Employment Essentials: Employment Law Changes 2024

LABOUR'S NEW DEAL FOR WORKING PEOPLE

With workers' rights at the centre of the Labour Party's manifesto, the new Government has laid out a whole host of employment law reforms as part of its plan to 'Make Work Pay' to tackle exploitative practices and enhance employment rights. In July 2024, we were introduced to two new bills on employment law; the Employment Rights Bill and the Draft Equality (Race and Disability) Bill - the first of which is to be introduced within the first 100 days of the new Parliament. Exactly when the 100 days is up, well this is a little blurry but roughly takes us to the week following the return of Parliament from the party conference season which is on 7 October.

On 22 September 2024, the Deputy Prime Minister Angela Rayner at the Labour party's conference in Liverpool promised that the flagship Employment Rights Bill will be brought to Parliament "in October" and stated:

"That means repealing the Tories' anti-worker laws and new rights for union reps too. A genuine living wage and sick pay for the lowest earners. Banning exploitative zero-hour contracts and unpaid internships. Ending fire and rehire and we will bring in basic rights from day one on the job.

"This is our Plan to Make Work Pay, and it's coming to a workplace near you."

In this article, we will explore the new Bills and notable policy changes, keeping a close eye on legislative and political process and provide a continuous update on what is likely to happen and when, and what this will mean for you as an employer.

This content is correct and up to date as of 23 September 2024.

THE LEGISLATIVE CHANGES THAT HAVE COME INTO FORCE SINCE THE ELECTION ON 4 JULY 2024

The statutory Code of Practice on Dismissal and Re-engagement devised under the previous Conservative Government came into force on 18 July 2024. The new Code sets out how employers should act when:

1. it is considering making changes to one or more of its employees' contracts of employment; and
2. it envisages that, if the employee and/or representative does not agree to some or all of the changes, it might opt for dismiss and re-engagement in respect of that employee.

Employers are expected to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees.

Notably, the Code states that "the employer should contact Acas for advice before raising the prospect of dismissal and re-engagement". Failure to follow the Code could result in a 25% uplift to compensation awards in relevant cases including unfair dismissal and discrimination. A notable omission from the list of clams to which a 25% uplift can apply are protective awards for failure to collectively consult on collective redundancies. The pre election proposed addition of protective awards unfortunately failed to gain House of Lords' approval before the general election

As for the Labour Government's plans to further strengthen the Code, we await the detail. However, it has been confirmed that this will fall short of an absolute ban. As a minimum, we expect additional types of tribunal claims to be added to the list of claims to which the 25% uplift may attach – in particular protective awards for failure to collectively consult.

EMPLOYMENT RIGHTS BILL

When to expect the detail

We start with the question all employment law stakeholders want to know – when will the Bill be published?

The Government has repeatedly confirmed that the Bill "will be delivered in the first 100 days" of this Parliament. On 19 August, it was widely reported in the press that "Legislation to enact the changes will start its journey through Parliament before mid-October, ministers have promised". While a September publication cannot be ruled out, the latest reports perhaps indicate that rather than the Bill being introduced in the period between 2 to 11 September (being the return from the summer recess and the start of the conference recess), it will be introduced shortly after the return from the conference recess being 7 October 2024. We wait to see.

Zero-hour contracts/predictable working hours

Policy

A ban on 'exploitative' zero-hour contracts ensuring workers have a right to a contract that reflects the number of hours they regularly work. The policy also includes giving workers "reasonable notice" of any shift changes and compensation for any cancelled or curtailed shifts. This will provide more stability for workers, while maintaining the flexibility that some employees find beneficial.

Comment

On 29 August, it was reported in the press that a Government source has confirmed that the not yet in force Workers (Predictable Terms and Conditions) Act 2023 has been shelved to "pursue a stronger contractual right to the hours usually worked".

The now shelved 2023 Act (which had been expected to come into force in September 2024) would have introduced a new statutory right for workers to request a more predictable working pattern. Instead, the Government now plans to introduce "a new right to a contract that reflects the number of hours regularly worked, as part of [the Government's] significant and ambitious agenda to ensure workplace rights are fit for a modern economy." So instead of a 'right to request' predictable working hours, it will be a 'right to' regular hours based on a 12-week reference period. It is also expected that there will be a right to compensation for late/no notice cancellation or curtailment of shifts.

