European Union: Employment Essentials Year Review Part 1: Our 2023 Top Legislative Picks

Significant legislative changes to holiday rights and new strike action restrictions are on their way. While no big Employment Bill, the Government opted for more of a Blue Peter Approach – here's one prepared earlier. 2023 has seen an unprecedented number of Private Members' Bills adopted by the Government to introduce new rights largely around work/life balance-related measures.

Later in Part 2 we will take a run through the 2023 case law lessons. For now, in Part 1 we take a festival countdown of our 2023 legislative top 15 hits, drawing on a little Swedish inspiration – Here we go again...

1. Trade union subscriptions
2. Pensions auto-enrolment
3. Corporate fraud
4. Spent convictions
5. Allocation of tips
6. Strike minimum service levels
7. Neo-natal care leave
8. Carer's leave
9. Pregnancy and maternity redundancy protection
10. Flexible working requests
11. Predictable hours requests
12. Duty to prevent sexual harassment
13. Retained EU equality general principles
14. (a) TUPE and (b) Holiday leave and pay
15. Revocation of EU retained law

Number 15: "Cheq-offitita"

Scraping in at number 15, is one for the public sector. The Trade Union Act 2016 (commencement No 6) Regulations 2023 made on 6 November. Together with the corresponding draft Trade Union (Subscriptions from Wages in the Public sector) Regulations 2023, the long foretold restrictions to trade union check-off in the public sector are expected to come into force from 9 May 2024. Check-off systems for union dues will only be permissible where union members have the option to use another pay method and the union makes a reasonable payment to the employer for the operation of the system.

Number 14: "Voulez-Vous une Pension"

At number 14 The Pensions (Extension of Automatic Enrolment) Act 2023 was passed on 18 September and gives the Secretary of State for Work and Pensions power to make regulations to:

• decrease the age for automatic enrolment in workplace pension schemes. The Government intends to use this power to reduce the lower age limit from 22 to 18; and
• reduce or remove the lower earnings limit of the qualifying earnings band, so that contributions are calculated from the first pound earned.

This significantly increases the scope of auto-enrolment. Further consultation on implementing the measure is expected.

Number 13: "Fraudando"

At number 13, The Economic Crime and Corporate Transparency Act 2023 introduces a broad package of measures to tackle economic crime more effectively. Of particular note from an employer's viewpoint:

• The introduction of a failure to prevent fraud offence, imposing a criminal liability on a large organisation that fails to prevent fraud intended to benefit the organisation, with a defence of adequate procedures in place to prevent fraud.
• A change to corporate criminal liability by expanding the class of persons whose conduct can be attributed to the company. An organisation will be guilty of an offence where a "senior manager... acting within the actual or apparent scope of their authority commits a relevant offence".

Many of the reforms under the Act will be effected through extensive amendments to the Companies Act 2006 and implemented through (as yet unpublished) secondary legislation. There is no current date set for the changes to come into force.

Number 12: "I Do, I Do, I Do, I Do, I Don't have to tell you"

At number 12, on 28 October 2023, The Police, Crime, Sentencing and Courts Act 2022 (Commencement No. 8) Regulations 2023 amended the Rehabilitation of Offenders Act 1974 to shorten the length of time some criminal convictions must be declared to employers and introduce a rehabilitation period for some custodial sentences of over four years, which were previously unable to become "spent". This is now in force, so ensure your record check processes are up to date.

Number 11: "The Waiter takes it all"

At number 11, one for the hospitality sector, The Employment (Allocation of Tips) Act 2023 was passed on 2 May and requires employers to fairly allocate tips and pay them to workers in full within a month of payment by the customer. Where tips are paid on more than an occasional and exceptional basis, an employer must have a written policy setting out how qualifying tips are dealt with. The Act will be supported by a new statutory Code of Practice, which will provide businesses and staff with advice on how tips should be distributed. The measures are expected to come into force some time on, or after, 2 May 2024, following a further consultation.

Number 10: "Gimme! Gimme! Gimme! the names of your MSL workers"

Starting off the top 10, is The Strikes (Minimum Service Levels) Act 2023 passed on 20 July. Only coming in at number 10 as it's highly sector specific, and just how long they will last when in force will very much depend on the timing and outcome of the next election.

This much commented upon Act allows the Secretary of State to make 'minimum service level (MSL) regulations' for strikes in 'relevant services' in the fields of health, transport, education, fire and rescue, border control, and nuclear decommissioning and radioactive waste management services.

