Employment Update - November 2024

1 In the News

EMPLOYMENT RIGHTS BILL

In October 2024, the UK Government published the much-anticipated Employment Rights Bill. Once in force, the Bill will make a number of significant changes to UK employment law. However, the majority of changes will not come into force until 2026, including the highly-publicised removal of the unfair dismissal qualifying period, which comes into force in Autumn 2026.

The key changes include:

• Unfair dismissal: removal of the two-year qualifying service requirement for unfair dismissal claims, with a statutory probationary period (possibly up to 9 months) during which a light touch dismissal process will apply;
• Flexible working: there will be a new requirement for employers to demonstrate that any rejection of a flexible working request is reasonable;
• Zero hours contracts: zero hours and casual workers will have new rights to move to a regular hours contract, and receive notice of shifts and compensation for cancellation;
• Harassment: the new employer duty to prevent workplace sexual harassment will be strengthened; sexual harassment complaints will be classed as whistleblowing disclosures; and employer liability for third party harassment will be introduced;
• Family rights: it will be unlawful to dismiss during pregnancy or maternity, adoption or shared parental leave, or within six months of return to work; paternity and unpaid parental leave will become day one rights;
• Fire and rehire: employers will be prevented from using "fire and rehire" to change employees' terms except in very limited circumstances where there is no viable alternative;
• Collective redundancies: the 20-redundancy threshold for collective consultation will be applied to the whole business (on a per entity basis), not just to each site;
• Equality reporting: large employers will be required to publish menopause and gender pay gap action plans alongside the current gender pay gap reporting requirements;
• Trade unions: employers will have to provide employees with information about trade union rights; trade unions will be given rights to access workplaces for recruitment and organising; the trade union recognition process will be simplified and strike ballot requirements will be made easier;
• Enforcement: there will be a new statutory body, the Fair Work Agency, to enforce certain employment rights.

The Government has begun consulting on some of the measures in the Bill (see "Consultations" below) and plans to consult on further details during 2025. It has also published factsheets on various aspects of the Bill.

While the majority of changes do not come into force until 2026, there are a number of steps employers can take during 2025 to be prepared. Our briefing Employment Rights Bill: What does it mean for employers? summarises the key changes and includes key action points for employers.

2. Immigration Radar

BUSINESS VISITORS

The UK Government is slowly introducing a new Electronic Travel Authorisation (ETA) system (similar to the ESTA system in the US). It will apply to everyone (except British or Irish nationals) and will mean an ETA or visa will be required for travel to the UK. The ETA currently applies to nationals of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. From 8 January 2025, it will apply to all non-EU nationals (including individuals from the US, Canada and Australia) and, from 2 April 2025, it will be extended to EU nationals. Applications for ETAs usually take around three working days to process and employers will need to factor this in for any employees making short business trips to the UK.

BIOMETRIC RESIDENCE PERMITS

As of 31 October 2024, the UKVI are no longer issuing biometric residence permits ('BRPs') to visa applicants as part of their transition to a fully digital system. Instead, individuals will only be issued with an online record of their immigration status known as an 'eVisa'. Employers will need to conduct online right to work checks for such employees by obtaining a share code from the individual.

3. Case Watch

HARASSMENT – HOW FAR DOES THE PROTECTION GO?

The Employment Appeal Tribunal has upheld a finding that referring to a man as "bald" can constitute sex-based harassment.

The employee in this case was an electrician in a small family business. He had an altercation with a colleague one day where the colleague called him a "bald c***" and threatened him with violence. The employee brought a number of claims, including a claim that this amounted to harassment.

The Employment Tribunal found that the "bald" comment amounted to unlawful harassment on the grounds of sex. It was unwanted and was intended to violate the employee's dignity or create an intimidating, hostile, degrading, humiliating or offensive environment for him. The Tribunal also found that baldness is much more prevalent in men than women, so the term "bald" is inherently related to sex. The Employment Appeal Tribunal agreed and confirmed that it was not necessary to show baldness was exclusive to men in order for the comment to relate to sex.

The case is a reminder of how wide the protection from harassment can extend. As this case shows, a one-off comment or incident can be enough. Although the perpetrator in this case intended to offend or intimidate, such an intention is not necessary. For a comment to amount to harassment, it is enough if it has the effect of violating someone's dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment. To be unlawful, the comment must also relate to a protected characteristic. As this case shows, a comment about someone's appearance could relate to a protected characteristic such as sex or race if the comment is about a feature which is more prevalent in that particular sex or race. The case highlights the need for employers to ensure staff receive regular training on the scope and nuances of harassment, and the importance of creating an inclusive workplace culture.

FINN V THE BRITISH BUNG MANUFACTURING COMPANY LIMITED

SETTLEMENT DISCUSSIONS – ARE THEY OFF THE RECORD?

