Find out what HR directors will need to prepare for in the coming months and beyond in the Winter 2022 edition of our bi-annual tracker.

 

Pandemic and post-pandemic workforce issues

What to expect

Although many had tentatively hoped that the start of 2022 would see us entering a more stable phase of the pandemic, the Omicron variant has triggered new guidance/controls and public Covid anxiety is affecting retail and hospitality businesses.

The government is currently considering evidence on the impact of ‘Long Covid’. Guidance, and possibly even new legislation, recognising Long Covid as a disability is expected. 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.

When?

Winter 2022 and ongoing.

Actions to consider now

A close watching brief on the latest guidance and legislation is essential in the coming months, as the government reviews the impact of its latest measures to control the virus and promote the roll-out the booster vaccination programme. Given high rates of infection and uncertainty around Omicron, senior leaders will, of course, be mindful of their continuing obligations to protect both the physical and mental health of their staff, regardless of whether they are working remotely or in the workplace. 

The possibility that ‘Long Covid’ could be classed as a disability should be considered.

Background

When we last updated on the HR issues linked to the pandemic, we were in the early stages of the vaccine rollout and cautiously optimistic about a return to a more normal way of working. Now that the Omicron variant has turned the dial back, at least for while, and advice to avoid social/workplace contact is tightened, plans for the year ahead will need to be revised.

What’s next?

It will be essential to keep a very close watching brief on the latest information from government, across each of the UK’s jurisdictions (health is a devolved matter, so the rules are different in each of the home nations). A helpful and regularly updated summary of the Coronavirus rules across the UK is maintained by the Institute for Government and is available here.

Although the Coronavirus Job Retention Scheme (CJRS) has now been fully and permanently withdrawn, the anticipated resulting rise in redundancies did not occur. In fact, figures from the Office for National Statistics for October 2021 showed that vacancies were 400,000 higher than pre-pandemic levels. So, pre-Omicron, it seemed likely that the post-lockdown recruitment market would be characterised by competition for talent rather than managing reductions in headcount; more recent developments may signal an economic slow-down and possible redundancies, as businesses feel the effect of advice to work from home and avoid social contact, with limited new economic support from government.

Finally, it is expected that Long Covid may be classed as a disability qualifying for protection under equalities legislation. This could happen by way of caselaw which finds that Long Covid falls within the existing definition of disability (i.e. a condition which has a long-term and severe adverse impact on a person’s ability to carry out day to day activities). It is also possible that legislation could be introduced which makes Long Covid a deemed disability (i.e. automatically covered without having to meet any legal test). A government All Party Parliamentary Group on the impact of Long Covid was formed in January 2021 and may recommend additional protections for employees suffering from Long Covid: we may see new, detailed, guidance or proposals for new legislation.

Things to consider

Risk assessments and health and safety procedures must be revisited for employees working remotely and in the workplace, to reflect the latest restrictions.

Consider the impact of working practices and procedures on employees who are suffering from ‘Long Covid’ symptoms, bearing in mind that this could be classed as a disability and therefore trigger protection from disability discrimination, discrimination ‘arising from’ disability and the duty to make reasonable adjustments.

Assuming that the recruitment market remains competitive, possibly consider using increased flexibilities around working arrangements to provide a competitive edge and scope to 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, and post-termination restrictions (note our comments in the Employment contracts section of this report).

Should the re-imposition of restrictions on working and social life continue longer term, without the re-introduction of economic support measures, affected businesses may be looking at cost-saving measures. For example, temporary ‘lay-offs’, short time working, agreed temporary reductions in working hours and even redundancies.

TLT comment

“Given reports that symptoms of Covid are affecting people for at least a year after infection, it seems only a matter of time before severe infection is classed as a disability, whether through legislation or through caselaw. Either way, prudent employers will be alive to this possibility in their approach to managing related absence.” - Siobhan Fitzgerald, Partner.

Hybrid and flexible working

What to expect

One of the biggest areas of working life affected by the pandemic was the sudden and seismic shift from office desk to kitchen table. Increased flexibility around working location is here to stay, with many employers either retaining full time remote working or ‘hybrid’ working model.

Separately, but on the same theme, the government has announced that it will remove the 26-week qualifying period for the right to request flexible working. This is intended to deliver the 2019 manifesto commitment to introduce flexible working ‘by default’. The linked proposal to require large employers to publish their flexible working policies online has been dropped.

When

During 2022 and ongoing.

