compensation
  • some aspects of the Transfer of Undertakings (Protection from Employment) Regulations 2006 (TUPE) – for example, the restrictions on post-transfer harmonisation of terms of employment.

Since our last update, the government has announced its ‘Brexit Freedoms’ Bill or Retained EU Law Bill. The Bill has not yet been published but the government has indicated that it will

“make it easier to amend or remove outdated ‘retained EU law’….and will accompany a major cross-government drive to reform, repeal and replace outdated EU law.”

It is not entirely clear what is meant by that statement. Repealing or amending EU retained law would involve changes to the EU Withdrawal Act and, following on from that, it is not clear what role the existing body of EU caselaw would have in relation to any amended legislation. According to a letter published by the House of Commons European Union Scrutiny Committee in April 2022, a review of EU retained law is almost complete and will inform the contents of the Bill.

Over time we may see the UK superior courts moving away from caselaw decided by the European Court of Justice, now that they have the power do so if they deem it “appropriate”.

Things to consider

Other than in relation to Immigration preparing a strategy for the impact of Brexit on your workforce is difficult: much will depend on the extent to which the government repeals or amends retained legislation and what approach the UK’s superior courts take to interpreting that legislation.

However, consider

  • whether there is any impact on any business protection restrictions in contracts of employment / service agreements which rely on the UK being part of ‘the European Union’
  • the operation of information flows between the various parts of your business affected by Brexit .

Await the publication of the review which is feeding into the Retained EU Law Bill, in order to understand to what extent the Bill may impact on EU derived legislation, such as the Working Time Regulations and TUPE.

Brexit: a process not an event

Remember that Brexit is ongoing process rather than a one-off event, so ensure that developments are tracked and cascaded as appropriate.

Employment lawyers will await the outcome of the government’s review of retained EU law with interest, as this poses all sorts of difficult questions about how this law will work if EU caselaw no longer applies to it.” Jonathan Rennie, Partner.

Immigration and staffing

What to expect

Key changes to the UK’s visa and immigration regime are now in place, with significant reforms passed in Spring 2022.

Further significant changes are not expected in the foreseeable future (for now!). However, 2022 is the year businesses are emerging from the fall-out of Brexit and the Covid-19 pandemic whilst also trying to grow in a highly competitive market. This has forced many more employers to grapple with the UK’s complex immigration rules.

Dates to look out for in the short-term include the introduction of the new ‘scale-up’ migration route, and the Covid-19 immigration checking concession expiration on 30 September 2022.

Employers engaging staff in offshore wind farms should note that the concession to the Immigration Rules for this industry has been extended from 1 July 2022 to 31 October 2022, reportedly for the final time.

There are increasing calls to explore the labour needs of the food and farming sector, with the Environment Food and Rural Affairs Committee having asked the Migration Advisory Committee (MAC) to conduct a review on this. The MAC has suggested it expects to be commissioned in the coming months by the Home Office to review the shortage occupation list – which would include a review of occupations in the sector (and others). Separately, the Independent Chief Inspector of Borders and Immigration has launched an inspection of the immigration system in relation to the agricultural sector, including looking at the effectiveness of immigration routes available to agricultural workers.

Processing delays. Our of country visa applicants currently cannot access fast-track processing, to give priority to applications from Ukraine. It is not known how long this situation, and the resultant delays, will continue.

When? 

  • 22 August 2022 – ‘scale-up’ migration route introduced
  • 30 September 2022 – expiration of Covid-19 concession
  • 31 October 2022 – expiration of wind farm worker concession

Actions to consider now

Employers should ensure that their on-boarding and HR/compliance teams are fully briefed on the Spring 2022 immigration changes.

There is now only a short window of opportunity to ensure that right to work checking procedures are up to date ahead of the expiration of the Covid-19 checking concession on 30 September 2022.

Employers operating offshore wind farms also only have a short time to prepare for the end of their Immigration Rules concession in October, and must ensure that their crews are compliant with UK rules and working legally.

Employers in the food, farming and agricultural sectors should watch this space and be alive to consultation opportunities where they may be able to highlight particular challenges they face in recruiting labour. Employers in all sectors should keep an eye out for developments on the shortage occupation list, to support particular skills shortages they may be facing.

Employers should plan recruitment, sponsorship and visa requirements as far in advance as possible to secure candidates in this very competitive market. Those who don’t have a sponsor licence but need one, in particular, should commence that process as soon as possible to avoid missing out on candidates. The trend of increasing sponsor licence holders is likely to continue, which can in turn impact processing times.

Background

Since our last update, employers have seen some fairly seismic changes around employing foreign nationals post-Brexit, with the introduction of a new approach to compliance checks undertaken by UK Visas and Immigration (UKVI), changes to right to work checks and significant reforms to economic migration routes. Those changes have been implemented with the exception of the new scale-up route (for companies experiencing high levels of growth to recruit talent to the UK), which opens on 22 August 2022 (referenced in our April 2022 guide below).

Click here for more information about the new UKVI compliance checks for sponsors.

Click here for more information about the new right to work checks.

Click here for our guide to the April 2022 changes to the UK’s economic migration routes.

What’s next?

There are no further significant or wholesale reforms to the UK’s immigration regime in the pipeline. Employers should ensure that the new immigration regime has been fully embedded in their organisations, and should be aware of the following forthcoming cut-off dates.

  • The Covid-19 right to work check concession expires on 30 September 2022.
  • A concession to the Immigration Rules, which allows foreign national workers leave to enter the UK for the purpose of joining a vessel engaged in the construction and maintenance of a wind farm within UK territorial waters, will end on 31 October 2022 (having been extended from July 2022).

Things to consider

Now that this tranche of significant changes to the immigration law landscape are in place, employers should ensure that they have compliance procedures in place and are up to date with the new Right to Work checking requirements. Employers should ensure that compliance/HR teams are aware of the final expiration of the Covid-19 right to work check concession.

Between now and 31 October 2022, employers in this wind farm industry should be putting in place plans and processes for ensuring that foreign nationals working in off-shore wind farms have the appropriate permission to do so under the Immigration Rules. The government has stated that this is the last time that this concession will be granted.

With increasing demand for sponsor licences and delays in processing times, employers should consider future recruitment needs and plans and whether they may need a sponsor licence to recruit migrants. If they do, we advise they secure this well in advance so they are ready and able to offer employment when needed.

TLT comment

Employers who have not yet got to grips with the robust new immigration checking requirements will hopefully be able to make use of the Covid-19 concession over the Summer and early Autumn of 2022 to make any necessary changes to their processes; employers who have already made changes would be well advised to use this period to review their processes and pick-up any gaps before the concession window closes.” Joanne Hennessy, Partner and Head of TLT’s Immigration team

Date published

05 July 2022

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