The employee in this case was a branch manager at a tyre and auto repair company. The employer decided it no longer needed a branch manager, after his work had been reallocated during a period of absence. The employee was invited to a meeting, ostensibly to discuss his return to work, but at which he was offered an exit package. He was given 48 hours to accept the offer, failing which the company said it would commence a redundancy consultation. He did not accept and was ultimately dismissed for redundancy. He brought an unfair dismissal claim and tried to rely on the offer as evidence that his dismissal had been predetermined.

The Employment Tribunal ruled that the offer of the exit package was part of a "protected conversation" and was inadmissible. The employee appealed, arguing that the offer could not be "protected" because the employer had placed undue pressure on him by setting up the meeting under false pretences, giving him only 48 hours to consider the offer and threatening redundancy if he did not accept it. The employee argued that he should have been allowed to refer to the offer at the Tribunal hearing. However, the Employment Appeal Tribunal disagreed with him. The employer had not threatened dismissal but had explained that a redundancy consultation would follow if the offer was rejected. Similarly, the 48-hour deadline was only to accept the verbal offer (with a written settlement agreement to follow) so did not constitute undue pressure. Accordingly, the EAT agreed with the Tribunal that the offer was part of a "protected conversation" and was inadmissible.

Under the "without prejudice" principle, genuine attempts to settle a dispute are generally not admissible in a court or tribunal. However, this rule only applies where there is an actual or contemplated dispute, which would not be the case where an employer offers an exit package out of the blue. In such situations, an employer might instead rely on separate rules around "protected conversations". These allow an employer to offer an exit package where there is no existing dispute without the offer being used against the employer in an unfair dismissal claim. However, the problem with "protected conversations" is that the rules only apply in unfair dismissal claims – they would not prevent the settlement offer from being used in a discrimination or whistleblowing claim. Also, to benefit from a "protected conversation", the employer must not place undue pressure on the employee (e.g. by threatening dismissal) and must give the employee a reasonable period of time to consider the proposed settlement agreement (guidance suggests 10 calendar days). This case is helpful because it confirms that it would not normally amount to undue pressure to explain to an employee that a disciplinary, capability or redundancy process would follow if the settlement offer were rejected, nor to give a shorter deadline to accept a verbal offer.

More importantly, the case highlights the complexities around the "without prejudice" principle and the rules on "protected conversations". It is much safer for employers to assume that any offer of an exit package could be referred to in court or tribunal and to frame the offer accordingly.

GALLAGHER V MCKINNON'S AUTO AND TYRES LTD

4. New Law

PREVENTING SEXUAL HARASSMENT: ARE YOU DOING ENOUGH?

On 26 October 2024, the new duty to prevent workplace sexual harassment came into force. The duty requires employers in the UK to take active steps to prevent sexual harassment in the workplace, including harassment of staff by third parties such as customers, investors, clients and suppliers. The EHRC has updated its Guidance on Sexual Harassment and Harassment at Work and also published an Employer 8-step guide: Preventing sexual harassment at work. Employers who have not already done so should consider the following action points:

• Risk assessment: determining the risk factors relevant to the employer's workforce and working environment and taking steps to minimise them.
• Effective policy: implementing a stand-alone harassment or sexual harassment policy containing relevant examples and addressing third party harassment.
• Training: ensuring all staff are trained regularly on what sexual harassment is and what to do if they experience or witness it or receive a complaint.
• Encourage reporting: explaining to all staff how to report sexual harassment complaints, as well as conducting regular one-to-ones and staff surveys, and having an open door policy.
• Investigate complaints: taking prompt action to investigate and resolve complaints, and keeping a centralised record of all complaints raised (to identify trends).

Employers who fail to take reasonable steps to prevent sexual harassment could face an uplift in compensation and/or enforcement action by the EHRC. We have been working with a number of employers to ensure they have appropriate policies and procedures in place. For more information, please speak to your usual Employment department contact.

NATIONAL MINIMUM WAGE

The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will apply from 1 April 2025. From 1 April 2025, the rates will be:

• £12.21 per hour for workers aged 21 and over (increasing from £11.44 per hour);
• £10.00 per hour for workers aged 18-20 years (increasing from £8.60 per hour);
• £7.55 per hour for workers aged 16-17 years (increasing from £6.40 per hour); and
• £7.55 for apprentices under 19 years or in the first year of apprenticeship (increasing from £6.40 per hour).

In determining the rates, the cost of living was taken into account for the first time. The increase in the rate for 18 to 20-year-olds is the largest on record and reflects the Government's intention to remove the age bands and apply the same rate to all workers aged 18 and over in future.

AUTUMN BUDGET 2024

As part of the Autumn Budget 2024, the Government announced a number of reforms relating to tax and national insurance, including:

• an increase in the rate of employers' national insurance contributions to 15 percent from 6 April 2025;
• a reduction to the per-employee threshold at which employers start to pay NICs from £9,100 to £5,000, also from 6 April 2025;
• measures to crackdown on tax avoidance by umbrella companies (including implications for employers that use umbrella companies); and
• changes to the taxation of carried interest.

