Employment law review and a look forward into 2023
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Moving on from COVID
2022 began with revocation of regulations requiring self-isolation on testing positive for COVID-19 and mandatory vaccination requirements for workers in the health and social care sectors. As we moved to a new phase of "living with COVID", guidance replaced legislation, encouraging vaccination and recommending that those with COVID symptoms stay home and exercise personal responsibility. Nonetheless, the impact of the pandemic continued to be felt throughout the year.
According to figures released by the Office for National Statistics on 3 November 2022, self-reported long-COVID symptoms adversely affected the day-to-day activities of 1.6 million people (73% of those with self-reported long-COVID), with 333,000 (16%) reporting that their ability to undertake their day-to-day activities had been "limited a lot". Fatigue continued to be the most common symptom (70%), followed by difficulty concentrating (45%), shortness of breath (42%) and muscle ache (42%).
As symptoms vary and can fluctuate, it is not yet certain whether all cases of long-COVID will meet the legal definition of disability, although they did in the Employment Tribunal case of Burke v Turning Point Scotland [2022] 5 WLUK 490 reported in May 2022.
Practical implications
Long-COVID may manifest itself in long-term absence or possibly and more disruptively in persistent intermittent absence. Employers should be cognisant of the possibility of a potential duty to make reasonable adjustments (e.g. to absence periods and trigger points for any management action) and of other disability related rights that an employee complaining of long-COVID might have.
Flexible working
Flexible working is perhaps the main legacy of the pandemic. Technology has allowed many of us to work from anywhere at any time. In many respects that has been welcomed by employees with many reluctant to return to full-time office based work leading to the rise of hybrid-working arrangements. CIPD research published in June found that on a poll of 1,006 senior decision makers, 78% of employers have adopted hybrid working on a formal or informal basis.
One of the main changes for the start of 2023 will be to the right to request flexible working. Under the current proposals, the right will become available to all employees from their first day of employment rather than only to those with at least 26 weeks' employment. Employees will be able to make two requests in any 12 month period (currently only one) and required response times from the employer will be reduced from three months to two. Changes to the process for requesting flexible working will be relatively minor but may necessitate updates to policies and procedures. Employers looking to row back on some of the informal flexibilities necessitated by the pandemic may find themselves having to manage an increase in formal flexible working requests.
Practical implications
Employers should review hybrid working practices and policies to ensure that any underlying contractual rights to designate the location from where employees work and working times are maintained rather than unintentionally permanently varied by the flexibilities determined by lockdown.On the other hand, where those flexibilities are intentionally embedded and intended to be permanent, employers may wish to review contracts of employment and policies to ensure that they reflect the agreed changes.
Flexible working policies will need to be updated to reflect the changes in the statutory scheme once introduced and managers will need to be trained to deal with requests. Although the statutory grounds for refusing a request are unchanged, the experience of working flexibly during lockdown and the hangover period from COVID, may make it more difficult to justify some grounds for refusing requests for flexibility which have previously been adopted without challenge.
Four day week
Continuing the flexibility theme, a pilot programme began in June introducing a four-day, 32 hour working week with no loss of pay for workers. The 6 month pilot is being run in conjunction with Cambridge and Oxford academics and overseen by 4 Day Week Global, a campaign group. The pilot includes over 70 organisations and 3,300 workers.
Advantages of a four-day week are said to include higher performing workers with a better work life balance, achieved through more time for rest, leisure and "life admin". Overall, 86% of respondents stated, at the midpoint of the pilot, that they would be "extremely likely" or "likely" to consider retaining the four-day week policy after the trial period.
4 Day Week Global have recently published the results of their first pilot programme for companies based mainly in North America and Ireland. 27 companies completed the final survey at the end of the six month trial. On a scale of 0-10 from very negative to very positive, the companies’ average rating for the trial was 9.0. Of those 27 companies: 18 are definitely continuing with a four day week; 7 are planning to continue but have not yet made a final decision; 1 is leaning toward continuing; and 1 is not yet sure. None are leaning against or not planning on continuing.
Employees used their day off for hobbies, household work and personal grooming. According to the report's authors, a wide range of well-being metrics showed significant improvement from the beginning to the end of the trial. Stress, burnout, fatigue, work-family conflict all declined, while physical and mental health, positive affect, work family and work-life balance, and satisfaction across multiple domains of life increased.
Practical implications
Employers interested in taking part in an organised trial of a four day week can find further information at Register Your Interest — 4 Day Week Global
Right to work
Illegal migration continued to dominate the headlines with inflammatory talk of an "invasion" of small boats crossing the channel culminating in the firebombing of an immigration processing centre in Dover. In some cases the underlying story behind the headlines is one of human trafficking and modern slavery.
