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Code of Practice on fire and re-hire now in force.

Posted on: July 22nd, 2024 by Hugh Dineen-Lees

This article was updated on 2 August 2024 to take account of the changes to the statutory Code of Practice on fire and re-hire as re-issued by the Government on 30 July 2024. 

On 18 July 2024, the Secretary of State issued the Statutory Code of Practice on Dismissal and Re-engagement under Section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. This is more commonly referred to as the Code of Practice on ‘fire and re-hire’.

The code provides practical guidance on how to promote the improvement of industrial relations. The Secretary of State considered that the practice of dismissing and re-hiring employees as a means to change their terms and conditions of employment could give rise to conflict between employers, employees and Trade Unions, which could subsequently lead to a deterioration in employment and industrial relations.

The code will provide guidance to employers, employees and their representatives where an employer is considering making changes to one or more of its employees’ contracts of employment and envisages that if the employee does not agree to some or all of the changes, the employer may opt for dismissal and re-engagement in respect of that employee. Some of the key provisions include;

  • Employers need to explore alternatives to ‘fire and rehire’ and it should only be used as a last resort.
  • Employers should not threaten dismissal if it is not actually envisaged and must not coerce employees into signing new terms and conditions.
  • The employer should ensure that the only terms which are changed are those which have been subject to the information-sharing and consultation process and should not use this as an opportunity to make any further changes.
  • A requirement to consult ‘for as long as reasonably possible’, but — unlike collective redundancy consultation — there is no minimum time period. Employers are told to contact Acas at an early stage before they raise ‘fire and rehire’ with the workforce.
  • Once the employer becomes aware the proposed changes are not agreed, they should re-examine them. The employer should consider feedback from employees and/or their representatives.
  • The employer might commit to reviewing the changes at a future set time and reconsider whether they are still needed. If more than one change is being implemented, the employer might also consider introducing them on a phased basis.

Whilst there is no stand alone claim for a breach of the code and its provisions, the Tribunals must take this into account in all relevant cases, including claims for unfair dismissal. The Tribunals will have the ability to uplift compensation by up to 25% if an employer unreasonably fails to follow it or reduce any award by up to 25% if the employee has unreasonably failed to comply. However, the uplift will not apply to protective awards for failure to inform and consult in consultation redundancy situations.

It is also worth noting that the Labour party have pledged to legislate to end ‘fire and re-hire’ and to replace and strengthen the code. Therefore, if you are facing any issues in relation to the above, speak to our specialist employment team where we can provide up-to-date information and advise you on how to manage any potential conflicts which may arise.

Emma Cocker comments on challenging bad references from previous employers in The Telegraph

Posted on: July 5th, 2024 by Natasha Cox

Emma Cocker, Senior Associate in the Employment team, comments on whether an employer can give a bad reference, and how employees can challenge a bad reference from a previous employer.

Emma’s comments were published in The Telegraph, 5 July 2024.

“An employer can give a negative reference, but it must be factual. Employers owe the subject of a reference a duty to take reasonable care to ensure the information it contains is true, accurate and fair. The reference must not give a misleading impression. If a referee gives a reference which is misleading, they may be liable for negligence, either to the new employer or the employee.

“In addition, if a referee knowingly includes false information with the intention that the recipient will rely on it, the referee will be liable to the recipient for a civil claim of deceit.

“It is difficult for employees to challenge a bad reference, unless they can demonstrate that the information was inaccurate, discriminatory or was given in retaliation for raising allegations of discrimination or whistleblowing. In practice, most employees will only become aware of a bad reference once a job offer has been withdrawn. At that stage, it is highly unlikely a prospective employer could be convinced to offer a role again, as the seeds of doubt will have already been sown.

“The only real option is for the employee to take legal advice to see whether they have a claim against the referee. If an employee does become aware of a bad reference before it has been shared with a prospective employer, they should try to discuss the reasons for the negative content with their new employer as soon as possible.

“Protecting your reputation is simple: be the best employee you can be. Courteous, on time for work and reliable – these are all behaviours employers hold in high regard. If there are circumstances which might affect your ability to comply with expected norms, such as being a parent or carer, or having a disability, discuss these with your employer as soon as possible so they are aware of any mitigating circumstances.

“There is a common misconception that employers are obliged to provide references. However, with the exception of regulated industries such as financial services, this is not the case. In reality, most employers will provide a “factual” reference, outlining the employee’s name, job titles and dates of employment, but they cannot be forced to provide further information.