For more details, please visit our Autumn Budget 2024 page where you can read our briefings on carried interest and the measures relating to employee incentives.

5. Consultations

COLLECTIVE REDUNDANCY CONSULTATION

The Government plans to expand the threshold for collective redundancy consultation under the Employment Rights Bill. Currently the collective consultation duty is triggered where an employer is proposing 20 or more redundancies at a single establishment or site. Going forward, the threshold will be 20 or more proposed redundancies across the entire UK business, which will mean the duty is triggered more often. However, the threshold will continue to apply per employing entity (rather than groupwide).

Employers who fail to inform and consult currently risk facing a protective award of up to 90 days' pay per affected employee. The Government has launched a consultation on proposals to increase the maximum protective award to 180 days' pay per affected employee or to remove the cap altogether. The Government is also considering the role of interim relief in such cases. This would allow an Employment Tribunal to order the employer to continue to pay the employee pending the outcome of a claim for failure to consult collectively. The consultation is open until 2 December 2024.

The Government also plans to consult during 2025 on a proposal to increase the minimum collective consultation period from 45 days to 90 days when an employer is proposing 100 or more redundancies.

FIRE AND REHIRE

The Employment Rights Bill will make it automatically unfair to dismiss an employee for refusing to agree changes to terms and conditions, or where the dismissal is to re-engage them (or someone else) on varied terms. The Government is considering whether interim relief should also be available in such cases. Interim relief would allow an Employment Tribunal to order the employer to continue to pay the employee until their unfair dismissal claim has been decided. Currently interim relief is only available in a limited number of claims for unfair dismissal, including whistleblowing dismissals. The consultation over this measure is open until 2 December 2024.

AGENCY WORKERS

The Employment Rights Bill will introduce a right for zero hours and low hours workers to have a contract with minimum guaranteed hours. It will also introduce rights to reasonable notice of shifts and compensation for shift changes and cancellations. The Government has published a consultation on how these rights will apply to agency workers. The consultation considers whether the agency or the end user hirer of the agency worker's services should be responsible for such rights. The consultation closes on 2 December 2024.

STATUTORY SICK PAY

The Government plans to remove the current three-day waiting period and the earnings threshold for statutory sick pay (SSP). This will make SSP a "day one" right available to all workers, regardless of their earnings. The Department for Work and Pensions is undertaking a consultation on what the rate for SSP should be for workers who earn below the statutory rate (currently £116.75 per week). The Government is proposing that SSP will be calculated as a percentage of earnings, such as 60 to 80 percent. The consultation closes on 4 December 2024.

TRADE UNIONS AND INDUSTRIAL ACTION

The Government plans to introduce a number of changes in relation to trade unions and industrial action, many of which are contained in the Employment Rights Bill. The Government is also undertaking a consultation on creating a modern framework for industrial relations, which considers a number of measures, including:

• simplifying the requirements for industrial action ballots;
• simplifying the requirements for trade unions to give notice of any industrial action;
• extending the period that a strike ballot remains valid from six to twelve months; and
• considering the enforcement mechanisms for the new right for trade unions to request access to a workplace for recruitment and organising purposes.

The consultation is open until 2 December 2024.

6. Watch this Space

In September 2023, the Financial Conduct Authority (FCA) published a consultation on proposals for a new regulatory framework relating to diversity and inclusion (D&I) in the financial sector. The proposals incorporate non-financial misconduct into the Conduct Rules, fit and proper assessments and guidance on regulatory references. Under the proposals, larger firms would also be required to develop a D&I strategy, set D&I targets, report and make disclosures on D&I metrics and incorporate D&I into the firm's governance. The FCA is expected to publish its final rules by the end of 2024, with a view to the rules coming into force in 2025. In the meantime, the FCA has published some key findings following a survey of culture and non-financial misconduct in financial services firms. Our briefing summarises the key findings and the actions that the FCA expects firms to take.

7. Community Engagement

In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Vox Aeris, GiveOut, Ella's, the Impact Investing Institute, Advocates for International Development, Cyanoskin and The Vavengers.

8. Our Work

Since the last Employment Update, our work has included:

• advising on an international cash bonus scheme including unusual payment and eligibility rules
• creating bespoke covenants based on a US precedent including concepts that don't translate easily into UK law
• advising on TUPE issues and protections following the sale of a property and related outsourced management contracts coming to an end
• advising on a global redundancy project
• scoping an EU Pay Transparency project
• supporting a listed client with multiple investigations following whistleblowing complaints
• providing respect in the workplace training to a client's workforce
• supporting a client with a grievance relating to alleged bullying and discrimination by a manager
• advising on a bullying investigation and follow-on disciplinary process at a regulated financial services firm
• advising on pension provision changes, requiring variations to employment contracts and an employee consultation process.

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.