Meanwhile, for the year ending June 2022, the Office for National Statistics reported net migration figures of 504,000 – the highest net migration total on record. The rise includes resettlement schemes for those coming from Afghanistan, Ukraine, and Hong Kong and 277,000 students - with the rate of student visas almost doubling on the previous year.
Every employer in the UK has to carry out "right to work checks" for their employees. Failure to do this can have major ramifications for employers if it later emerges employees do not have the requisite visa permission to work in the UK. Such employers can be hit with up to a £20,000 fine per worker and can be "named and shamed" on the Home Office's website.
From 6th April major changes were introduced to the documents that an employer can accept for a valid right to work check. Employers have to use the online right to work check system for anyone with digital immigration status or a biometric residence permit. A new system was also introduced to allow third parties to carry out remote checks for British and Irish nationals for the first time.
Practical implications
Employers caught by the Modern Slavery Act 2015 and required to publish annual statements, should ensure that they are complying with this requirement on an annual basis.Taking action (other than publishing a statement) is not mandatory but employers will generally want to demonstrate that they are maintaining a high standard of vigilance to ensure that they are not profiting from the exploitation of vulnerable individuals.
For more information on the key changes to right to work checks please see Immigration: Key changes to right-to-work checks coming into force on 6 April 2022 | Fieldfisher and Are you confused about IDVT right work checks via IDSPs?! Here is the lowdown on how digital right to work checks can help businesses verify documents for remote workers | Fieldfisher
Whistleblowing
Protections for whistleblowers came under scrutiny in Kong v Gulf International Bank (UK) Ltd [2022] I.C.R. 1513. employed by the bank as the head of financial audit. She made a protected disclosure to the head of the legal department who was upset and felt that Ms Kong had called her professional integrity into question. Eventually, Ms Kong was summarily dismissed with the bank indicating that her behaviours, manner and approach had resulted in people not wanting to work with her and that trust and confidence had been lost.The difficulty came in separating out the protected disclosure from the conduct associated with or consequent on the making of the disclosure. Dismissal for raising the former would be automatically unfair but dismissal because of the latter could be unfair but not automatically unfair.
The case did more to highlight a potential practical difficulty than create any new legal principle.Every case is dependent on its facts and Tribunals should be capable of working out whether the reason for dismissal was the protected disclosure or the individual's conduct.The very nature of whistleblowing is that matters that would otherwise remain hidden are revealed and that will inevitably result in hostility and defensive behaviours from those whose actions or integrity are challenged by the disclosure.For whistleblowers this makes for a stereotypically English right, protecting those who raise concerns in a polite, tactful and inoffensive manner but leaving the assertive more exposed.
ESG and pensions
Environmental, social and governance (ESG) measures continued to dominate board level concerns throughout the year. Employment law dominates the "social" element of this triumvirate but also has influence on the other elements. For the first time, UK pension schemes have been required to report publicly on what they are doing, as institutional investors, about climate change. The duty under Section 41A of the Pensions Act 1995, added in 2021 by the Pension Schemes Act 2021 and the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, has in 2022 only applied to the very biggest pension schemes (with over £5bn of assets). However, in 2023 many more schemes will be under the same duty and it is expected that smaller schemes will be brought into the ambit of the legislation in future years.
The report must be available on a public website and should include scenario analysis, taking into account the potential impact of climate change on the scheme's assets and liabilities. The Pensions Regulator is expected to comment on the content and quality of the reports that have been published and may identify room for improvement for future years.
Practical implications
Scheme trustees are responsible for the content of their reports and need to take into account advice from their advisers, especially their investment advisers.But in the court of public opinion it will also be the employer corporate group that will face scrutiny over statements made in their scheme's report. So employers will want to work with trustees to ensure that wherever possible the policies they adopt are consistent with the employer's ESG profile and where such consistency is not achievable, explain the independence of the trustees in adopting their position.
Holiday pay
The Supreme Court case of Harpur Trust v Brazel [2022] ICR 1380, has implications for employers paying holiday pay to part-year workers, those workers who have a permanent contract but are only required to work for part of the year.This potentially includes term time workers but also those on flexible arrangements with no normal working hours.Many employers have adopted a process of calculating holiday pay for such workers as 12.07% to pay for the work performed.12.07% is the proportion that 5.6 weeks annual holiday bears to the total working year: 5.6 weeks is 12.07% of 46.4 weeks (52 weeks in the year less 5.6 weeks holiday).The method was originally supported by guidance from ACAS which has now been withdrawn.