“Employers are also entitled to include a disclaimer within the reference that limits any liability to the recipient of the reference. References may be given orally or in writing. However it is generally safer to provide basic factual references in writing with no further information given to avoid any liability to the employee or the recipient. If incorrect or misleading information is given, the recipient may allege negligence. Do not be tempted to say things on the phone that you wouldn’t commit to in writing!

“If you are not happy with a reference provided by your ex-employer, the first step is to find out whether the reference has actually been sent to the prospective employer. If not, you may be able to talk to your ex-employer and see whether they might be prepared to change the content. Remember however that they are under a duty to provide accurate information, so they may not be willing to change it. Also consider whether their approach or any of the information they have provided might be discriminatory, such as commenting negatively on high absence levels if you have taken a period of parental leave, or on your performance which has been adversely affected by a disability.

“If you have been given a bad reference because of or after raising concerns about discrimination, or after you have “blown the whistle”, you may have a claim against your ex-employer for victimisation or whistleblowing detriment. It is important to take legal advice at an early stage to assess whether you might have viable claims against the referee. This will be especially important if you have lost a job opportunity because of a negative reference.”  

If you have any questions relating to the above, please contact a member of our Employment team.

General Election 2024 – what are the various parties’ proposals relating to employment law?

Posted on: July 4th, 2024 by Natasha Cox

While many may feel that the outcome of today’s General Election is a foregone conclusion, we felt it was important to look at each of the political parties’ manifestos to consider what they are proposing in the field of employment law – and what the consequences of these might be. 

Some of the parties have announced extensive proposals (which could mean the Lawrence Stephens’ Employment team will be extremely busy over the coming months!) while others have caused us to wonder how they will be implemented in light of recent court rulings / existing legislation.

If you have any questions on how the general election may affect your obligations as an employer, please contact any member of our Employment Team (see end of article).

Labour

In summary, Labour propose to:

  • Introduce a day one right to sick pay, parental leave and unfair dismissal;
  • Extend Employment Tribunal time limits for bringing all claims from three months to six months;
  • Ban “exploitative” zero hours contracts (which means an outright ban on such contracts is unlikely);
  • End fire and rehire (although Labour’s New Deal document indicates they would stop short of an outright ban);
  • Set up a single enforcement body to enforce workers’ rights;
  • Alter the criteria for determining national minimum wage so all adults are entitled to the same minimum wage;
  • Create a “Fair Pay Agreement” to allow for sectoral collective bargaining in the adult social care sector;
  • Give employees the right to have a contract which reflects the hours they regularly work based on a 12-week reference period;
  • Require employers with more than 250 employees to have a menopause action plan;
  • Place new duties on large employers to produce ethnicity and disability pay gap reports;
  • Make collective redundancy consultation requirements dependent on the number of redundancies across the whole business rather than the number at each ‘establishment’;
  • Require section 1 statements to inform staff of their right to join a trade union;
  • Introduce a right to ‘switch off’;
  • Consult on an eventual move towards a single status of worker, incorporating all but the genuinely self-employed;
  • Make flexible working a default right unless employers have a ‘good reason’ to refuse it;
  • Reverse the changes made under the Trade Union Act 2016 (which placed more stringent requirements on those engaging in industrial action);
  • Abolish the Strikes (Minimum Service Levels) Act 2023;
  • Remove the requirement for fully postal ballots for industrial action;
  • Make it easier for unions to gain recognition;
  • Give trade unions the right to access workplaces for recruitment and organising purposes; and
  • Introduce a right to unpaid bereavement leave (which is currently only available following the death of a child).

The full manifesto can be found here: https://lnkd.in/eFZQ_mva

Conservatives

In summary, the Conservatives propose to:

  • Overhaul the fit note system to move responsibility from GPs to other healthcare professionals;
  • Continue with the implementation of minimum service level agreements in relation to industrial action;
  • Cut employee National Insurance contributions to 6% from 2027; and
  • Abolish National Insurance for self-employed people by the end of the next parliament.

It’s worth noting that the first two proposals are not new – a consultation on the fit note system had already started before the General Election was called and we already knew the Government planned to introduce minimum service levels during strikes in hospitals and schools. It looks largely like business as usual if the Conservatives are successful.

