UK: Employment Update - March 2024

Key employment and business immigration developments for employers.

1. In the News

Labour's proposed employment reforms

As widely reported in the press, the next UK general election is expected before the end of 2024. While no date has been set, and the parties are yet to publish their manifestos, the Labour party has set out a number of proposed reforms to UK employment law.

Among the key proposals are plans to reform unfair dismissal laws by removing the qualifying period for claims, removing the limit on compensation and making the right available to all workers (not just employees). These changes would have a significant impact on the number of people who could claim unfair dismissal and the potential cost to employers. Currently, only employees can bring unfair dismissal claims (not all workers) and only after they have clocked up at least two years' service with their employer (in most cases). Compensation is currently also capped (in most cases) at the lower of a year's pay and £105,707 (although this is increasing to £115,115 from 6 April 2024).

Other Labour proposals include:

• ending the distinction between employees and workers, and making all employment rights available to all workers from day one;
  
  
• banning zero hours contracts and ending "fire and rehire";
  
  
• strengthening collective bargaining and trade union rights;
  
  
• introducing a "right to switch off" and work autonomously;
  
  
• improving family friendly rights by extending maternity and paternity leave, and reviewing shared parental leave;
  
  
• making it unlawful to dismiss a woman who is pregnant or on maternity leave, or for six months after her return, except in specific circumstances;

• making flexible working a day one right for all workers; and
  
  
• introducing mandatory ethnicity pay gap reporting for employers with over 250 staff.

Labour has previously said it would introduce a number of these reforms in the first 100 days in power if elected. However, business groups including the Institute of Directors and the British Chamber of Commerce have raised concerns about the speed and scope of the proposals, and the impact on businesses and the economy. We are speaking to a number of clients about the potential impact of the Labour proposals on their workforce and will be keeping a close eye as the parties publish their election manifestos. Employment Update will report developments.

2. Immigration Radar

Skilled worker salary threshold

As previously reported in Employment Update, the minimum salary threshold to qualify for a Skilled Worker visa will increase from the current £26,200 to £38,700. The Government has confirmed that this increase will take effect on 4 April 2024. Employers must pay at least the minimum salary threshold or the 'going rate' for the role (whichever is higher) in order to sponsor a Skilled Worker visa. The Government has said that those already on Skilled Worker visas will be exempt from the increase to the minimum salary threshold but will still need to meet the relevant minimum 'going rate' for their occupation type. As the specified 'going rates' for the occupation types are also being reviewed, from 4 April 2024 these rates will be set at the higher 50th percentile, instead of the current 25th percentile of annual salaries. These changes will mean employers will need to meet a higher minimum salary level when sponsoring Skilled Worker visas. Further details of the changes are expected to be released over the next few weeks ahead of the changes taking effect in April.

Shortage occupation list

On 4 April 2024, the Shortage Occupation List will be reformed and replaced by a new Immigration Salary List. The Shortage Occupation List contains a list of roles deemed by the Government to be in short supply (including a number of tech roles) that can be paid at a 20-percent discount against the minimum salary required to qualify for a Skilled Worker visa. The Government had previously announced its intention to remove this 20-percent discount. However, the Migration Advisory Committee (MAC) has now conducted a "rapid review" of the new Immigration Salary List (at the Government's request) and, interestingly, recommends retaining the 20-percent discount in view of the planned increases to minimum salary levels from April 2024 (see above). The MAC also recommends that the number of roles on the Immigration Salary List be reduced to just 21 roles (just eight percent of all Skilled Worker roles, compared to the current 30 percent on the Shortage Occupation List). A full review will follow once new Immigration Salary List is in place from 4 April 2024.

Sponsorship compliance and remote working

In recently updated guidance for sponsor employers, UK Visas and Immigration (UKVI) has clarified that sponsoring employers must continue to report any changes to the main workplace location for their sponsored employees. Employers must also continue to notify UKVI if any sponsored employees move to remote working arrangements on a permanent or full-time basis (e.g. contractual homeworkers). UKVI has also now confirmed that it reserves the right to question whether there is a genuine requirement for an individual to be sponsored to work in the UK if (for example) they could work remotely from their home country. In most cases, employers would likely still require remote workers to attend the office for in-person meetings, training sessions or for co-working from time to time so could point to such requirements as justification, if questioned in an audit.