Actions to consider now

Hybrid and remote working arrangements, whether necessitated by the pandemic or in response to the cultural shift in attitudes towards atypical working, have now bedded in.  Senior leadership will need to 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.

The changes to the right to request flexible working are comparatively low impact, but any contractual or policy documentation which currently refers to the 26-week qualifying period will need to be amended and you may see increased requests.

Background

In a time of seemingly endless flux, one constant and likely permanent change triggered by the pandemic is the move towards widespread remote working - whether wholly away from the workplace or through ‘hybrid’ working arrangements. 

In its 2019 manifesto, the Conservative Party promised that it would make flexible working the ‘default’ and large employers would be required to publish their flexible working policies. When the last edition of our HR Horizon tracker was published, we had anticipated that these would be delivered in the forthcoming Employment Bill. 

What’s next?

The government has said that it will deliver on its promise to make flexible working the ‘default’ by removing the 26-week qualifying period for the right to request flexible working. The government issued a consultation on this, which closed on 1 December 2021. There is no timetable as yet for the next development, but we expect legislation to amend the Flexible Working Regulations will be published in Spring/Summer 2022.  The proposal to require large employers to publish their flexible working policies appears to have been dropped.

As the new ways of working bed down in 2022 and beyond, we expect the focus on employee wellbeing to continue and probably increase, as the distinction between ‘home’ and ‘work’ becomes increasingly blurred. 

Things to consider

In December 2021, the CIPD published guidance on hybrid working, commissioned by the government’s taskforce on flexible working and this supplements Acas advice on the same topic. A key focus of both sets of guidance is the importance of the health and wellbeing of staff working remotely, including their mental wellbeing; working remotely can increase the risk of burnout and ‘digital presenteeism’.  The Acas and CIPD guidance should be considered and built into long-term agile working practices.

We understand that some employers are allowing staff more flexibility to attend the office to work during the restrictions imposed in response to the Omicron variant, if it is necessary for wellbeing reasons (as well as for operational reasons).

Consider to what extent the removal of a qualifying period for the right to request flexible working will impact on working arrangements. Many more employers are allowing flexible working as a matter of course, in the wake of the Coronavirus lockdowns. However, this reform will broaden the reach of flexible working to all staff; not just those who are able to work from home, so it will include other atypical models, such as job-sharing or annualised hours. What impact will this have on workforce profile and to what extent would your business be able to accommodate increased requests?  It may be prudent to start considering now how you will audit and assess roles’ suitability for flexible working and objective reasons for any refusals.

TLT comment

“Although increased agile working and hybrid working was initially a crisis response, it may be beneficial to employers in terms of increased competition in the recruitment market. On the other hand, a day one right to request flexibility (of all sorts, not just location) may have a significant impact on candidate mindsets and further embed flexibility as an expectation.” Stuart McBride, Partner 

Equality and dignity at work

What to expect

A House of Commons inquiry into menopause at work closed in July 2021 and the outcome is awaited. The introduction of ‘menopause’ as a new protected characteristic has not been ruled out and further guidance will almost certainly be published in the next twelve months.

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, enforcement 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.

The Ministry of Justice has launched a consultation on reform of the Human Rights Act 1998, with the intention of replacing it with a Bill of Rights.

When?

During 2022 and ongoing.

Consultation on Human Rights Act reform closes on 8 March 2022 – there is no set timescale for any resulting legislative changes.

Actions to consider now

Active Board level engagement and leadership on promoting equalities and preventing unwanted conduct at work 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, employers that want to be on the front foot should consider taking action now to raise awareness and prevent disadvantage caused to employees experiencing menopause symptoms.

Background

Diversity and inclusion remain high up the social, governmental and corporate agenda.

Moving into 2022, Equality, Diversity and Inclusion continues to be a key area of focus for those tasked with both wider engagement and avoiding the legal 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.

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 2022.

Specific developments since the Spring/Summer 2021 edition of this report are as follows.