The full manifesto can be found here: https://lnkd.in/ekQNictf


Liberal Democrats

In summary, the Lib Dems propose to:

  • Establish a new ‘dependent contractor’ employment status between ‘employment’ and ‘self-employment’, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement;
  • Increase minimum wage by 20% for people on zero-hour contracts at times of normal demand to compensate them for the uncertainty of earnings;
  • Promote employee ownership by giving staff in listed companies with 250+ employees a ‘right to request’ shares;
  • Change the burden of proof in Employment Tribunal claims so that the employer has to disprove employment status, rather than the employee proving it;
  • Improve Statutory Sick Pay by removing the 3-day waiting period and lower earnings limit;
  • Extend the use of name-blind recruitment processes;
  • Make parental leave and pay day 1 rights;
  • Double Statutory Maternity Pay and Shared Parental Pay to £350pw;
  • Introduce a ‘use it or lose it’ month for fathers and partners, paid at 90% of earnings;
  • Introduce new Equality Act protected characteristics of ‘caring’ and ‘care experience’;
  • Require large employers to publish data on gender, ethnicity, disability, and LGBT+ employment levels, pay gaps and progression, and publish five-year aspirational diversity targets;
  • Introduce specialist disability employment support and simplify the Access to Work scheme; and
  • Introduce ‘Adjustment Passports’ to record the adjustments, modifications and equipment a disabled person has received, and ensure that Access to Work support and equipment stays with the person if they change jobs.

While there are undoubtedly some proposals that will be attractive to the electorate, the proposed introduction of ‘dependent contractor’ employment status seems to be something of style over substance – aren’t these people already classified as ‘workers’? In addition, the proposed introduction of new protected characteristics of ‘caring’ and ‘care experience’ seems fraught with difficulties – it would certainly keep us employment lawyers busy with the courts grappling to put into practice what these terms actually mean…

The full manifesto can be found here: https://lnkd.in/ehU4gcMw

Reform

In summary, Reform UK intend to:

  • Abolish IR35 rules to support sole traders;
  • ‘’Scrap thousands of laws that hold back British business and damage productivity, including employment laws that make it riskier to hire people’’;
  • Replace the Equality Act 2010;
  • Scrap all Diversity Equality and Inclusion roles that, “cost huge sums, create division, inequality and exclusion, and reduce productivity.’’; and
  • “Scrap EU Regulations with immediate effect. British Laws on [employment] are still based on EU regulations.”

I think it’s fair to say that Reform UK’s manifesto is somewhat light on the detail of how they plan to achieve the above…

The full manifesto can be found here: https://lnkd.in/eMYNR6Qr


Plaid Cymru

In summary, Plaid Cymru intend to:

  • Support the devolution of employment law to Wales;
  • Make paid bereavement and miscarriage leave a day 1 right;
  • Extend the entitlement to statutory bereavement leave and pay entitlement to all people with a ‘close relationship’ to a person who has died;
  • Increase Statutory Sick Pay (SSP) in line with Statutory Maternity Pay (SMP) and remove the lower earnings limit;
  • Reform Shared Parental Leave;
  • Consider making Carer’s Leave paid;
  • Re-introduce the ‘bankers’ bonus cap’
  • Implement an apprenticeship living wage and pay social care workers at least £1 above the real living wage;
  • Investigate increasing higher earners’ National Insurance contributions and promote employee ownership models;
  • Reverse “the Tories’ regressive anti-strike legislation”;
  • Support legislation to tackle insecure work and outlaw fire and re-hire tactics;
  • Abolish compulsory zero-hours contracts;
  • Establish the right to ‘disconnect’;
  • Promote LGBTQ+ inclusion throughout society, including all workplaces, and propose a simplified, de-medicalised gender self-identification system;
  • Adopt the United Nations Convention on the Rights of Disabled People into UK law and introduce a Business, Human Rights and Environment Bill which would mandate that private companies conduct due diligence in their supply chains to prevent human rights abuses; and
  • Put the power to decide Bank Holidays in Wales in the hands of the Senedd and make St David’s Day a Bank Holiday in Wales on 1 March each year.

There’s definitely some overlap here with the other manifestos described above (i.e. Labour’s pledge regarding the right to disconnect, as well as increasing SMP and SSP, reforming zero hours contracts and making some employment rights available from day 1).

However there are also some issues that are likely to be divisive, such as the proposal to introduce a simplified, de-medicalised gender self-identification system. How will this work in practice in light of such decision as Adams v Edinburgh Rape Crisis Centre, Meade v (1) Westminster City Council; and (2) Social Work England and Forstater v CGD Europe?