We await details of the proposed new right. Outstanding questions include:

• Will the 12-week reference period be a fixed or rolling period?
• Will there be a qualifying service period and, if so, how long?
• How will seasonal variations in workloads be accommodated?
• Will workers who wish to retain full flexibility over the hours they work be able to do so?

Fair pay agreement in the adult social care sector

Policy

A new fair pay agreement in the adult social care sector will help to establish national terms and conditions and fair pay rates, as well as a "genuine" national living wage which removes "discriminatory" age bands.

Comment

The Labour Government originally committed to establishing sector-wide collective bargaining through which unions would negotiate fair pay agreements with employers across an entire industry (instead of merely a single employer or workplace). The planned introduction of fair pay agreements has been limited to the adult social care sector where Labour has identified issues relating to relatively high turnover and vacancy rates.

However, note that the King's Speech in July 2024 referred to "assess[ing] how and to what extent such agreements could benefit other sectors" indicating that the Labour Government has long-term plans to expand the ambit of collective bargaining to other sectors.

Dismissal and re-engagement or "fire and re-hire"

Policy

A new statutory Code of Practice on dismissal and re-engagement, or fire and rehire, is now in force.

The new Code aims to protect workers from unreasonable dismissal or the threatening of dismissal by an employer. It also provides guidance for employers to "explore alternatives to dismissal and engage in meaningful consultation with a view to reaching an agreed outcome".

Comment

Remember, the Code of Practice on dismissal and re-engagement devised under the previous Conservative Government did in fact come into force post the general election on 18 July 2024 . The existing Code requires employers to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees in circumstances where the employer is not envisaging dismissal.

Notably, it states that "the employer should contact Acas for advice before raising the prospect of dismissal and re-engagement". Failure to follow the Code could result in a 25% uplift to compensation awards in relevant cases.

We are yet to understand the extent of the Labour Government's further planned restrictions and the nature of the remedies that will be introduced.

We do understand from the 'Plan to Make Work Pay' that the strengthening of the Code will fall short of an absolute ban; offering to re-engage workers on new terms - or replacing those workers will only be permitted as part of a restructuring for a business to ensure its viability and preserve its workforce when there's genuinely no alternative.

As for strengthening penalties, as a minimum we expect additional types of tribunal claims to be added to the list of claims to which the 25% uplift may attached – in particular protective awards for failure to collectively consult.

Day-one employment rights: Parental leave and unfair dismissal

Policy

Introduction of "day-one" employment rights, namely parental leave, sick pay and protection from unfair dismissal (subject to probationary periods to assess new hires).

Comment

1. Probationary periods

On 19 September 2024, it was further reported that, in connection with Labour's pledge to provide protection from unfair dismissal as a "day one" right, employers will be able to put new employees on probation for up to six months.

Note that employers will not be precluded from dismissing employees for the usual fair reasons such as capability, conduct or redundancy and will have the ability to dismiss an employee for failing their probation provided a fair and transparent process has been followed.

While simply reducing the current two-year qualifying service itself may have been a simpler option, this does not appear to be what the Government is proposing. Unfair dismissal will become a day-one right but there will be provisions specifically dealing with dismissals during a six-month probation period. But what a fair and transparent process would require and how that would compare with our understanding of the usual processes employers follow to conduct a fair dismissal is yet to be fleshed out.

We await the details of how this will work. See our blog on 'how to square 'day-one rights' with a probationary period' – a modest proposal for our guess of how this can be best achieved via requiring tribunals to take into account the fact that the dismissal took place during a probationary period when deciding the fairness of a dismissal.

2. Removal of two-year qualifying period generally

The removal of the two-year qualifying period for unfair dismissal rights alone will be very significant and result in a notable increase in claims. But the language of the announced policy goes further in stating unfair dismissal will be a day-one right for "all workers". Strictly read, this would involve a significant expansion of worker rights, as currently only employees are entitled to unfair dismissal protection. If (and it is an "if") the intention is to expand to "all workers" as opposed to "all employees" (it is likely that the Labour Government has used "worker" in a layman rather than a legal sense) rather than a big change, this will be a massive change.