The accompanying Statutory Code of Practice on the "reasonable steps" a trade union should take to comply with the Act came into effect on 8 December (The Code of Practice (Reasonable Steps for Trade Unions) Order 2023). As for the various sets of sector regulations, these are being introduced in batches. Also brought into force on 8 December are the:

• Strikes (Minimum Service Levels: Passenger Railway Services) Regulations 2023.
• Strikes (Minimum Service Levels: NHS Ambulance Services and the NHS Patient Transport Service) Regulations 2023.

And from 12 December:

• Strikes (Minimum Service Levels: Border Security) Regulations 2023.

Number 9: "Mamma Neo"

We begin a run of family-friendly measures. At number 9, The Neonatal Care (Leave and Pay) Act 2023 was passed on 24 May. The Act enables eligible employed parents whose newborn baby is admitted to neonatal care to take up to 12 weeks of paid leave. This is in addition to other leave entitlements such as maternity and paternity leave.

As for implementation 'in due course', with amendments needed to several parts of tax legislation, as well as HMRC and payroll systems, it is not expected to be brought into force before April 2025. Many of the necessary legislative changes to implement the Act will be via changes to the Social Security Contributions and Benefits Act 1992 through the introduction of new sections 171ZZ16 to 171ZZ24 – the sort of numbering suggesting it may be time for the 1992 Act to be rewritten and simplified!

Number 8: "Caring Queen"

At number 8, The Carer's Leave Act 2023 was passed on 24 May and the corresponding Carer's Leave Regulations 2024 published on 12 December. From 6 April 2024, employees who are caring for a dependent with a long-term care need (not ordinary childcare needs) will have a new statutory entitlement to one week of unpaid carer's leave per year. The leave can be taken in one block or in blocks of no less than half a working day.

Number 7: "Do the Mothers Know"

At number 7, The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 was passed on 24 May and the corresponding Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024 published on 12 December. Research has shown that pregnant women and women who have recently returned from maternity leave are often the most vulnerable to redundancy selection. To combat this, the Act provides for the extension of existing redundancy protections (priority for suitable alternative employment) while on maternity, adoption or shared parental leave to additionally cover the pregnancy period and 'a period of time' after a new parent has returned to work.

For pregnant employees, the protected period begins from the date the employee notifies the employer of her pregnancy until the statutory maternity leave period commences (which already has the corresponding right), or until the end of the pregnancy. For those returning from a period of maternity leave, adoption leave or shared parental leave, the protected period will last until 18 months, beginning with the first day of the expected week of childbirth or the date placed for adoption (essentially an additional six-month period). For those taking shared parental leave who have not taken maternity or adoption leave, there is a six-week threshold of continuous leave requirement.

As for implementation, the extended protected period for pregnancy applies where the employer is informed of the pregnancy on or after 6 April 2024. As for the extension after a period of maternity, adoption or shared parental leave, the extended protected period applies where the employee's leave period ends on, or after, 6 April 2024.

Number 6: "Take a Flexible Chance on Me"

At number 6, The Flexible Working (Amendment) Regulations 2023 were published on 11 December. From 6 April 2024, the existing 26-week qualifying period for making a flexible working request is removed, making the right to request flexible working a day-one right. And more tweaks are on their way.

The Employment Relations (Flexible Working) Act 2023 was passed on 20 July. When its provisions are brought into force, employees' rights to request flexible working will be further enhanced by:

1. Extending the number of flexible working requests an employee can make during a 12-month period from one to two.
2. Requiring an employer to consult with an employee, as a means of exploring the available options, before refusing a flexible working request (although there is no legislative de minimis requirement of what that 'consultation' needs to include).
3. Requiring employers to respond within two months, rather than the current three-month period, if no extension is agreed.
4. Removing the requirement for the employee to set out how the effect of their request may be dealt with by their employer.

The secondary legislation implementing these further changes is expected sometime in 2024, with 6 April being the best guess.

Number 5: "Knowing me, knowing your work patterns"

At number 5, The Workers (Predictable Terms and Conditions) Act 2023 was passed on 18 September. The Act introduces a new statutory right for workers to request a more predictable working pattern where:

• There is a lack of predictability as regards any part of their work pattern (for example, the hours or times they work). Fixed term contracts of 12 months or less are presumed to lack predictability.
• The change relates to their work pattern.
• Their purpose in applying for the change is to get a more predictable work pattern.