The full manifesto can be found here: https://lnkd.in/enRssnpZ

SNP

In summary, the SNP intend to:

  • Support the devolution of employment law to Scotland to enable changes such as banning ‘exploitative’ zero hours contracts and ‘fire and rehire’, as well as increasing the level of the National Minimum Wage and removing the age brackets;
  • Create a single status of ‘worker’ for all but the ‘genuinely self-employed’;
  • Increase access to statutory sick pay by removing the lower earnings limit and the waiting period;
  • Increase the rate of Statutory Maternity Pay to 100% of average weekly earnings for the first 12 weeks, dropping to 90% of average weekly earnings or £150 (whichever is lower) for 40 weeks;
  • Increase the available period of Shared Parental Leave from 52 to 64 weeks with the additional 12 weeks to be the minimum taken by the father on a ‘use it or lose it’ basis to encourage better uptake of the statutory right; and
  • Support the repeal of the Strikes (Minimum Service Levels) Act 2023 and the Trade Union Act 2016

Any of this sounding familiar?

The full manifesto can be found here: https://lnkd.in/eh5YiBKj

Greens

In summary, the Green Party intend to:

  • Repeal anti-union legislation and introduce a ‘positive’ Charter of Workers’ Rights, containing a right to strike and a legal obligation on employers to recognise trade unions;
  • Remove ‘arbitrary’ ballot thresholds and requirements for postal ballots;
  • Overturn bans on secondary picketing and industrial action for political objectives;
  • Introduce a maximum 10:1 pay ratio for all private and public-sector organisations;
  • Increase the national minimum wage to £15 an hour, regardless of age;
  • Campaign for ‘safe sick pay’;
  • Provide equal rights for all workers from their first day of employment, including platform workers, zero hours workers and those working in the ‘gig economy’;
  • Properly fund the enforcement of workers’ rights and abolish tribunal fees;
  • Move to a four-day working week;
  • Transition towards a green economy, led by workers and trade unions;
  • Establish an Offshore Energy and Skills Passport so that workers can transition between offshore energy industries;
  • Require all large and medium-sized companies to carry out equal pay audits, redress any inequalities and extend pay-gap protections to all protected characteristics;
  • Introduce a right to flexible working and ensure disabled workers have the in-job support they need, as well as ‘proper pay and conditions’;
  • ‘Defend’ the Human Rights Act 1998 and continued access to the European Court of Human Rights;
  • Protect the right to religious expression and support gender self-identification for trans and non-binary people; and
  • Push for a precautionary regulatory approach to the development of AI, ensuring that workers’ rights and interests are respected when AI leads to significant changes in working conditions.

The full manifesto can be found here: https://lnkd.in/emtteMbV

If you have any questions on how the general election may affect your obligations as an employer – or any other employment law concerns, please contact any member of our Employment Team (see below).

Changes to the obligation to inform and consult on TUPE transfers

Posted on: July 1st, 2024 by Natasha Cox

Changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) come into effect on 1 July 2024.

These changes are likely to be welcomed by small to medium-sized businesses as they provide greater flexibility to employers in complying with their duty to inform and consult affected employees in relation to a TUPE transfer.

A business preparing for the sale of part or all of an undertaking or service provision can now consult directly with affected employees if:
– there are no recognised trade union or employee representatives AND
– the employer has not already invited the affected employees to elect representatives AND
– either the employer has fewer than 50 employees OR
– fewer than 10 employees will transfer.

There is nothing to prevent an employer in either scenario from arranging an election to vote for employee representatives if this is preferred.

Please get in touch if you require any advice as to how to get the process right for your business. A failure to do so can be costly: transferors and transferees are jointly liable for any breach of the duty to inform and consult. This could result in protective awards reaching as high as 13 weeks’ gross pay for each affected employee.

Government rejects ban on NDAs in sexual harassment cases

Posted on: May 20th, 2024 by Natasha Cox

In March 2024, the Treasury Select Committee delivered its’ report entitled ‘Sexism in the City’. As part of the enquiry, the committee found a ‘shocking’ prevalence of sexism and misogyny towards women working in financial services, and recommended a total ban on the use of non-disclosure agreements (NDAs) and clauses in all harassment cases.

In its response to the Select Committee’s recommendations, the UK government has now pushed back against a move to ban NDAs, saying that they would already ‘most likely’ be unenforceable when reporting a crime to the police. In the Government’s opinion the law therefore does not need to go any further.

