UK:
UK Employment Law Update – July 2022
04 August 2022
Eversheds Sutherland
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Quarterly UK employment update
April to June 2022 – a backward
glance
|
Development |
Impact on employers |
Updated COVID-19
guidance for England, published on 1 April 2022, reflects a final
phase of lifting restrictions. In the context of "Living with
Covid", employers are no longer required to explicitly
consider the virus in their statutory health and safety risk
assessments (save for limited exceptions). New Guidance for workplaces is aimed at employers
and managers. |
Employers
remain under a legal obligation to protect health, safety and
welfare at work, including from respiratory infections such as
COVID-19 and the flu. Policy decisions regarding attendance at
work, safety measures and pay now fall within these broad health
protection responsibilities, supported by risk assessments. Worker
representatives should continue to be consulted over new measures
or changes. |
NLW and NMW rates
increase from 1 April, with the NLW increasing from £8.91 to
£9.50 and the 21-22 year old rate from £8.36 to
£9.18. The last few years have seen a significant increase in
these statutory wage rates and new resourcing for enforcement. |
Many employers assume that setting
the correct minimum wage rate is enough, often overlooking the
complex rules regulating how it is applied in practice and the
risks of a shortfall. HMRC's enforcement policy makes no
distinction between deliberate and accidental breaches and HMRC
investigations are expected to increase. See our guide to common NMW pitfalls for
employers. |
Since 6 April 2022, HMRC
enforcement of the off-payroll working rules (known as
IR35) is being pursued more robustly, following a
more lenient approach during last year. (IR35 is intended to apply
similar income tax liability and national insurance contributions
to in-scope contractors and freelancers as applies to
employees). |
With the end of HMRC's
'light touch' enforcement, organisations should review
their processes for hiring contract labour, or risk HMRC
investigation and, potentially, significant tax liabilities and
penalties. As a minimum, a review should ensure that: reasonable
care has been taken in status determinations; IR35 processes are
compliant; and, labour supply chains are audited for risk (read our Alert). |
Reversing a significant decision by
the EAT, the CA in Mercer v Alternative Future Group has
confirmed that workers are not protected against detriments imposed
by their employer in response to industrial
action, such as being disciplined for leaving a shift to
take part in strike action. |
This is a significant reversal of
the EAT's decision and is particularly relevant where an
employer contemplates taking action against those striking, other
than deducting pay for work not done during the strike. It has been
reported that the trade union involved will lodge an appeal
application. |
From 6 April the statutory
compensation limits in the ET increased, with the limit on
a week's pay rising to £571 (from £544) and maximum
compensatory award for unfair dismissal rising to £93,878
(from £89,493). Guidance on Vento bands for injury to
feelings and psychiatric injury awards has also been updated, with
awards for less serious cases rising to between £990 and
£9,900 and for very serious cases to between £29,600
and £49,300. |
Employers must ensure that any pay
calculations have met these rates and that policies and practices
have been updated. |
A new "roadmap" for ET
proceedings in 2022/23 has confirmed the retention of
telephone or video hearings for preliminary matters, wage claims
and straightforward unfair dismissal cases, subject to tribunal
discretion, with in-person hearings reserved for more complex
cases. |
Continuing to conduct hearings by
telephone or video should help to reduce a backlog of cases but
delays in cases being heard remain. As well as ensuring access to
suitable, working IT equipment and quiet space for virtual
hearings, employers should give thought to early collation of
evidence and longer term witness availability. (See also our Guide to Remote Hearings) |
The EAT upheld an ET decision in
Rodgers v Leeds Laser Cutting Ltd that the dismissal of an
employee who declined to come into work, believing that
COVID-19 presented circumstances of serious and
imminent danger "all around" but not specifically in his
workplace, was not automatically unfair. |
Although specific on its facts, the
judgement provides useful clarifications concerning automatically
unfair dismissal related to H&S, including that a reasonable
belief in risk of serious harm can relate to circumstances outside
of the workplace. Employers should take this into account in
H&S policy and enforcement. |
July to September 2022 – short range
forecast
|
Development |
Impact on
employers |
As expected,
this year's Queen's Speech did not include the awaited
Employment Bill. Progress of various government
employment law proposals (such as for the extension of flexible
working, more predictable working and the creation of a single
enforcement body) is therefore uncertain but not ruled out in the
coming months. |
Government comment around the
Queen's Speech suggests a pause in progressing many employment
law proposals and taking stock but does not necessarily mean they
are off the agenda. Employers should continue to monitor
developments and further clarifications later in the year. |
Further developments with the
Gov't National Disability Strategy are expected, including a
Response to consultation on disability workforce
reporting and recommendations for collating and disclosing
workplace disability data. |
Whilst mandatory reporting of
disability across the workforce seems unlikely in the short term,
pressure upon government and employers is growing. Proposals for a
more robust approach to voluntary reporting are therefore expected,
along with guidance for employers over how data can be
collated. |
Having confirmed that it will not
introduce mandatory ethnicity pay reporting, the
Gov't is expected to publish guidance this summer (read our Alert). |
The guidance is expected to assist
employers in understanding and tackling pay gaps within their
organisations and in building trust with employees. What
information employers are encouraged to collect and disclose will
be an essential starting point. |
The Gov't is expected to
publish a new Statutory Code of Practice to detail practical steps,
including the need for meaningful consultation, when employers
change employment terms by dismissing and
re-engaging (termed 'fire and rehire'). Acas has
also published guidance. |
Details of the Code are awaited.