3. Parental leave

As for making parental leave a day-one right, for employees - currently maternity leave and adoption leave are already a day-one right though it will impact other forms of leave, such as paternity leave, shared parental leave and unpaid parental leave.

There is no indication that qualifying periods for parental leave statutory pay will also be made a day-one right. Like the case for unfair dismissal, the King's Speech states it will make parental leave (in a generic sense), available from day one on the job for all workers. Currently, only employees are entitled to parental leave, as such if extended to all workers a very significant extension of parental leave.

4. "Employees" or "workers"?

It is not clear whether the reference to "workers" implies that the Labour Government's intention is to move towards a single status of worker is part of the Employment Rights Bill, though highly doubtful.

While not part of the King's Speech, the 'Plan to Make Work Pay' includes a commitment to consult on a framework that brings about a move towards a single status of worker and transition towards a simpler two-part framework for employment status that differentiates between workers and the genuinely self-employed. This will be no easy task. It is unclear if the Labour Government intends to make parental leave, unfair dismissal and sick pay (some workers are already entitled to statutory sick pay, depending on their earnings) a day-one right for "all workers" rather than "all employees" at an early stage before any single status consultation takes place. If it does, that would make a single status consultation largely redundant so perhaps indicating a two-stage approach will be needed, or a use of "worker" in a non-legal sense.

Statutory sick pay

Policy

Strengthening statutory sick pay (SSP) by removing the lower earnings limit to make it available to all workers, as well as by removing the waiting period.

Comment

The removal of the waiting period (the first three days of sickness) was previously done as a temporary measure during the COVID-19 pandemic to simplify the SSP system and get help to those in need more quickly.

The removal of the lower earnings limit (LEL) (currently £123) will help low-paid casual workers. The move to "all workers" will have less impact as for the purposes of SSP, "employee" includes all those whose earnings are liable for Class 1 National Insurance contributions – so already includes many "workers".

Flexible working

Policy

Making flexible working a day-one right for all workers.

Comment

While employers will still have a discretion to refuse flexible working where it is not feasible, we understand that such discretion is likely to be limited. We may see the statutory minimum process requirements introduced on 6 April 2024 (that an employer must consult with an employee, as a means of exploring the available options, before refusing a flexible working request) expanded. Currently there is no legislative de minimis requirement of what that 'consultation' needs to include). The new legislation may also further empower employment tribunals to scrutinise employers' decisions.

Press reports warn of workers "being able to demand" compressed hours so that they can work a five-day week in four days. Requesting a compressed hours working arrangement is and has been a possibility since the right to request flexible working was introduced. The Government's plans will not require employers to agree to compressed hours working arrangements where such working pattern is not reasonable. There is no proposal for a right to a four-day working week. What is proposed is a shift in the dynamic for flexible working requests generally so that employers consider flexible working (which can be in a variety of forms) unless it is not reasonably feasible, more of a mindset shift.

Maternity

Policy

Strengthening protections for new mothers by making it unlawful to dismiss a woman who has had a baby for six months after her return to work, except in specific circumstances

Comment

We await details of how this will differ from the rights which came into force on 6 April 2024 under the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 and the corresponding Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024 which extend the existing redundancy protections (priority for suitable alternative employment) while on maternity, adoption or shared parental leave to additionally cover the pregnancy period until 18 months beginning with the first day of the expected week of childbirth or date placed for adoption (essentially an additional six-month period). Perhaps protection beyond priority for suitable alternative employment? We wait to see.

Single enforcement body

Policy

Establishing a new single enforcement body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights.

Comment

The impact this will have will largely depend on its resourcing.

School Support Staff Negotiating Body

Policy

Reinstating the School Support Staff Negotiating Body, to establish national terms and conditions, career progression routes, and fair pay rates.

Comment

Abolished back in 2010, the Labour Government plans to reinstate the body to "ensure a proper voice for the staff who power our schools, bringing consistency to terms and conditions."