As part of the rationale for this decision, the government said, “When it comes to sexual harassment and discrimination, it is important to recognise that individual circumstances vary. The government consultation on ‘Confidentiality clauses: measures to prevent misuse in situations of workplace harassment or discrimination’ in 2019 also heard evidence that many employees who sign a settlement agreement at the end of their employment with an organisation value the inclusion of confidentiality clauses, as they allow them to move on and make a clear break.” It added that an NDA would also be unenforceable if it sought to prevent a worker making a protected disclosure about wrongdoing to a prescribed person for whistleblowing purposes.

This move means that employers will be able to continue using NDAs in most common situations where a crime is not involved. It is important to remember, however, that other laws and guidance already exist on how NDAs should be used. These include  best practice guidance from the Equality and Human Rights Commission and Acas guidance for employers, as well as the Solicitors Regulation Authority’s warning notice on NDAs. In addition, all employers regulated by the Financial Conduct Authority must include a clause in any NDA making it clear that it does not prevent a protected disclosure.

Get in touch if you require further guidance on the use of NDAs in relation to allegations of harassment by employees.

New duty imposed on employers to prevent sexual harassment in the workplace

Posted on: April 10th, 2024 by Natasha Cox

A new duty will be imposed on employers to prevent sexual harassment in the workplace from October 2024.

Currently workers are protected against sexual harassment carried out at work by their employer or its employees under the Equality Act 2010. Sexual harassment is defined as unwanted conduct of sexual nature which has the effect of violating the victim’s dignity, or creating an environment that is intimidating, hostile, degrading, humiliating or offensive.

Employers are also liable for sexual harassment carried out by their employees during the course of their employment, even if the employer was not aware of their actions.  However, employers may have a defence if they can show that they took “all reasonable steps” to prevent the harassing employee from acting unlawfully. However, the new rules will go further, placing employers under a duty to consider what steps can reasonably be taken to ensure that sexual harassment does not occur in the first place. This represents a shift from the current post-harassment liability to a proactive duty, and employers must therefore prioritise the prevention of sexual harassment in the workplace.

However, employees will not be able to bring standalone claims in the employment tribunals for a breach of the new duty. Instead, an uplift to compensation of up to 25% may be made to successful sexual harassment claims where an employer is found to have breached the new duty.

It is currently unclear what proactive “reasonable steps” employers are required to take, but the government has confirmed that further guidance will be published later this year. The Equality and Human Rights Commission will also issue a Code of Practice. We consider that  reasonable steps are likely to include implementing anti-harassment policies and procedures and training the workforce appropriately.

Although the new duty does not come into force until October 2024, employers should review the current suite of relevant policies to ensure they offer as much protection as possible. Contact us if you need assistance with such policies, or in dealing with complaints of sexual harassment.

Tribunal compensation limits increase

Posted on: April 7th, 2024 by Natasha Cox

From 6 April 2024, new increased compensation limits for employment tribunal claims will come into force under the provisions of the Employment Rights (Increase of Limits) Order 2024.

The changes are as follows:

  • maximum amount of a week’s pay (used for calculating a redundancy payment or for various awards including the unfair dismissal basic award): £700 (increased from £643)
  • limit on amount of unfair dismissal compensatory award: £115,115 (increased from £105,707)
  • minimum amount of unfair dismissal basic award for trade union, health and safety, working time representative, pension scheme trustee and employee representative dismissals: £8,533 (increased from £7,836)
  • minimum amount for unlawful exclusion or expulsion from trade union: £13,032 (increased from £11,967)
  • maximum guarantee payment per day: £38 (increased from £35)
  • amount for unlawful inducement relating to trade union membership/activities or collective bargaining: £5,584 (increased from £5,128)

With effect in respect of claims presented on or after 6 April 2024, the Presidential Guidance on the Vento bands for making awards for injury to feelings in discrimination claims is being amended by a Seventh Addendum which increases the bands to:

  • £1,200 to £11,700 for the lower band—less serious cases (previously £1,100 to £11,200)
  • £11,700 to £35,200 for the middle band (previously£11,200 to £33,700)
  • £35,200 to £58,700 for the upper band—the most serious cases (previously £33,700 to £56,200)
  • £58,700 and above for the most exceptional cases (previously £56,200 and above)

The potential pitfalls of unlimited annual leave

Posted on: March 20th, 2024 by Natasha Cox

Many employers including LinkedIn, Netflix, Eventbrite and Dropbox are now offering their employees unlimited annual leave.

