UK employment law changes
Increased flexibility – the Flexible Working Bill achieves Royal Assent
The Employment Relations (Flexible Working) Act 2023 received Royal Assent on 20 July 2023. Employees currently have the right to request flexible working arrangements such as working from home, changing their hours etc. Effective from summer 2025 employees will have increased rights when the following changes become law.
- Employees will have the right to make two flexible working arrangements in any 12-month period (currently this is restricted to one)
- Employers will have two months to deal with a request (currently three months)
- Employers must consult with an employee before refusing a request.
- Employees will no longer be required to explain to their employer the effect of their request on the employer’s business.
The changes are designed to encourage more flexible working and prior to coming into force its likely that ACAS will be issuing specific guidance on how an employer should deal with a request.
Carer’s Leave Act - a new right to time-off
The Carer’s Leave Act received Royal Assent in May 2023. The purpose of the Act is to support working carers in taking time away from their employment to fulfil their caring responsibilities.
Currently, there is no dedicated leave entitlement for those who have dependent family or friends. Despite this, around two million people in the UK are thought to be balancing caring responsibilities and their employment.
- Expected to come into force in April 2024, the provisions cover the following.
- Employees with caring responsibilities can take one week (five days) unpaid leave per year.
- Employees will be able to take Carer’s Leave regardless of the duration of their employment.
There is no restriction on the kind of care this leave can be used for. However, the qualifying criteria is whether the person being cared for is a dependent.
Employers should review their employment policies to ensure they align with the Act and support those employees who have caring responsibilities.
Neonatal Care Act extends parental leave rights
The Neonatal Care (Leave and Pay) Act 2023 received Royal Assent in May 2023. This Act aims to provide parents with leave when their baby requires neonatal care.
This new right will not come into force until April 2025, and will include the following.
- Parents will be entitled to 12 weeks’ leave and pay when their baby requires neonatal care.
- Statutory pay will be in line with SMP flat rate.
To receive the leave:
- the parent must have a qualifying employment period of 26 weeks service,
- medical or palliative care must begin within 28 days of the birth,
- the leave must be taken within 68 weeks of the birth,
- the time spent in neonatal care must be seven consecutive days.
Again employers should plan to update their employment policies to coincide with the introduction of these new rights.
Pregnancy and Family Leave Act - redundancy rights for new parents and pregnant workers.
The Protection from Redundancy (Pregnancy and Family Leave) Act was given Royal Assent in July 2023. The purpose of this Act is to enhance redundancy protection for new parents and pregnant workers.
Currently, redundancy protections only protect those on maternity, adoption, or shared parental leave.
The Act is expected to come into force at the end of September 2023 and the final details are not yet known, however it’s likely that an employer when facing a redundancy situation will have an obligation to offer suitable alternative roles to pregnant employees that have yet to start their maternity leave and for those returning from maternity leave this right will extend for a period of six months following the end of their leave.
Employers should be aware of the new protections and be prepared to offer further protection to these groups of people when contemplating redundancies.
Illegal Working – new act to punish illegal workers and their employers.
The Illegal Migration Act 2023 received Royal Assent on 20 July. The Act is an attempt by the government to crack down on people illegally coming to the UK for reasons other than genuine asylum. As an increased deterrent the Act introduces the specific offence of illegal employment and tougher penalties for non-compliance.
Fines are to be more than tripled with civil penalties raised to £45,000 for a first breach from the current £15,000 and up to £60,000 for repeat breaches (currently £20,000). Additionally, there will be increased use of criminal sentences against employers that knowingly hire illegal employees.
Employers will have a statutory defence against a civil penalty where they have conducted a compliant Right to Work check and, if an employer is liable but has reported a suspected employee already in their employment, they could receive a £5,000 civil penalty reduction.
It’s likely that the changes will be come into force in early 2024 and employers not wanting to risk receiving a large fine should ensure that they are fully conversant with the current ‘right to work’ checking process and maintain appropriate records.
‘Rolled up’ Holiday Pay and the Merging of Holiday Entitlements
Rolled up holiday pay is the term given to the arrangement where holiday pay is added to a worker’s basic rate of pay instead of being paid when the employee takes their entitlement. This is an attractive and, in many cases, the only logical option for casual employees who work unpredictable hours. The arrangement usually results in an uplift to the employee’s hourly rate of 12.07%.