  • The disability rights agenda has moved more into the spotlight. In particular, the government published its National Disability Strategy in July 2021 and awareness of the ‘disability employment gap’ is receiving more media attention. Given that disabled people are the world’s largest minority, facing some of the biggest hurdles at work, our view is that the focus on disability rights will continue and may well be the subject of a high-profile equalities movement, along the lines of Black Lives Matters and #MeToo (please see link below to our podcast which explores this topic in more detail).
  • Shareholder and investor pressure continues; Legal & General Investment Management, the UK's biggest fund manager, has warned firms that there will be "voting and investment consequences" for companies who fail to diversify their senior leadership team by 2022. And government is now putting pressure on companies too. In November 2021, the Department for Business, Energy & Industrial Strategy (BEIS) announced its support of the FTSE Women Leaders Review: a new five-year review to monitor the representation of women in FTSE 350 board positions.
  • The Financial Conduct Authority (FCA) made it clear during 2021 that it will be focussing on diversity in the financial services industry. It is now considering the introduction of a requirement for companies who wish to list in the UK to meet diversity measures, mirroring Nasdaq requirements in the US. For wholesale banks, the FCA is considering introducing a sixth question to its five Conduct Questions, asking: is your management team diverse enough to provide adequate challenge and do you create the right environment in which people of all backgrounds can speak up?" The clear message from the FCA during 2021 was that the financial services industry should expect equality and inclusion to remain a key focus into 2022.
  • Renewed focus on complex gender identities is expected following landmark rulings in the second half of 2021: the appeal courts have found that being ‘non-binary’ and having ‘gender critical’ beliefs are both protected under the Equality Act 2010, marking a significant extension to the scope of equalities protections.
  • The impact of menopause symptoms has come under the spotlight since our last report. This has been receiving media attention and in July 2021 the government launched an Inquiry into Menopause and the Workplace. The Inquiry has now closed and there is no timescale yet for it to publish its findings.

In relation to legislative developments, in our last edition of this report we flagged that the government intended to change in 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 Ministry of Justice has now published the long-awaited report of the Independent Human Rights Act Review Panel. The government has responded by publishing its proposals to reform the Human Rights Act 1998 in a consultation paper. The government proposes to replace the Human Rights Act 1998 with 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 consultation proposes to give greater priority to domestic case law and loosen the requirement to interpret legislation in line with Convention rights. The consultation closes on 8 March 2022 and legislation will then be put forward to replace the 1998 Act.

Business and cross-party support for the introduction of ethnicity pay gap reporting continued during 2021, and the Equalities Minister promised a response to the government’s 2018 consultation on ethnicity pay reporting during Autumn 2021. 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.

It is expected that in the early part of 2022, the government will convert the non-statutory, technical guidance on preventing sexual harassment into a statutory code.

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 Spring 2021 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 and ethnicity pay
  • 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).

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.

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.

And visible and active Board level HR support on dignity at work, equality, diversity and inclusion policies and practices continues to be essential.

More information

Listen to our employment law experts discuss the disability rights agenda and how best to work with medical professionals, in our latest podcast.

You can subscribe to our employment law podcasts via iTunes or Spotify.

TLT comment

“Looking ahead to 2022, equalities and diversity are set to remain right at the top of the corporate agenda. This will be driven both by the need to keep in step with the expected legislative reforms, and also by the need to remain competitive in a market where a positive culture is linked to profitability: the most diverse companies outperform their peers by 35%, according to research published by McKinsey.” Esther Smith, Partner and TLT’s Equality, Diversity, Inclusion and Wellbeing Champion.

Immigration and staffing

What to expect

As discussed in the previous edition, changes were made to the UK Immigration Rules in late 2020. Free movement of people has now ended in relation to UK nationals, with those EU nationals resident in the UK at 31 December 2020 being able to apply for status under the EU Settlement Scheme. For EU staff who arrived in the UK for the first time from 1 January 2021, recruitment may be more complex and expensive.

A new Graduate visa route has been introduced, and the government has also announced plans for new visa categories to be introduced in 2022 as part of its UK Innovation Strategy.

When?

Ongoing

Actions to consider now

The deadline for eligible individuals to apply to the EU Settlement Scheme expired on 30 June 2021, with any late applications being limited to certain exceptional cases and those who have “reasonable grounds” for missing the deadline.  Clearly, the further away from June 2021 we get, the stronger any argument for an extension will need to be. It remains wise to assess recruitment procedures and consider applying for a Sponsor Licence to ensure continued access to global talent. If UK staff are being deployed to EU countries, it would be wise to take advice in the destination country to ensure any necessary visa permissions are obtained.

Background

EU Settlement Scheme

Under the terms of the UK’s withdrawal from the EU, free movement of people ended on 31 December 2020. To enable EU/EEA/Swiss nationals (‘EU nationals’) and certain non-EU national family members to maintain their right to reside in the UK post-Brexit, the Home Office introduced the EU Settlement Scheme (‘the Scheme’). A successful application to the Scheme enshrines residence and working rights in domestic UK law, which is necessary now that EU free movement has ended.