Unlimited leave reflects a significant uplift on the statutory minimum position. Under the Working Time Regulations 1998, full-time employees are legally entitled to 5.6 weeks’ paid holiday each year, which translates to 28 days, including bank holidays. Part-time staff are also entitled to 5.6 weeks, the number of days being dictated by how pro-rated their working time is.

While undoubtedly a great selling point to potential new recruits, is unlimited annual leave more hassle than its worth for an employer?

Potentially, yes. Employers need to be extremely careful when implementing an unlimited annual leave policy because failing to set appropriate expectations and creating a clear and well-structured policy could lead to significant problems. For example, how does one calculate the annual leave owing (or owed) when an employee’s employment comes to an end if this is not specified in their contract or the leave policy? Likewise with the continued accumulation of leave during a period of family leave.

No employer is likely to be content with an employee taking 52 weeks’ annual leave in a leave year, not least because they won’t be able to do the job that they’re employed to do. If you are offering unlimited annual leave, employers must ensure adoption of and adherence to minimum performance criteria, as well as having robust performance measures in place to objectively assess how well the employee is performing.

Further, employees will still need their manager’s permission to take time off, which could result in the policy being enforced differently from one manager to another. This may lead to accusations of favouritism, or differing treatment of employees in relation to any of the nine protected characteristics under the Equality Act 2010.

Lack of cover during an employee’s holiday may also discourage them from taking time off, undermining the incentive for annual leave altogether.

It is ultimately important to strike a balance between the needs of the business for employees to carry out the jobs they are employed to do, and the ability to attract and retain the right talent. While offering unlimited annual leave is certainly likely to assist with recruitment and retention, its implementation needs careful handling to avoid unintended consequences.

Talk to us if you would like to discuss the pros and cons of enhanced employee benefits.

Proposal to reintroduce employment tribunal fees

Posted on: January 10th, 2024 by Natasha Cox

The government has announced a consultation on the proposal to reintroduce fees for bringing employment tribunal claims.

First introduced in 2013, employment tribunal fees saw claimants having to pay separate fees to issue their claims and to have them heard. Fee levels differed according to the nature of the claim.

On 26 July 2017, the Supreme Court declared employment tribunal fees to be an unlawful interference with the common law right of access to justice and the fees were subsequently abolished.  

However, the government has now announced proposals to reintroduce tribunal fees. Under the proposed scheme, tribunal issue fees would be at the flat rate of £55 per claim. In the event of a multi-claimant claim, the fee would be unchanged, with the multiple claimants being treated as a single entity. No separate hearing fee would be payable.

The £55 fee would also apply on lodging an appeal in the Employment Appeal Tribunal (EAT), however the fee would apply per tribunal decision, direction or order being appealed. Therefore, an appellant seeking to appeal more than one tribunal decision or direction could incur multiples of the £55 fee.

A fee exemption would apply in the case of claims in which individuals are seeking a right to payment from the national insurance fund. Further, individuals could apply under the Help with Fees remission scheme where eligible. 

Based on 2022-23 volumes, the government estimates that the proposed fees could generate between £1.3 million and £1.7 million a year from 2025-26 onwards. It is expected that, if the consultation is successful, these new fees will be implemented from November 2024. For now, the status quo remains and claimants may continue to submit claims free of charge. However given the modest level of proposed fees and the cost of administering the employment tribunal, it is arguably not unreasonable to expect that fees will be reintroduced.

Round up of 2023 employment law

Posted on: December 18th, 2023 by Natasha Cox

As 2023 draws to an end, the employment team at Lawrence Stephens examines employment law developments of 2023 and what we’re expecting in 2024.

Holiday and holiday pay

Changes have also been made to the Working Time Regulations 1998.

All employees are entitled to 5.6 weeks’ annual leave entitlement per leave year. The 5.6 weeks is split into two ‘pots’: one pot of ordinary leave, which is four weeks, and one pot of 1.6 weeks additional leave.

Ordinary annual leave should be paid at the employee’s ‘normal’ rate of pay. This does not necessarily apply to the additional leave.

The government is amending regulations to set out what elements of pay are to be included as ‘normal’ for the purposes of the first four weeks’ leave entitlement. Unfortunately, the regulations do not list specific payments that should be included, and instead refer to certain categories, including:

  • payments, including commission payments, which are ‘intrinsically linked’ to the performance of tasks that a worker is contractually obliged to carry out;
  • payments for professional or personal status relating to length of service, seniority or professional qualification; and
  • other payments, such as overtime payments, which have been regularly paid to a worker in the 52 weeks preceding the calculation.