It is expected that a 26-week service requirement will apply via the subsequent implementing regulations. However, given the aim of the legislation, workers will not have had to have worked continuously during that period.

The new law will also apply to agency workers who will be able to apply to either the temporary work agency or the hirer to request a more predictable working pattern, provided they meet certain qualifying conditions.

The Act mirrors the statutory framework for flexible working applications (as to be amended) in several respects; notably, employers will be required to deal with any requests in a reasonable manner, notify the worker of their decision within one month and a maximum of two applications may be made in a 12-month period. Also, like the position in relation to flexible working requests, this is a right "to ask", not a right "to necessarily get".

Previously considered measures such as compensation for shift cancellation or curtailment without reasonable notice are not included in the Act.

The secondary legislation implementing these changes is expected to come into force sometime in 2024, with 6 April 2024 being a good bet.

Number 4: "Preventative SOS"

At number 4, The Worker Protection (Amendment of Equality Act 2010) Act 2023 was passed on 26 October and is due to come into force one year from then. While at one time a contender for our top three, the Act was significantly diluted as it passed through Parliament.

The 2022 draft included two main provisions:

• Introducing a duty on employers to take all reasonable steps to prevent sexual harassment of their employees, and provides for a 25% compensation uplift in sexual harassment cases where there has been a breach of the employers' duty.
• Re-introducing protection from third-party harassment, subject to an "all reasonable steps" defence. Unlike the new preventative duty, this is not limited to sexual harassment, but also covers the other relevant protected characteristics.

During a difficult passage through Parliament, the provisions were very significantly diluted:

• The provisions for the re-introducing employer liability for the harassment of employees by third parties in the course of employment have been removed altogether. So the position remains as it has been since the removal of the third-party harassment protections back in 2013.
• In relation to the preventative duty carrying a potential 25% compensation uplift in sexual harassment cases, employers will only be required to take "reasonable steps", rather than "all reasonable steps", to protect employees from sexual harassment in the course of their employment.

When this Act is implemented, it will remain the case that to establish the existing statutory defence in a sexual harassment claim involving harassment by a colleague, the employer will still need to show that it took "all reasonable steps" to prevent the sexual harassment. But where a claim is upheld and the employer fails to establish the statutory defence, the employer may still potentially be able to avoid a "failure to prevent claim" and the corresponding 25% uplift to compensation if the employer can show it took "reasonable steps" to prevent sexual harassment of employees – a lower threshold. Employers need to think now about what steps they currently have in place and any further measures they can put in place with a good paper trail.

Number 3: "Thank EU for the Case law"

We begin our top three with The Equality Act 2010 (Amendment) Regulations 2023 and related The Pensions Act 2004 and Equality Act 2010 (Amendment) Equal Treatment by Occupational Pensions Schemes) Regulations 2023. Admittedly, an unusual choice as both are about maintaining the status quo, rather than new measures. Nevertheless, they are significant pieces of legislation, as without them six key equality protections that emerged from EU case law and general principles would be lost on 1 January 2024 (see below).

The Regulations amend the Equality Act 2010 to preserve:

1. The 'single source' test for establishing an equal pay comparison.
   A new section 79(4A) will provide that an equal pay comparison can be made where there is a single body that is responsible for setting or continuing the terms on which the claimant and comparator are employed, and which is in a position to ensure equal treatment between them.
   
2. The right to claim indirect discrimination by association.
   A new section 19A will provide that indirect discrimination can be established if the claimant is put (or would be put) at 'substantively the same disadvantage', as persons who share the relevant protected characteristic.
   
3. The definition of disability and participation in working life.
   A new paragraph 5A will be inserted into Schedule 1 to provide that the reference to a person's ability to carry out normal day-to-day activities is to be taken as including a reference to the person's ability to participate fully and effectively in working life on an equal basis with other workers.
   
4. Pregnancy, maternity and breastfeeding.
   Retention of aspects in relation to pregnancy, maternity and breastfeeding:
   • Women can continue to receive special treatment in connection with maternity (s13).
   • Protections for women against less favourable treatment at work because they are breastfeeding (s13).
   • Protections for women against unfavourable treatment after they return from maternity leave where that treatment is in connection with a pregnancy or a pregnancy-related illness occurring before their return(s18).
   • Protections for women against pregnancy and maternity discrimination where they do not have a statutory right to maternity leave, but have similar rights under alternative occupational schemes (s18).
     