However, in 2006 the European Court of Justice ruled that rolled up holiday pay was incompatible with the Working Time Directive because in its view it discouraged employees from taking time off.
The government has announced that it hopes to ‘re-introduce’ rolled up holiday pay from April 2024 as part of a post Brexit reform of employment laws.
Additionally, as part of these reforms the Government also proposes to simply the rights and regulations surrounding holiday entitlement. Currently UK employees have a four-week entitlement stemming from EU law and a further 1.6 weeks entitlement from domestic law, each with their own rules on pay and carry forward rights. The Government is currently consulting on having a single 5.6 week entitlement with a major focus on how holiday pay should be calculated – either using the EU approach of using average pay (includes overtime, commissions etc) or using basic pay as per the UK approach. Obviously employers will favour the latter! The recent case of Agnew (included in the next section) would suggest that the line of travel is to calculate based on average pay.
The Economic Crime and Corporate Transparency Bill
This bill is currently in the final stages of review before receiving Royal Assent. It will create a new corporate offence of failure to prevent fraud. A company will be liable where a specified fraud offence (offences to be listed in secondary legislation) is committed by an employee or agent, for the organisation’s benefit, and the company did not have reasonable fraud prevention procedures in place.
Failing to prevent fraud will be a strict liability offence, meaning that there is no requirement for the employer to be complicit or even know that the employee is committing the offence to be sanctioned.
When the bill becomes law employers should take extra steps to ensure they comply with the new rules. As with the Bribery Act a statutory defence will be available if the employer can prove they had prevention procedures in place which were reasonable in all circumstances. What is considered reasonable will depend upon the employer’s business - higher risk activities will require tighter procedures.
When the offence was first introduced into the bill it only applied to ‘large’ companies, however the House of Lords subsequently removed the thresholds and therefore the offence applies to all companies regardless of size. Recent amendments have also extended the offence to a failure to prevent money laundering.
The bill is likely to receive Royal Assent later this year.
Changes to EU pre-settled status scheme
European nationals who were based in the UK before 31 December 2020 were provided with the right to remain and work in the UK after Brexit under the EU Pre Settled Status scheme.
The UK’s Home Office has recently announced two key changes to current holders of Pre-Settled Status.
- An automatic two-year extension will be offered which will assist individuals meet the five-year residency required to upgrade to Settled Status. The rules require that during the five-year period an individual must have absences of no more than 180 days in any 12 month period. It is thought that, given the travel restrictions at the time of the Covid-19 pandemic, many would not be able to meet this requirement without the extension.
- From 2024 the Home Office has indicated that some holders of Pre-Settled Status will be automatically upgraded to Settled Status - its likely this will only be extended to the simplest of cases, such as where the individual has a full record of National Insurance contributions. Details on how this will work have yet to be released.
Changes to auto-enrolment pensions
On 18 September the Private Members Bill aimed at expanding the auto-enrolment pension system received Royal Assent. The Pensions (Extension of Automatic Enrolment) Act 2023 aims to abolish the lower earnings limit for contributions so that contributions will apply to the first £1 of earnings rather than from £6,240 per annum.
The Act also seeks to lower the age when employees are eligible to be automatically enrolled from 22 to 18.
It’s not currently known when the changes will be introduced – the Act simply provides the Secretary of State with the authority to implement regulations to put the changes into effect.
Employment Tribunals: round up
A balancing of beliefs
Two recent tribunal cases highlight the challenge that employers face where there is a clash of beliefs in the workplace. Employers need to balance the need for an inclusive work environment with an employee’s right to express their beliefs. If a balance isn’t struck then either the individual holding the belief could claim discrimination and harassment in the event that action is taken to silence them, or in the event of inaction another employee could make similar claims as a result of the employee’s comments.