As per previous case law, results-based commission, certain overtime payments, allowances, etc., will still be caught, however there is still uncertainty about payments such as annual or semi-annual bonuses, and it remains to be seen whether this amendment changes much.

For irregular hours workers and part-year workers (both now defined in the regulations), the government is also introducing a new method to calculate their holiday entitlement. Essentially, an irregular hour worker or a part-year worker accrues annual leave at the rate of 12.07% of the number of hours worked, subject to a maximum of 28 days per leave year. A worker will be an ‘irregular hours worker’ if the number of paid hours that they work is ‘wholly or mostly variable’. A worker will be a ‘part-year worker’ if they are required to work only part of that year and there are periods of at least a week in which they are not required to work (and for which they are not paid). This change is intended to address the issues caused by the Supreme Court’s decision in Harpur Trust v. Brazel, in which it held that part-year workers were entitled to 5.6 weeks’ leave per year, irrespective of the hours they worked. 

The government is also introducing ‘rolled up holiday pay’ for irregular hours workers and part-year workers. Rolled up holiday pay is a system under which a worker’s holiday pay is included in their basic pay, rather than paying them when their holiday is actually taken. The practice has been unlawful since 2006 but will now be lawful under the updated regulations.

These changes come into force on 1 January 2024 for holiday years commencing on or after 1 April 2024.

TUPE

The government has announced its intention to change the transfer of undertaking consultation obligations so that there can be direct consultation with affected staff for businesses with fewer than 50 employees, or businesses of any size with fewer than 10 transferring employees. This assumes in both cases that no existing employee representatives are already in place. The regulations are expected to come into force on 1 January 2024 and the changes will apply to transfers that take place on or after 1 July 2024.

National Insurance and Minimum Wage

Class 1 employee NICs will be cut from 12% to 10% from 6 January 2024.

The NICs holiday for veterans in their first year of civilian employment will be extended to 5 April 2025.

For the self-employed, Class 2 NICs will be abolished, and the main rate of Class 4 self-employed NICs reduced from 9% to 8%, from 6 April 2024.

New national minimum wage rates to apply from 1 April 2024 have also been announced, along with a change to the threshold for being eligible for the highest rate. Over 21s will now be entitled to £11.44 per hour, with 18- to 20-year-olds being entitled to £8.60 per hour. 16- to 17-year-olds and apprentices will be entitled to £6.40 per hour.

Fire and rehire

The government has issued a draft Code of Practice on dismissal and re-engagement. It is designed to cover situations such those seen recently with P&O, where an employer makes changes to terms and conditions by dismissing employees under their old contracts and offers to re-engage them on new contracts (with less favourable terms and conditions).

The aim of the code is to clarify how employers should behave when seeking to change employees’ terms and conditions of employment. A court or tribunal will be able to take the code into account when considering relevant cases and they will have the power to increase an employee’s compensation by up to 25% if an employer unreasonably fails to comply with the code. They could also decrease any award by up to 25% where an employee has unreasonably failed to comply.

The consultation on the Code closed on 18 April 2023 and it is anticipated that the government’s response will be delivered in Spring 2024. While the code is still in draft form it is not binding, but any proposed fire and rehire processes should be carefully considered in the meantime.

Flexible working

The Flexible Working (Amendment) Regulations 2023 come into force on 6 April 2024. The regulations amend the existing Flexible Working Regulations 2014 so that the right to make a flexible working application becomes a ‘day one right’ on 6 April 2024. Currently employees must have 26 weeks’ continuous service to make a flexible working request under the legislation (however, nothing prevents employers and employees agreeing flexible working arrangements between themselves, whether formally through contractual variations, or informally). 

It is assumed that the other flexible working reforms contained in the Employment Relations (Flexible Working) Act 2023 will also commence on that date, but this has not yet been confirmed. These reforms will:

  • allow employees to make two flexible working applications every 12 months instead of one;
  • remove the requirement for employees to have to explain what effect they think their flexible working request will have on the employer;
  • require employers to consult with the employee before refusing their flexible working application; and
  • require employers to respond to flexible working requests within two months instead of three months.

Carer’s leave

The draft Carers’ Leave Act 2023 (Commencement) Regulations 2023 have been published, bringing the Carers’ Leave Act 2023 into force from 6 April 2024.