Sponsor licence renewals

Sponsor licences are normally valid for a four-year period which can then be renewed for a further four years, on payment of an application fee. UKVI has now confirmed that effective from 6 April 2024, it will remove the requirement for sponsors to renew their licences. Instead, UKVI has automatically extended all licences which expire on or after 6 April 2024 by ten years. A sponsor licence renewal application can often trigger an audit or compliance review by UKVI. With the removal of the requirement to apply to renew licences, it is likely that ad hoc compliance reviews or audits by UKVI will increase. Sponsors should therefore ensure they maintain adequate oversight of compliance with their sponsorship duties throughout the lifecycle of their licence.

3. Case Watch

Tupe – when do discrimination claims transfer?

A recent case has considered when liability for discrimination and harassment claims transfers under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).

The employee in this case brought a claim against his employer arguing that he had suffered harassment and discrimination perpetrated by a colleague. The colleague's employment later transferred to a different company (but, importantly, the employment of the employee in the case did not also transfer). The employer argued that this was a TUPE transfer and that liability for the discrimination and harassment transferred with the colleague to the new employer. However, this argument was not raised until the first day of the Employment Tribunal hearing.

The Employment Appeal Tribunal (EAT) ruled that liability for any discrimination and harassment did not transfer with the perpetrator employee. The EAT said that liability for discrimination and harassment arises in connection with the employment of the employee bringing the claim rather than the perpetrator. Such liability would therefore only transfer under TUPE if the claimant transferred. In any event, the EAT agreed with the Employment Tribunal that the employer could not rely on the TUPE argument because it had been raised too late in the proceedings.

TUPE protects employees on the transfer of a business or part of a business, for example, on a business sale, an outsourcing or a change in outsourced service provider. Where TUPE applies, employees who are wholly or mainly assigned to the relevant part of the business transfer with the business being sold or the services being outsourced. All rights and liabilities in connection with the transferring employees also transfer to the new employer. This case confirms that where an employee has brought a discrimination or harassment claim, liability for that claim will transfer with the employee who has brought the claim, rather than with the employee who is responsible for the discrimination or harassment. An employer buying a business or taking over services in an outsourcing situation should be aware of this, and ensure that they have appropriate indemnity protection for any discrimination or harassment occurring before the date of the transfer.

SEAN PONG TYRES LTD V MOORE

Discrimination and offensive beliefs

Two recent cases highlight the care employers must exercise with balancing freedom of speech in the workplace against the potential for others to be discriminated against or harassed.

Case 1: The employee in this case was a university professor. He was dismissed for gross misconduct after he made a number of controversial comments in talks and articles about Israel and Zionism, which led to complaints from students and Jewish groups, as well as negative press. However, the employee claimed that his dismissal was unfair and discriminatory. He said the dismissal was due to his protected philosophical belief that political Zionism (i.e. the idea that a state for Jewish people should exist in previously Palestinian territory) is inherently racist, imperialistic and colonial.

The employee won his claim. The Employment Tribunal ruled that the employee was dismissed for manifesting his belief, which was a protected philosophical belief under the Equality Act 2010. While the university was aiming to protect its reputation and the rights of others, summary dismissal for gross misconduct went too far and the university should have considered action short of dismissal. This also meant the dismissal was unfair. However, the Tribunal ruled that the compensation award should be reduced by 50 percent to reflect the employee's contribution to his dismissal.

Case 2: The employee in this case was also a university professor. She held a belief that a person cannot change their biological sex and that sex should not be conflated with gender identity. Along with others, she established a research network to promote academic research into sex and gender from a critical perspective. An open letter was published, signed by over 360 colleagues, calling for the network to be shut down as being hostile and harmful to trans and non-binary people. She also received death threats and suffered symptoms of stress and PTSD. She ultimately resigned and claimed constructive dismissal after the university failed to deal with her grievance, the Vice Chancellor failed to condemn the campaign against her and the university refused to take down certain online comments. The Employment Tribunal ruled that the employee's gender critical views were protected philosophical beliefs and the university's failure to do enough to protect her constituted harassment and discrimination on the grounds of those beliefs.