As a general rule, EU nationals who were resident in the UK by 11pm on 31 December 2020 are eligible to apply under the Scheme. Those who met the residence deadline had until 30 June 2021 to make their Scheme applications.

Applicants were granted Settled Status if they had 5 years’ continuous residence or Pre-Settled Status (temporary residence) if residence had been for less than 5 years. It is possible to convert Pre-Settled Status into Settled Status at a later date, assuming continued compliance with Scheme rules. Whilst the deadline for applications has passed, there are some limited situations in which applications can still be made. There is also a general “catch all” argument that an applicant did not have “reasonable grounds” to make an application in time. Clearly, nearly 6 months on from the initial deadline, such an argument would need to be compelling.

Skilled Worker Visa

Following the end of free movement, employers who wish to employ non-UK nationals who have arrived or will arrive in the UK after 1 January 2021, may need to obtain a Sponsor Licence in order to do so.

Sponsorship will not always be necessary, as there are some other visa permissions that confer the right to work without the need for sponsorship. Individuals who hold status under the Settlement Scheme are among the categories of individual who do not require sponsorship.

Before December 2020, the most common work visa for non-EU nationals was known as a Tier 2 (General) visa. The old system of Tier 2 (General) visas has now been replaced by the Skilled Worker visa. To re-cap since our last update, key points in relation to the Skilled Worker visa are as follows.

  • The system applies to both EU and non-EU nationals who arrive in the UK from 1 January 2021 onwards. It is not restricted to non-EU nationals like the old system. Those with status under the Settlement Scheme will not be governed by the new Skilled Worker rules.
  • The Skilled Worker visa is available to individuals filling lower-skilled roles at A-Level skill threshold (RQF Level 3).
  • An employer will generally need to pay a minimum salary of £25,600 or the “going rate” for the job (whichever is the higher) - although some exceptions will apply for those with PhD qualifications, roles considered to be in shortage and new entrants to the labour market. Sometimes the “going rate” can be significantly higher than the general minimum of £25,600.
  • The Resident Labour Market Test has been abolished, meaning that mandatory 28-day advertising of vacancies to the UK workforce is no longer required.
  • The system is more flexible than Tier 2 (General) and there is also an increased ability for individuals to switch between various immigration categories without leaving the UK.

As well as Tier 2 (General) permissions, some businesses may have held Tier 2 (Intra Company Transfer) licences for the purpose of intra-group assignments and secondments. The Intra Company Transfer rules will remain largely unchanged, but this route will likely become less relevant due to the above noted changes under the new Skilled Worker visa.

Graduate visa

Following our last update, during the summer of 2021, a new Graduate visa was introduced. The Graduate visa applies to individuals who successfully completed a course of studies in the UK and will allow them to work for 2 years on a non-sponsored basis (or 3 years for those with doctoral qualifications).

What’s next?

The government has announced plans to implement a number of new visa routes as part of its Innovation Strategy. These include:

  • a fast track scale-up visa for small rapidly growing organisations,
  • changes to the current Innovator visa to make it more accessible,
  • a new Global Talent Network to attract the best global talent in science/tech to the UK; and
  • a new High Potential Individual route for high potential internationally mobile individuals.

Specifics of these proposed new routes are still awaited.

Things to consider

Conducting a right to work check in accordance with Home Office guidelines should be a key element of any recruitment process and the time of this important issue will be key when designing those processes.

In general, right to work matters should be discussed as late in the recruitment process as reasonably possible. The check itself should also be carried out as late in the process as reasonably possible, of course remembering that the check should be completed before employment commences. Ideally, this would be after the offer is made – with the offer conditional upon a satisfactory check being returned. If you do not want to leave it this late, then the next best alternative is to check all candidates who reach final interview stage. The risk with the latter approach is that – either consciously or subconsciously – there is a greater risk of right to work issues being considered in the recruitment process. It may also increase the risk of possible discrimination claims from unsuccessful candidates who would require a visa to work in the UK.

In terms of recruitment strategies, the biggest change is that much more stringent rules now apply to the recruitment of EU nationals who arrived in the UK from 1 January 2021 and who do not have status under the Settlement Scheme. Businesses who do not already have a Sponsor Licence should actively consider whether a Licence may be required to maintain access to a wide talent pool of non-UK applicants moving forward.

TLT comment

“As we move further into 2022 and beyond, most organisations are now getting to grips with the new Skilled Worker visa and the requirements for sponsorship. The process is actually easier than the pre-2021 position when it comes to non-EU nationals, but significantly more complex for EU nationals – especially with regards to minimum salary levels and the need for English language tests as part of the process. It would remain wise for employers to assess their reliance on EU nationals and have appropriate recruitment strategies in place should such individuals depart the business” - Fraser Vandal, Associate.