The draft regulations set out important detail relating to the Act. They state that the legislation will cover employees in England, Wales and Scotland. To be entitled to the provision, employees need to be providing long term care. Carer’s leave will be able to be taken in half or full days, up to and including taking a block of a whole week of leave at once. In a similar way to other types of leave, the notice an employee needs to give to take the leave is twice the length of time that needs to be taken. Leave requests do not need to be made in writing.

Employees taking carer’s leave will have the same employment protections associated with other forms of family related leave. This includes protection from dismissal or detriment as a result of having taken the leave.

The draft regulations still need to be passed by Parliament and it is also expected that guidance will be made available before 6 April.

Strike action

The Strikes (Minimum Service Levels) Act 2023 was passed in July. The act gives powers to make regulations to set minimum service levels in certain industries during strike action. The government has now made regulations under these powers to set minimum service levels for ambulance, railway and border security staff. Although the regulations are not yet in force, they are expected to be by the end of the year. A draft code of practice has also been laid before Parliament, but no minimum service levels are yet in force.

Government consultation response: non-compete clauses to be limited to three months

Posted on: October 25th, 2023 by Natasha Cox

The government has announced plans to limit the length of non-compete clauses in employment contracts in its response to a 2020 consultation on their reform.

Non-compete clauses are one of several types of post-termination restrictions that are often found in employment contracts. These restrictions typically restrict an employee’s ability to work for a competitor for a set period following the termination of their employment, but can also restrict their ability to canvass or solicit clients and customers, as well as poaching colleagues.

To be enforceable, restrictions must not be any wider than reasonably necessary to protect legitimate business interests. Examples of legitimate business interests include client, supplier or customers relationships, and confidential information.

Non-compete clauses are the most restrictive option, with employees frequently seeking to argue they prevent them from securing alternative employment during the restricted period. 

In 2020, the Government published a consultation paper exploring options for reform, including mandating that non-compete clauses be unenforceable unless the employer provides compensation for the period of restraint, or making all non-compete clauses unenforceable.

The government has now rejected the possibility of making employers pay employees during a restricted period, citing concerns around substantial costs and supressing growth. Instead, it has proposed to limit the period of non-compete restrictions to just three months.

While these are just proposals, and properly drafted non-compete clauses lasting longer than three months continue to remain effective at present, employers need to carefully consider the impact on their business if the option to have a longer non-compete period is removed. It is worth considering what other protections can be put in place to achieve as near as possible the same level of protection currently afforded by a non-compete restriction.

Contact us for advice on post-termination restrictions and updating your contracts of employment.

Employment law reforms post-Brexit

Posted on: May 17th, 2023 by Natasha Cox

On 10 May, the Government published plans to make a number of changes to EU-derived employment law following the UK’s exit from the EU.

The announcements are linked to the Government’s decision to abandon the ‘sunset’ provisions in the Retained EU Law (Revocation and Reform) Bill which, if passed into law, would have repealed all retained EU law at the end of 2023.  Instead, EU law will remain binding unless specifically revoked.

Working Time Regulations 1998 (WTR)

To reduce some of the more cumbersome regulations affecting businesses, the following proposed changes to the WTR have been announced:

  • Removing the requirement for employers to record the number of hours worked by employees to ensure they do not exceed the 48-hour per week limit;
  • Allowing holiday pay to be paid with basic pay rather than at the time the holiday is taken (rolled-up holiday) which is prohibited under EU law;
  • Merging the 4 weeks ‘normal’ holiday entitlement provided by EU legislation with the 1.6 weeks ‘additional’ entitlement to create one pot of statutory annual leave of 5.6 weeks.
Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

The Government intends to simplify TUPE rules to ease administrative obligations on employers.

It is proposed that businesses with fewer than 50 employees, transferring less than 10 employees to another business, will no longer be required to consult with employee representatives and instead can consult directly with the employees affected.

Non-Compete Clauses

Unrelated to EU law, the Government also plans to limit the duration of non-compete clauses in employment contracts to 3 months in an effort to encourage competitiveness amongst businesses and boost the economy.

This is not intended to impact upon the use of non-solicitation and confidentiality clauses, paid notice periods or gardening leave.

Comment

Given the proposals are aimed at increasing productivity by reducing administrative burdens within businesses, whilst safeguarding the rights of employees, they are likely to be welcomed by employers.

The implementation date for these changes is yet to be specified, although the intention to legislate on non-compete clauses “when parliamentary time allows” indicates the TUPE and WTR related reforms may be actioned more quickly. 

This marks the first in a series of reform proposals, so further announcements are expected to be forthcoming.