Trade unions

Policy

Strengthening trade union legislation and simplifying the process of statutory recognition.

Comment

The King's Speech refers to "removing unnecessary restrictions on trade union activity... including minimum service levels...and ensuring industrial relations are based around good faith negotiation and bargaining."

The Bill will simplify the route to statutory recognition by revising the relevant voting thresholds and will introduce rights for unions to access workplaces for recruitment and organisation purposes.

The Government has repeated and stressed that the changes will include:

• Repeal of the power of the Secretary of State to specify minimum service levels (MSLs) during periods of strike action in the fields of health, transport, education, fire and rescue, border control, and nuclear decommissioning and radioactive waste management service. Prior to the election, secondary legislation introduced MSLs for passenger rail, ambulance services, border security and, fire and rescue services. Although the ability of employers to give MSL work notices will legally continue until the legislation has been formally repealed, the Government "strongly encourages" employers to use alternative mechanisms for dispute resolution, avoiding the imposition of MSLs in the meantime. See the "Update on minimum service levels and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022" to find out more.
• Formal repeal of the provisions which purported to allow the use of agency workers to cover for striking workers. The Government highlights that these provisions have already been held by the High Court to be unlawful with formal repeal simply making the position crystal clear.
• The Trade Union Act 2016, which introduced strike ballot minimum turnout thresholds of 50% of those entitled to vote and for key public sectors, an additional threshold of 40% of the entire membership must vote in favour of strike action, is being repealed in full. Returning to the pre-March 2017 position means provided the union allows all those being called upon to take action to vote, only a simple majority of those who actually vote is needed to validate the action. As such, if there is a very low turnout to vote, a strike could be called based on a small percentage of the actual membership who turned out to vote and voting in favour.

In addition to the above, the 'Plan to Make Work Pay' states the Government will:

1. Update the balloting requirements to allow for electronic balloting
2. Simplify the union recognition process and reduce thresholds
3. Introduce rights for trade unions to access workplaces in a regulated and responsible manner for recruitment
4. Introduce a new duty on employers to regularly inform all employees of the right to join a union. To become a s1 Written Statement of Particulars of Employment requirement
5. Increase protection for trade union reps
6. Modernise rules on blacklisting

DRAFT EQUALITY (RACE AND DISABILITY) BILL

Policy

This new Bill proposes to implement the full right to equal pay for ethnic minorities and disabled people to enable claimants to bring equal pay claims on the grounds of race and disability (not just sex).

There are also plans to introduce mandatory ethnicity and disability pay gap reporting for those employers with more than 250 employees.

Comment

The detail is awaited. Note, only four of the 40 bills listed in the King's Speech are referred to as "draft" indicating that this Bill is at a more formative stage.

As it regards pay gap reporting, finding a methodology resulting in meaningful data is no easy task. Simply cutting and pasting the methodology used in gender pay gap reporting is unlikely to be suitable due to small statistical group issues and issues around classification of those of differing ethnicities/disabilities.

OTHER PROPOSALS

While many of the key policy proposals under the 'Plan to Make Work Pay' proposals are included in the Employment Rights Bill and the draft Equality (Race and Disability) Bill, there are some parts that are absent.

Their absence does not mean that they have been abandoned. Some of these things may not require primary legislation to progress. Some may be parked momentarily awaiting future parliamentary time.

Tribunal procedure

Policy

The time limits within which employees are able to make an employment claim is to be increased from three to six months. It will also enable employees to collectively raise grievances through ACAS about conduct at work.

In September 2024, it has also been leaked that the Government is intending to:

• Increase the current compensation limit for Breach of Contract claims in the Employment Tribunal from the current £25,000 to £100,000.
• Enable employees to bring breach of contract claims in the employment tribunal whilst still in employment.
• Allow employment tribunals to hear breach of working time limit claims.

Comment

1. Time limits

The increase in time limits from three to six months is likely to lead to an increase in tribunal claims.