The cases show that employers must tread carefully when balancing competing rights in the workplace. On the one hand, employees have a right to express their beliefs even if they are controversial and, on the other, employers must protect staff from discrimination or harassment. Employers should therefore be careful not to take disciplinary action against an employee simply because they hold or express views which others might find offensive. In contrast, it usually is possible to take action where someone expresses their beliefs in an inappropriate manner e.g. in an aggressive or particularly insensitive way. Even then, employers should ensure any action is proportionate, as Case 1 above shows. Case 2 highlights that employers must also be careful not to take sides and need to be careful to protect staff on both sides of any debate from retaliation. More importantly, the cases highlight the need for regular and effective training on diversity and inclusion to help prevent issues in the first place.

MILLER V UNIVERSITY OF BRISTOL; PHOENIX V THE OPEN UNIVERSITY

4. New Law

Unfair dismissal compensation

On 6 April 2024, the maximum compensatory award for unfair dismissal will increase from the lower of a year's pay and £105,707 to the lower of a year's pay and £115,115.

Statutory redundancy pay

On 6 April 2024, the maximum amount of a week's pay, for the purposes of calculating statutory redundancy pay (among other things) will increase from £643 to £700 per week. The maximum statutory redundancy payment will therefore increase from £19,290 to £21,000 for redundancies taking effect on or after 6 April 2024.

Statutory sick pay

On 6 April 2024, the weekly rate of statutory sick pay will increase from £109.40 per week to £116.75 per week.

Statutory maternity, paternity, adoption and shared parental pay

On 6 April 2024, the weekly rate of statutory maternity, paternity, adoption and shared parental pay will increase from £172.48 to £184.03 per week.

Flexible working and family friendly changes

On 6 April 2024, a number of changes to flexible working and family friendly rights will come into effect:

• the right to request flexible working will become a "day one" right and employers will have a shorter period to respond to requests;
  
  
• a new right to unpaid carer's leave will come into force for employees with caring responsibilities;
  
  
• redundancy protection will be extended for pregnant employees and employees returning from maternity, adoption or shared parental leave; and
  
  
• changes will be made to the way statutory paternity leave is exercised.

Employers should ensure their flexible working and family friendly policies are updated to reflect the changes. For more details of the changes see the January 2024 Employment Update.

Sexual harassment

From 26 October 2024, employers in the UK will come under a new positive duty to take reasonable steps to prevent workplace sexual harassment. This new duty will apply to all employers regardless of their size or sector. Failure to do so could expose the employer to an uplift in compensation of up to 25 percent in a successful claim or – even where there is no claim – potential enforcement action by the Equality and Human Rights Commission (EHRC). The EHRC is updating its statutory guidance to take account of the new duty but employers should begin preparing now by reviewing anti-harassment policies and training, thinking about implementing a standalone sexual harassment policy and also considering a wider culture audit to identify risk areas. For more information, please see our briefing on the new duty.

Holiday changes

A number of changes are coming into force in relation to holiday entitlement and pay for holiday years starting on or after 1 April 2024. The main changes affect workers with irregular hours (such as casuals, zero hours workers and agency workers) and workers who work part of the year (such as term-time workers). For such workers, holiday will accrue at the rate of 12.07 percent of hours worked and employers will be allowed to pay "rolled up" holiday pay, by including an element for holiday pay in the worker's hourly rate. At the same time, a number of other changes to the holiday rules will also be implemented for all workers, confirming how holiday pay is calculated and confirming the circumstances in which statutory holiday entitlement may be carried forward from year to year. Our November 2023 Employment Update has more details.