5. Protections against discriminatory recruitment conditions.
   A new section 60, so that the making of public discriminatory statements by an employer about access to opportunities in their organisation, may amount to direct discrimination; even in the absence of an active recruitment process and without an identifiable victim.
   
6. Pensions equality.
   Preservation of rights in relation to equalisation of guaranteed minimum pensions between men and women, and the provision of survivor benefits for couples in same sex legal relationships (ss 64-67 and para 18 Sch 9).

Number 2: "Super TUPE" & "Holiday Money, Money, Money" (a double 'A' side)

The legislation titles we have had so far may be a little dry, but at least largely do what they say on the tin. At number 2, we have a highly significant new employment law act, despite its generic title, The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023.

"Super TUPE"

The existing exception allowing micro businesses to consult directly with affected employees if there are no existing appropriate representatives in place (for example, if there is no recognised trade union) is being expanded. For a TUPE transfer taking place on or after 1 July 2024, the exception will also apply where:

• "the employer employs fewer than 50 employees"; or
• "there are fewer than 10 transferring employees".

The existing requirement that there are no existing appropriate representatives remains.

"Holiday Money, Money, Money"

While the majority of employment rights are not being revoked or amended on 1 January 2024, holiday accrual and pay is the big exception. Significant changes are imminent to codify the two decades of extensive case law and introduce changes to ease application in light of modern flexible working practices.

The initial hope of merging the existing two pots of annual leave – regulation 13 leave being four weeks and regulation 13A leave being an additional 1.6 weeks – with their differing carry over and pay calculation rules, has proved a step too far. Nevertheless, some highly significant changes are coming, resulting in three potential holiday money pots.

From 1 January 2024:

1. Codification of carry over rights: to reflect various pieces of retained EU case law (including the differing rules for reg 13 leave, reg 13A leave and the new reg 15B leave) and repeal of the COVID-19 carry-over provisions.
2. Codification of "normal pay": provisions as to what constitutes "normal remuneration" for the purposes of reg 13 leave and the new reg 15B leave for irregular hour workers and part-year workers.
3. Clarification of record keeping requirements.

And for leave years beginning on or after 1 April 2024

4. Two new classes of workers: "irregular hour workers" and "part-year workers".
5. Introduction of new annual leave entitlement provisions for irregular hour workers and part year workers ('reg 15B leave'), by introducing an accrual method to calculate entitlement at 12.07% of hours worked in a pay period in the first year of employment and beyond.
6. Introduction of permissible rolled-up holiday pay for irregular hour workers and part-year workers only.

Number 1: "WaterREUL"

At number 1, The Retained EU Law (Revocation and Reform) Act 2023 known as 'REUL' was passed on 26 June, with its impact coming into force from 1 January 2024. Taking the number one position for the shear breadth of its impact. On one side of the coin, a sunsetting of Retained EU law supremacy, on the other side the dawning of an era of legal uncertainty.

When originally drafted, the vast majority of EU law was to be automatically revoked at the end of 2023, unless a statutory instrument was passed to preserve it. In the final version of the Act, that position was essentially reversed. Instead, everything will continue to be retained (at least for the moment) unless specifically revoked/amended.

The vast majority of employment law is being retained, save for significant changes to holiday entitlement and pay under the WTR 1998 and minor changes to the TUPE 2006 collective consultation requirements (see above). While legal uncertainty armageddon has been averted, do not underestimate the impact this legislation may have on legal certainty going forward.

REUL abolishes the principle of supremacy of EU law. This means the rules that give retained EU law priority over conflicting UK law passed or made before the end of the Brexit transition period will no longer apply. REUL also abolishes the general principles of EU law, unless saved by new domestic legislation (see number three above). In addition, the UK courts and tribunals will have greater discretion to depart from retained EU case law (to be known as assimilated law), including the ability for tribunals to refer questions on whether to depart from previously binding case law. This all means uncertainty. The meaning of a legal right in December 2023 may have a different interpretation and outcome when arising in January 2024. For example, the recent Supreme Court judgment in Chief Constable of the Police Service of Northern Ireland and another v Agnew and others which largely turned on the principle of equivalence, could have been affected by this change if brought in 2024 (see Underlying vice: what can amount to a series of holiday pay unlawful deductions?).

In general, the potential for increased litigation with lengthy appeals as both employees/workers and employers seek to overturn the effect of long-standing embedded EU case law seems inevitable.

In part 2, with more bad puns to hand, we romp through the notable 2023 case law developments to remember.