2. Breach of contract claims

The current compensation limit for Breach of Contract claims in the Employment Tribunal is £25,000. To put the increase to £100,000 into context, the current £25,000 limit has been in place since 1994 and so arguably well overdue for an increase. Breach of contract claims seeking more than £25,000 in compensation can currently be brought in the County or High courts. Nevertheless, enabling higher value contract claims to instead be brought in a tribunal is likely to lead to an increase in breach of contract claims in light of the more informal nature of the employment tribunal process, the differing fees regime, and the significantly lower costs risks regime for claimants.

While the value of claims for breach of contract are likely to be increased, there is no announced/leaked proposal to amend or remove the list of breach of contract claims specifically excluded from employment tribunal jurisdiction. These include contractual claims relating to personal injury, living accommodation provisions, intellectual property, imposing an obligation of confidence or a restraint of trade covenant.

3. 48-hour working week claims

Currently, (broadly) employers' obligations such as mandatory limits on working time (the 48-hour working week limit) and night working time, health assessments and transfers to day work are enforced by the Health and Safety Executive. Entitlements granted to workers by the Working Time Regulations 1998, such as to paid holiday, rest breaks, rest periods or compensatory rest, are enforceable by workers bringing complaints to employment tribunals. In light of:

• the prevalence of valid 48-hour working week opt outs in use; and
• given the relatively small number of claims for breach of rest break or rest period provisions over the years

this change may be of limited impact. Nevertheless, employers should review opt out arrangements to ensure they are properly documented and monitor the working hours of any workers who have refused to agree to opt out or have opted back into the WTR.

Tribunal procedure

Policy

The time limits within which employees are able to make an employment claim is to be increased from three to six months. It will also enable employees to collectively raise grievances through ACAS about conduct at work.

In September 2024, it has also been leaked that the Government is intending to:

• Increase the current compensation limit for Breach of Contract claims in the Employment Tribunal from the current £25,000 to £100,000.
• Enable employees to bring breach of contract claims in the employment tribunal whilst still in employment.
• Allow employment tribunals to hear breach of working time limit claims.

Comment

1. Time limits

The increase in time limits from three to six months is likely to lead to an increase in tribunal claims.

2. Breach of contract claims

The current compensation limit for Breach of Contract claims in the Employment Tribunal is £25,000. To put the increase to £100,000 into context, the current £25,000 limit has been in place since 1994 and so arguably well overdue for an increase. Breach of contract claims seeking more than £25,000 in compensation can currently be brought in the County or High courts. Nevertheless, enabling higher value contract claims to instead be brought in a tribunal is likely to lead to an increase in breach of contract claims in light of the more informal nature of the employment tribunal process, the differing fees regime, and the significantly lower costs risks regime for claimants.

While the value of claims for breach of contract are likely to be increased, there is no announced/leaked proposal to amend or remove the list of breach of contract claims specifically excluded from employment tribunal jurisdiction. These include contractual claims relating to personal injury, living accommodation provisions, intellectual property, imposing an obligation of confidence or a restraint of trade covenant.

3. 48-hour working week claims

Currently, (broadly) employers' obligations such as mandatory limits on working time (the 48-hour working week limit) and night working time, health assessments and transfers to day work are enforced by the Health and Safety Executive. Entitlements granted to workers by the Working Time Regulations 1998, such as to paid holiday, rest breaks, rest periods or compensatory rest, are enforceable by workers bringing complaints to employment tribunals. In light of:

• the prevalence of valid 48-hour working week opt outs in use; and
• given the relatively small number of claims for breach of rest break or rest period provisions over the years

this change may be of limited impact. Nevertheless, employers should review opt out arrangements to ensure they are properly documented and monitor the working hours of any workers who have refused to agree to opt out or have opted back into the WTR.

Equal pay

Policy

Strengthening working women's rights to equal pay by ensuring outsourcing of services cannot be used by employers to avoid paying equal pay and strengthening equality impact assessments for public bodies.

Comment

Details are awaited.

Fair tips

Policy

Strengthening the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.

Comment

This is being done via the pre-existing Employment (Allocation of Tips) Act 2023. On 26 and 29 July, the Labour Government made the commencement regulations to bring into force the remaining provisions of the 2023 Act, together with the statutory Code of Practice on Fair and Transparent Distribution of Tips with both to come into force on 1 October 2024.