Corporate governance for listed companies

The Financial Reporting Council has published a revised UK Corporate Governance Code, which applies to financial years beginning on or after 1 January 2025. The Code contains good governance principles and provisions which apply on a 'comply or explain' basis to all companies with a UK premium listing (whether incorporated in the UK or elsewhere). The key changes from a people perspective are that the revised Code:

• requires directors' contracts and/or other agreements or documents which cover director remuneration to include provisions on malus (the ability to adjust remuneration awards before they vest) and clawback (the ability to recover remuneration awards once vested or paid out);
  
  
• requires board appointments to promote diversity, inclusion and equal opportunity beyond gender and social or ethnic backgrounds;
  
  
• requires boards to assess and monitor not just culture but how the company's desired culture has been embedded.

In view of the changes, companies subject to the Code should review their initiatives on diversity and inclusion, as well service agreements and incentive arrangements (both in relation to malus and clawback and more generally to ensure they are up-to-date and fit for purpose). For more information on the revised UK Corporate Governance Code, please read our briefing.

5. Consultations and Guidance

Employment tribunal fees

The UK Government has launched a consultation paper on proposals to reintroduce fees in the Employment Tribunal and Employment Appeal Tribunal (EAT). The proposal is for a flat fee of £55 to bring a tribunal claim or lodge an appeal. The same fee would apply regardless of the type of claim, its value or the number of claimants. There would be no separate hearing fees, so the £55 would cover the full tribunal process. Under the proposal, there would be a fee remission system for those unable to pay. Tribunal claims to establish a right to payments from the National Insurance Fund (e.g. where the employer is insolvent) would also be exempt from the fee.

Fees were previously in place in the Employment Tribunal and EAT from July 2013 until July 2017. However, the fee regime was abolished in 2017 after the Supreme Court ruled it to be unlawful. Given the level of fees required, the old fee structure was deemed to prevent access to justice. It was also ruled to be discriminatory against women, who were more likely to bring discrimination claims, which attracted a higher fee. The Government says it has taken all of this into account in developing its new proposal to introduce a 'modest' £55 flat fee. The Government consultation closes on 25 March 2024 and, if implemented, fees may be introduced as early as November 2024. Employment Update will report developments.

Fire and rehire

The UK Government has promised a statutory code of practice on dismissal and re-engagement (or "fire and rehire"), a tactic used to make changes to terms and conditions of employment when an employer is unable to reach agreement with employees. A draft code was published in 2023 for consultation and the Government has now responded to that consultation with a revised draft code of practice. The revised draft sets out the steps employers should take when considering using dismissal and re-engagement to make changes to terms and conditions. The revised draft has been streamlined but continues to emphasise that dismissal and re-engagement should be used as a last resort, only after meaningful consultation and consideration of all the alternatives. The code of practice now needs to be approved by parliament but is expected to come into force by summer 2024. Once in force, Employment Tribunals will have the power to increase compensation by up to 25 percent where an employer unreasonably fails to follow it. Employment Update will report developments.

Menopause

The Equality and Human Rights Commission (EHRC) has published guidance for employers on menopause and the workplace. The guidance explains what menopause and perimenopause are and how the associated symptoms can impact on workers. It highlights the obligations on employers to protect staff from discrimination, harassment and victimisation particularly on the grounds of sex, age and disability. As menopausal or perimenopausal symptoms could give rise to a disability under the Equality Act 2010, the guidance explains the employer's duty to make reasonable adjustments and gives examples of common adjustments. It is increasingly common for employers to have a menopause policy which encourages open conversations about the menopause, provides guidance and highlights the support available to staff. Please speak to your usual Employment department contact if you are thinking about implementing a policy.

6. Community Engagement

In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Refugees at Home, A4ID and PulpaTronics.

7. Our Work

Since the last Employment Update, our work has included:

• advising on options around changing terms and conditions following a TUPE transfer
  
  
• in conjunction with our Financial Services and Markets team, running a training session for a global HR team on UK employment law and its intersection with UK FCA regulatory issues
  
  
• supporting a client with injunction applications to ensure the return of confidential information taken by a departing employee
  
  
• carrying out a workplace investigation for a FTSE250 company
  
  
• preparing for a whistleblowing interim relief application
  
  
• undertaking an independent investigation for a major bank involving whistleblowing and disability discrimination
  
  
• advising a listed company on a senior executive exit followingserious misconduct.

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.