In the case of Higgs V Farmor’s School Mrs Higgs, a teacher, made comments on Facebook expressing her views on same-sex relationships , same-sex marriage and gender fluidity. A parent read the post and complained Mrs Higgs held homophobic views. The school followed up with an investigation. Mrs Higgs denied being homophobic and stated that she did not regret making the comments. At the disciplinary hearing the school found that the posts showed that she held ‘illegal and discriminatory views’ and she was terminated for gross misconduct- namely for failing to adhere to the schools code of conduct. Mrs Higgs filed a direct discrimination claim for religious discrimination and harassment and argued that her freedom of expression and religious beliefs were unlawfully compromised.
The Employment Tribunal found in favour of the school basing their decision on the fact that she had not been dismissed because she held certain beliefs but her dismissal was in response to expressing them in a post which may lead someone to conclude she was homophobic. However, on appeal, the Employment Appeal Tribunal (EAT) found that belief is not limited to merely holding a belief, but also the ability to express it and therefore Mrs Higgs was within her rights to do so. The case has been sent back to the Employment Tribunal to reconsider.
In the case of Fahmy v Arts Council England (ACE) a branch of ACE awarded the LGB Alliance a grant which was criticised widely on the basis that the LGB Alliance had a reputation for being anti-transgender. During an internal meeting Ms Fahmy challenged this view and defended the Alliance stating it was not anti-transgender. The following month an employee circulated a petition to all employees which included a comment about ‘openly discriminatory transphobic staff’. The employee was suspended, however the petition remained open for more than 24 hours. Ms Fahmy complained to the Employment Tribunal claiming harassment and victimisation on the grounds of her gender-critical beliefs. Her victimisation claim was dismissed however the judge upheld her claim for harassment and stated that ACE were liable for the acts of its employee and that the Tribunal was not satisfied that they had taken all reasonable steps to prevent its employees from ‘harassing someone with the claimants protected characteristic’.
What this means for employers
Both cases highlight that all beliefs even those considered controversial are capable of protection under the Equality Act 2010 and that a robust approach to training supported by clear policies can go a long way to providing an employer with a defence against the actions of one of its employees.
Reasonable Adjustments?
In AECOM Ltd v Mallon the Employment Appeal Tribunal upheld the decision of an Employment Tribunal that the employer did not need to know the specific details of an applicant’s disability in order to make reasonable adjustments.
Mallon applied for a position with AECOM which required the submission of a standard online application. Due to his dyspraxia Mallon struggled to set up the username and password part of the process and emailed AECOM to request a telephone application process on account of his dyspraxia, but failed to explain what part of the process he was struggling with. AECOM’s HR manager emailed Mallon offering support to complete the online process but did not offer a telephone process as an alternative. Mallon did not respond to the emails and his application was unsuccessful. Mallon followed up with a Tribunal claim claiming that in not providing a telephone process AECOM failed to make reasonable adjustments.
The tribunal found in his favour stating that a blanket approach had put Mallon at a substantial disadvantage. Despite not knowing exactly what disadvantage Mallon was facing AECOM had ‘constructive’ knowledge and ought to have known that Mallon faced a disadvantage because of his dyspraxia and also commented that Mallon should not been expected to explain himself further over email due to his difficulties with written communication.
AECOM appealed the decision and the Employment Appeals Tribunal agreed with the decision of the Employment Tribunal commenting that an employer is expected to make reasonable enquiries to ascertain whether an individual has a disability and to what extent this places them at a ‘particular and substantial disadvantage’.
This case highlights the importance of employers making reasonable adjustments for their candidates and existing employees as soon as they find out about a disability. It also shows that employers should take reasonable steps to help applicants/employees with disabilities, even if they do not know the full extent of the disability. AECOM should have engaged in a phone call with Mallon because his lack of email response appeared to be due to his difficulty with written communication.
What this means for employers
The case highlights that an employer should take a proactive and cautious approach when meeting its obligations under the Equality Act 2010 and if there is evidence of a disability additional enquires should be made to understand how this may have an impact and what reasonable adjustments may need to be considered, especially the means of communication itself.
Social Media – expectation of privacy?
When does an employee’s social media content cross over into employment – this was a question posed in the recent case of Webb v London Underground.
Ms Webb made comments about the Black Lives Matter movement and George Floyd on her private Facebook page. Her page also listed the London Underground as her employer with many of her work colleagues connected as Facebook friends. Her posts were circulated on Twitter which resulted in several colleagues complaining to London Underground.