Reporting, enforcement and transparency

What to expect

Autumn 2021 saw the government re-stating its intention to “take action” on ethnicity pay gap reporting. This proposal has received support in government, from businesses and from the CIPD.

The government published its National Disability Strategy in July 2021. As part of this strategy, the Cabinet Office will consult this year on voluntary and mandatory workplace transparency rules, including disability reporting for large employers.

Socio-economic inequality may emerge as a new area of focus.

Scrutiny of ‘green washing’ (publishing misleading information about sustainable practices) is set to rise up the corporate agenda.

The government is set to move forward with its proposal to create a new Single Enforcement Body (SEB) for employment rights; marking a shift away from individual / trade union backed action for breaches.

When?

Ongoing.

No set timescale for creation of SEB – in early stages of development and will 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.

Plans for extended data gathering (based on gender pay gap reporting) should be underway. Perhaps more importantly, consider what your organisation should be doing in response to the results of data gathering exercises and how findings will be communicated. 

 

Background

Mandatory publication of data and workforce practices has, for some time now, been used as a mechanism 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 fraudulent use of the furlough scheme, 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 Equality and dignity at work 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?

Since our last update, the pause in enforcement of gender pay reporting has been lifted, and the government is likely to press ahead with the expansion of gender pay reporting requirements.  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 Spring report that new legislation introducing ethnicity pay reporting is anticipated.  Since then, the government has promised a response to its 2018 consultation on ethnicity pay reporting during Autumn 2021, so this is expected imminently. A new consultation on voluntary or mandatory disability pay gap reporting will be published by the end of 2021 and draft legislation and / or guidance may be published by the end of next year. The government has, however, acknowledged in Parliamentary debate that the introduction of ethnicity pay reporting will be even more of a challenge to introduce than gender pay reporting.

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 will consult on how this new reporting obligation will work, but according to the strategy document, the requirements will focus more on general disability workforce information rather than pay.

Another new development is that reporting on social class pay is beginning to occur. PwC has announced that alongside its gender pay report, it will publish 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.

In our last report we highlighted the government’s proposal for a new mandatory duty for large employers to publish their family friendly policies online. The result of the consultation on this proposal has now been published and it appears that it has been quietly dropped. 

However, we do still expect modern slavery reporting 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.

It now seems 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. On that topic, please note that our latest Retail Agility report focuses on sustainability and what to expect from the CMA next year.

In 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.

Things to consider

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

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

Ahead of the expected introduction of ethnicity pay reporting, consider voluntary reporting of both these metrics.  Detailed planning for compulsory reporting will be difficult until the exact requirements have been published. But whether you are intending to report voluntarily now or want to start preparing for compulsory reporting when it arrives, points to think about 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 do you understand the profile of your workforce in terms of disability, what 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 particular, can be highly complex and technical, so it would be a good idea to ahead of the curve now.

TLT comment

“Over the course of 2021, it was interesting to see businesses and employers’ organisations, such as the CIPD, actively calling for mandatory ethnicity pay reporting. It is definitely another area where some employers are moving ahead of the government.” - Stuart McBride, Partner.

Employment contracts and contingent workers

What to expect

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.

Changes to post-termination restrictions in employment contracts are on the horizon.

When?

Employment status reform TBC but within 5 years.

Proposals for reform of post-termination restrictions (if any) expected during 2022.

Actions to consider now

Keep developments 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.

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 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 Spring 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 2021 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 Spring 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 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.

Things to consider

Employment status

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.

Post-termination restrictions

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.

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. 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. 

TLT comment

“The government has many factors to weigh in the balance before deciding how to proceed on post-termination restrictions. Whatever happens, such clauses will continue to require specific drafting rather than a ‘one size fits all’ template approach.” - 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 from 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.

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 the UK’s withdrawal from the EU, the government has not provided any indication that it intends to make changes to the employment law framework which we derived from EU requirements. Given other pressing priorities on government time, this is not currently a high priority.

Over time we may see the UK appeal 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 appeal 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. 

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. 

TLT comment

“The ‘gold plating’ of EU employment regulations, such as TUPE, may well be retained in order to avoid further trade disputes under the TCA. That said, the early signs from post Brexit UK/EU relations suggest that nothing should be assumed.” - Jonathan Rennie, Partner.

Contributor: Sarah Maddock.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2022. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Date published

21 January 2022

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