The 2023 Act regulates how employers allocate tips among workers by introducing obligations to ensure that workers receive "tips, gratuities and service charges" in full, and that those tips are allocated in a fair and transparent way. In addition, workers will receive a new right to request more information about an employer's tipping record with employers being required to have a written policy on how tips are allocated. It will still be possible for employees to pool tips and for tronc systems to be operated independently of the employer. However, unlike the headline policy stated in the 'Plan to Make Work Pay' this does not go so far as to provide that "workers decide how tips are allocated".

Discrimination and harassment

Policy

Strengthening working women's protections from maternity and menopause discrimination and sexual harassment.

Comment

Under the 'Plan to Make Work Pay', large employers with more than 250 employees will be required to produce menopause action plans, setting out how they will support employees through the menopause – it appears this may be done via the gender pay gap reporting provisions. Alternatively, this may mean the implementation of the s41 Equality Act dual discrimination provisions - we wait to see.

As for strengthening the sexual harassment provisions, presumably this will be via the provisions of two pre-existing pieces of legislation passed before the election which have not yet been implemented;

1. The Worker Protection (Amendment of Equality Act 2010) Act 2023 was passed back on 26 October 2023. Its provisions are due to come into force on 26 October 2024. The Act introduces (1) a new positive legal obligation on employers to take reasonable steps to protect their workers from sexual harassment, and; (2) If an employer breaches the preventative duty, the Equality and Human Rights Commission (EHRC) will have the power to take enforcement action against the employer. Employment tribunals will also have the power to increase compensation for sexual harassment by up to 25%.

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

• The original provisions for the re-introducing employer liability for the harassment of employees by third parties in the course of employment were removed.
• 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.

The 'Plan to Make Work Pay' indicates the existing provisions due to come into force soon may later be strengthen by reinserting all reasonable steps to stop sexual harassment before it starts, including by third parties, but that will require primary legislation – we wait to see.

2. On 24 May 2024, the Victims and Prisoners Act 2024 (VPA) received Royal Assent as part of the "wash-up" before Parliament was dissolved in advance of the 4 July General Election but largely not yet implemented.

When in force, section 17 will make void any provision in an agreement that purports to preclude a disclosure of information by a victim (or a person who reasonably believes they are a victim) of a crime to:

• Any person with law enforcement functions, for the purpose of those functions being exercised in relation to relevant conduct.
• A qualified lawyer, for the purpose of seeking legal advice about relevant conduct.
• Any individual who is entitled to practise a regulated profession, for the purpose of obtaining professional support from that service in relation to relevant conduct.
• A regulator of a regulated profession for the purpose of co-operating with the regulator in relation to relevant conduct.
• A person who is authorised to receive information on behalf of any of the above persons for the purposes mentioned above.
• A child, parent or partner of the person making the disclosure, for the purposes of obtaining support in relation to the relevant conduct.

"Victim" includes a person who is "subjected to criminal conduct", or "where the person has seen, heard, or otherwise directly experienced the effects of, criminal conduct at the time the conduct occurred".

Redundancy

Policy

Strengthening redundancy rights and protections, including the trigger for collective redundancy consultation being determined by the number of people impacted across the business.

Comment

This will remove a single establishment requirement for collective consultation trigger.

TUPE

Policy

Strengthen existing TUPE protections.

Comment

We await details.

Whistleblowing

Policy

Strengthen whistleblowing protections (including those related to sexual harassment).

Comment

We await details.

Public sector equality duty

Policy

The socio-economic duty under s1 Equality Act 2010 to be enacted and apply to public bodies in England and Wales.

Comment

This will require public bodies to pay due regard to reducing inequalities because of socio-economic disadvantage.

Artificial intelligence

Policy

Safeguard against discriminatory algorithmic decision-making and invasion of privacy in new technologies, including automation and AI.

Comment

We await details.

Parental leave

Policy

Review the current parental leave (generic sense) system within the first year of a Labour Government.

Comment

Review of the unpaid Carer's Leave regime (to include consideration of making it paid leave).

Bereavement leave

Policy

Introduction of the right to bereavement leave for all workers (which is currently only available for the death of a child under the age of 18).