The decision of the Supreme Court in the Brazel case in effect says that the only way to calculate holiday pay for workers with no normal working hours is set out in the Employment Rights Act 1996 as read with the Working Time Regulations 1998.This calculation uses the amount of the worker's average weekly remuneration in the previous 52 weeks, ignoring any weeks when no remuneration was received (and going back no further than 104 weeks).This is a far less convenient calculation in practice and can lead to some absurd results where a worker has an ongoing contract but works very infrequently.For example, a worker on a permanent contract but who works in only 4 weeks of the year earning £2,000 in total would be entitled to 5.6 weeks holiday at £500 per week (£2,000 divided by 4) = £2,800 holiday pay.Using the 12.07% method the worker would have received £241.40.
Practical implications
Employers should check whether anyone working for them is being paid using the 12.07% calculation or any other calculation used for convenience which is not the calculation set out in the legislation. Where such individuals are identified employers will need to work out a strategy for dealing with any historical underpayments and migrating staff onto a new system for calculating and taking holiday which may involve shorter term contracts for some and designated holiday periods for others.
Benefit and minimum wage increases
The closing months of 2022 have seen numerous strikes by public sector workers. Downing Street has suggested that a “fair agreement” to end strike action should not involve double-digit pay rises for workers as this would "embed inflation" currently running at 9.3% according to the Office for National Statistics (last reporting on 14 December 2022).
Notwithstanding these comments, from April 2023 certain benefits will be increased by just over 10%. The rates for Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay, Statutory Parental Bereavement Pay and Maternity Allowance will all increase from £156.66 to £172.48 per week, and the rate for Statutory Sick Pay which is now paid by employers rather than recoverable from the Government, will increase from £99.35 to £109.40 per week.
Also set to rise are the national living wage (NLW) and national minimum wage (NMW). The new rates from 1 April 2023 will be:
- Age 23 or over (NLW rate): £10.42 (up 9.7% from £9.50)
- Age 21 to 22: £10.18 (up 10.9% from £9.18)
- Age 18 to 20: £7.49 (up 9.7% from £6.83)
- Age 16 to 17: £5.28 (up 9.7% from £4.81)
- Apprentice rate: £5.28 (up 9.7% from £4.81)
Diversity and inclusion
The Equality Act 2010 did not change, although the House of Commons Women and Equalities Committee issued a report in July calling on the government to bring s14 of the Act into force allowing dual discrimination claims based on more than one protected characteristic and to consult urgently on making menopause a protected characteristic. The Committee also recommended the introduction of mandatory ethnicity pay gap reporting.
On 7 December 2022 the Directive on the gender balance of boards of listed companies was published in the Official Journal of the European Union. This Directive aims to achieve a more balanced representation of women and men among the directors of listed companies by establishing effective measures that aim to accelerate progress towards gender balance. A "listed company" means a company which has its registered office in a Member State and whose shares are admitted to trading on a regulated market.
Under the Directive, EU member states must require that at least 40% of non-executive director positions, or at least 33% of all director positions, in listed companies are held by the underrepresented sex (usually women) by 30 June 2026. These are not quotas to be achieved from positive discrimination but rather targets in respect of which non-achievement should result in the implementation of more formal and transparent recruitment regimes including, when choosing between candidates who are equally qualified in terms of suitability, competence and professional performance, priority is given to the candidate of the underrepresented sex.
Practical implications
The Directive is a timely reminder that a more balanced representation of women and men among the senior leadership grades of corporate bodies is not going to happen quickly without a push from lawful positive action. In the UK, the Equality Act 2010 contains provisions allowing for general positive action and for positive action in recruitment and promotion which apply to all protective characteristics not just sex. Employers could and probably should be considering adopting positive action measures beyond merely ensuring equality of treatment, where underrepresentation is self-evident, particularly in positions which have the potential to act as role models for more junior employees.
Gender critical views
One of the protected characteristics covered by the Equality Act 2010 is "religion or belief". Under the Act, "belief" means any religious or philosophical belief. The case law on the extent to which gender-critical beliefs count as “philosophical beliefs,” and are therefore protected by the Act, continued to develop during 2022. Gender-critical beliefs include the belief that sex is biological and immutable; that people cannot change their sex and sex is distinct from gender-identity. The interaction of protections for philosophical beliefs in the workplace with the protections from discrimination on the basis of sex or gender reassignment are reminiscent of the difficulties encountered between discrimination because of sexual orientation and religious belief.