Tribunals will be required to take the Code into account and will
have the power to apply a compensation uplift of up to 25% for
non-compliance. Increasingly, "fire and re-hire"
strategies also risk reputational, employee relations and legal
challenges. |
A SC judgment is expected in
Harpur Trust v Brazel which will decide what amounts to
appropriate holiday pay for part-time term-time
workers and whether the CA was correct to rule that a 12.07% cap of
annualised hours was unlawful. |
The outcome of this appeal will
have implications for those workers who have no normal working
hours - particularly for those who work on a term-time basis or
intermittently throughout the year (read our Alert) |
September to December 2022 - long range
forecast
|
Development |
Impact on
employers |
A new central registry has been
created for modern slavery statements but the Gov't has also
pledged to legislate to strengthen and expand modern
slavery reporting requirements, including introducing
civil penalties for non-compliance. Changes in EU legislation are
also proposed and will affect UK employers with operations
abroad. |
The pandemic and conflict in Europe
have increased modern slavery and other exploitation risks in UK
and global supply chains. Anti-slavery training, risk assessments,
due diligence and other initiatives remain vital to compliance, ESG
objectives and reputational risk but will also facilitate reporting
requirements in due course. |
Legislation which will extend the
ban on exclusivity clauses and protection from
related detriment is expected for individuals whose guaranteed
weekly income is below or equivalent to the Lower Earnings Limit
(currently £123 a week). |
In anticipation of this change,
employers are advised to audit and review use of exclusivity
clauses in the contracts of low income workers. |
The CA is expected to hand down its
judgement in Amdocs Systems Group Ltd v Langton. A key
issue is the transfer of contractual benefits
where insurance underwriting of the benefit has lapsed. |
However the CA decodes, employers
involved in TUPE transfers should carefully check the status of
benefits provided by the transferor. |
A new Data Reform
Bill may be published, in line with a Gov't announcement in
this year's Queen's Speech and a declared aim of
modernising the Information Commissioner's Office;
strengthening its powers and reducing data burdens on
business. |
The impact of Gov't proposals
are currently unclear. Further consultation may follow. However,
the removal of mandatory impact assessments and a requirement of
data protection officers, post Brexit, seem amongst likely
proposals. |
Further news on the establishment
of a single enforcement body, to improve the
enforcement of employment rights and with new powers and penalties,
is awaited. Legislation to bring the body into effect has been
delayed but could be revisited by the end of the year. |
More proactive enforcement of
shortfalls in NMW, holiday pay, sick pay and the rights of agency
workers would prove significant for employers. However, HMRC
enforcement is already increasing and employers should continue to
audit their compliance with pay practices, to avoid penalty and
reputational damage. |
Legislation that would have
required employers to pass on all tips to workers
has been postponed or abandoned but a Statutory Code of Practice
may be introduced to address this issue. |
If and when these changes are
brought in, businesses that currently use discretionary service
charges to offset expenses, or make deductions from tips, will face
increased costs. |
The EU is seeking to enact
legally-binding due diligence and directors'
duties in relation to the environment and human rights -
duties that would apply to some UK companies that operate in the
EU. |
While the draft proposal is
unlikely to be implemented before 2024 at the earliest, the legal
duties envisaged for supply chains (and the potential
penalties/liabilities) would be significant. Reflecting the
increasing importance of the ESG agenda which transcends borders,
companies should take note of this direction of travel. |
NB. Employment law is a devolved matter in Northern Ireland and
the issues set out above may not all apply in NI. For NI specific
advice contact our
Belfast office.
For further information, please contact:
|
Key |
CA |
Court of Appeal |
EAT |
Employment Appeal Tribunal |
ESG |
Environmental, Social and Governance |
ET |
Employment Tribunal |
Gov't |
The UK Government |
HMRC |
Her Majesty's Revenue and Customs |
NLW |
National Living Wage |
NMW |
National Minimum Wage |
H&S
|
Health and Safety |
SC |
Supreme Court |
TUPE |
The Transfer of Undertakings (Protection of Employment)
Regulations 2006
|
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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