Internships

Policy

Unpaid internships to be banned except when part of an education or training course.

LEGISLATIVE CHANGES SET TO BE IMPLEMENTED BEFORE THE END OF THE YEAR

Allocation of tips

The Employment (Allocation of Tips) Act 2023 together with the statutory Code of Practice on Fair and Transparent Distribution of Tips come into force on 1 October 2024.

Under the new provisions:

• Employers must distribute all qualifying tips, gratuities, and service charges" to workers fairly and transparently, without any deductions except for income tax.
• Qualifying tips must be paid no later than the end of the month following the month in which they were paid by the customer.
• Employers are required to keep detailed records of all tips received and their distribution among workers with workers having the right to request access to these records.
• Where tips are paid on more than an occasional or exceptional basis, employers must maintain a written policy detailing how tips are managed and distributed.
• It will still be possible for employees to pool tips and for tronc systems to be operated independently of the employer.

As for penalties for non-compliance, businesses found non-compliant with the legislation risk facing claims in the employment tribunal. A compensation payment of up to £5000 may be ordered in respect of each worker;

• where a claim relates to a failure to comply with the obligations regarding a written policy or keeping records than the usual three-month time limit applies;
• However, for claims regarding allocation or payment of tips, a significantly longer 12-month limitation period applies starting from the date of non-payment or incorrect allocation. Where the complaint relates to a series of failures to comply, the 12-month period will commence with the date of the last failure in the series.

Duty to prevent sexual harassment

On 26 October 2024 the Worker Protection (Amendment of Equality Act 2010) Act 2023 will come into force. The Act introduces a new positive legal obligation on employers to take "reasonable steps" to protect their workers from sexual harassment. If an employer breaches the preventative duty, the Equality and Human Rights Commission (EHRC) will have the power to take enforcement action against the employer. In addition, employment tribunals will have the power to increase compensation by up 25% where an employer is found to have breached the new duty.

Under the existing provisions of the Equality Act 2010, where a person commits an act of discrimination (including harassment) in the course of their employment, their employer is ordinarily liable for that act, in the event a claim is brought, unless the employer can show that it took "all reasonable steps" to prevent the discrimination from arising. "All reasonable steps" is a high bar, and many employers find it difficult to demonstrate that they have taken all such steps.

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.

In July, The < EHRC's Technical Guidance: Sexual harassment and harassment at work (originally issued in January 2020) was updated to include a new chapter with information on the new preventative duty.

During a difficult passage through Parliament, the originally proposed provisions of the 2023 Act were very significantly diluted:

• The original provisions provided for re-introducing employer liability for third party harassment of workers in the course of their employment, was remove: and
• The potential 25% compensation uplift in sexual harassment cases, test was changed from requiring employers to have taken "all reasonable steps" to simple "reasonable steps".

The Government has indicated that it will seek to amend the new duty to protect employees from sexual harassment to revert to its original drafting, which would make employers responsible for taking "all reasonable steps," not just reasonable steps, to prevent sexual harassment in the workplace, including from third parties. It is therefore in employers' best interests to ensure that they have robust processes in place in this regard.

CURRENTLY OFF THE TABLE

Unlike the previous green paper, there is no longer mention in the 'New Deal' or the King's Speech of removing the cap on compensation for unfair dismissal.

This is favourable news for private equity backed businesses who rely on carefully crafted good and bad leaver provisions to adequately incentivise its key employees and discourage them from leaving through the back door. Perhaps an unwelcome reversal for senior executives, though, who've one less string to their bow when it comes negotiating favourable exit packages.

Given that the overwhelming beneficiaries of capless compensation would not be the Labour Government's prime votership, the absence of this policy is not overly surprising.

The Labour Government has not made a time commitment to the draft Equality (Race & Disability Bill), which suggests that it is lower down in its list of legislative priorities.

How to keep up with employment law in the UK?

We expect there to be more changes coming for employment law in the next few months as the new governmental policies and legislation take shape.

Our Employment team is at the forefront of these changes, challenges and opportunities that will affect businesses, employers and employees. We will continue to provide updates on this page when new developments occur.

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