London Underground investigated the matter and dismissed her for posting offensive comments in breach of its social media policy which explicitly highlighted the risk that private social posts could be circulated, and any posts found inconsistent with the policy could result in disciplinary action being taken.
Ms Webb applied to the Employment Tribunal claiming that her dismissal and the defendants’ conduct had breached her right to private life and correspondence under Article 8 of the European Convention on Human Rights (ECHR).
The ET found that it was reasonable for an employer to rely on private Facebook posts in a disciplinary hearing. On the issue of Article 8 ECHR the Tribunal argued that she could have no expectation of privacy in light of the fact that she welcomed her Facebook friends to repost her content.
What this means for employers
Whether or not personal posts are capable of being used in disciplinaries will depend on the facts of each case – however a clear policy that sets out expectations and the possibility of private posts being considered will strengthen an employer’s position in the event of a breach.
Holiday Pay – mounting liabilities?
For the four weeks of annual leave provided by the EU Working Time Directive holiday pay should be paid based on an employee’s ’normal pay’ taking into account commissions, bonuses, compulsory overtime etc.
In circumstances where holiday pay has been paid incorrectly, such as using basic salary only, the courts have determined that the failure can be classed as a series of unlawful deductions from wages.
Under the Employment Rights (NI) Order 1996 a claim for unlawful deductions must be made within three months of the last in such a series and can extend back two years. In the case of ‘Bear Scotland v Fulton’ the Employment Appeal Tribunal established that a gap of more than three months between the underpayments would break the series of deductions. For most employers this seriously minimised their exposure given that most employees would have three months of uninterrupted work between holidays.
In the latest case of ‘Chief Constable of the Police Service of Northern Ireland v Agnew and others’ more than 3,500 employees employed by the Police Service of Northern Ireland brought claims for underpaid holiday. The basis of their claim was that their holiday pay failed to take account of compulsory overtime and - given that the two-year limitation period does not apply in Northern Ireland - the claims extended back to 1989 with an estimated total liability of approximately £30 million.
The Police Service accepted that the holiday pay had been incorrectly calculated and therefore the employees had been underpaid, however it argued that in nearly all cases there had been a three month break in the underpayments and therefore this broke the series of unlawful deductions.
The Supreme Court took a different view stating that the purpose of the legislation was to prevent the exploitation of workers and that there was no basis for interpreting the legislation that requires a claim to be made within three months of the last underpayment as meaning a three month gap between underpayments automatically broke a series of unlawful deductions. Instead, it held that a series of deductions is something that is assessed based on the facts in each case, such as taking into account the similarities and frequency and what links them.
What this mean for employers
The case does not actually change the current legal position on how holiday should be calculated for the four weeks of annual leave deriving from EU law (ie using ‘normal pay’), nor does it change the look back period for claims – this remains two years for employers in Great Britain (but not Northern Ireland). It is also the case that a claim for unlawful deductions must still be made within three months of the last underpayment, What does change is the fact that once a claim is made an employer cannot raise an argument that a three month gap breaks the series of deductions – instead other reasons will need to be presented to persuade a tribunal that there is no ‘series’ of deductions, and if they fail then the statutory two year backstop will be the only means of limiting a claim.
It is worth highlighting that an employer may still avoid liabilities. For example, if an employer starts to pay holiday pay correctly and the employee does not raise a claim within three months of the last underpayment then the employer’s past liabilities are extinguished. We would reiterate our stance on this and strongly recommend employers to take this course of action sooner rather than later.
The Supreme Court in Agnew took the view that most employees view their annual leave as a composite whole unless an employer has drawn a distinction between the different types (ie the four weeks from the EU Working Time Directive, and the 1.6 weeks from the UK’s Working Time Regulations). Some employers already apply a ‘normal wages’ calculation to the full 5.6 weeks of statutory entitlement and any contractual allowance provided in addition to this. However, for employers that only want to apply the ‘normal wages’ calculation to the first four weeks of annual leave there will need to be clear messaging around this for a tribunal to take the same view.
For more information on any of the topics above please contact [email protected].