The criteria for determining whether a belief is capable of amounting to a "philosophical belief" were established back in 2009 by Grainger v Nicholson [2010] ICR 360:
- the belief must be genuinely held;
- it must be a belief and not an opinion or viewpoint based on the present state of information available;
- it must be a belief as to a weighty and substantial aspect of human life and behaviour;
- it must attain a certain level of cogency, seriousness, cohesion and importance; and
- it must be worthy of respect in a democratic society, be not incompatible with human dignity and not conflict with the fundamental rights of others.
In Maya Forstater v CGD Europe [2022] ICR 1 it was established Ms Forstater's gender-critical views satisfied the Grainger criteria and were protected by the Equality Act.Ms Forstater expressed her opposition to proposed changes to the Gender Recognition Act 2004 that would allow transgender people to achieve legal recognition of their acquired gender based only on self-identification.She also posted several tweets and had a discussion with a colleague expressing her belief that sex is immutable and not to be conflated with gender identity.As a result, when her contract came up for renewal, she was not offered a new one.The Employment Appeal Tribunal found that her beliefs were philosophical beliefs and in particular satisfied the final criterion of Grainger in that they were worthy of respect in a democratic society, were not incompatible with human dignity and did not conflict with the fundamental rights of others.
The legal disputes continued in 2022.In Bailey v Stonewall Equality Ltd 2202172/2020 and others
In Mackereth v DWP [2022] ICR 1609, Dr Mackereth applied for a job as a health and disabilities adviser with the Department for Work and Pensions. He stated his objections to addressing service users by pronouns, titles or forms of address that differed from their sex registered at birth on the grounds, based on his religious belief, that people cannot change their sex or gender. This contradicted DWP's policy and, after attempting to clarify the position with him, his contract was terminated. The Employment Appeal Tribunal found that his beliefs satisfied the Grainger criteria but that no direct or indirect discrimination took place.This was because the DWP would have treated any employee who refused to address service users in their preferred form of address in the same way and the policies of the employer “were necessary and proportionate to meet a legitimate focus on the needs of potentially vulnerable service users”.
On 22 December 2022 the Scottish Parliament passed the Gender Recognition Reform (Scotland) Bill by a majority of 86 votes for to 39 against. The vote was largely split along party political lines with over 70% of the votes against coming from the Scottish Conservatives while the vast majority of the Scottish Nationalists, Labour and Green Party members voted in favour. The Bill will introduce a system of self-declaration for obtaining a gender recognition certificate. It will remove the need for a psychiatric diagnosis of gender dysphoria and reduce the time someone must have been permanently living in their gender before they can apply, from two years to three months – or six months for 16 and 17-year-olds. The Bill is awaiting Royal Assent with the possibility of the UK Government blocking that Royal Assent. This issue looks set to be prominent throughout 2023.
Practical implications
It is clear from Forstater that gender-critical views are capable of being a "philosophical belief" and therefore protected by the Equality Act 2010.Employers need to be careful not to overreact against any worker who expresses such views in the workplace or outside the workplace such as on social media, even where colleagues are offended and raise concerns and grievances.
Equally however, the ways in which such beliefs manifest themselves in behaviour might not be protected. As the EAT noted in Forstater the decision “does not mean that those with gender-critical beliefs can ‘misgender’ trans persons with impunity”. Acts of harassment and discrimination against trans people in the workplace are also prohibited by the Equality Act. As was seen in Mackereth, the consistent application of a policy of addressing service users by pronouns, titles or forms of address that differed from their sex registered at birth was not direct discrimination (because the policy applied to all DWP staff regardless of their beliefs) and was not indirect discrimination (because it was a proportionate means of achieving the legitimate aim of meeting the needs of potentially vulnerable service users).
Given the likely prominence of these issues in 2023, employers should review their policies and training to ensure that they are covered. Policies to consider will include those dealing with equality and inclusion, harassment and social media and public statements.
Employers also need to continue to tread carefully over the issue of staff stating their preferred pro nouns. While requesting or requiring this might be seen as supporting trans, non-binary, gender-fluid and intersex colleagues, not everyone is likely to be happy with compulsion and the corporatisation of what is essentially a very personal issue. Voluntary adoption of such measures is less likely to result in hostility and confrontation.
Data privacy
Following on from GDPR and the Data Protection Act 2018, the Information Commissioner's Office has been a little slow to update its employment practices guidance. The ICO is however, now producing an online resource with topic-specific guidance on employment practices and data protection. Drafts of the different topic areas are being released in stages. Drafts of the guidance on (a) monitoring at work (consultation closing 11 January 2023); and (b) handling information about workers’ health (consultation closing 26 January 2023) and are out for public consultation, with other topics to follow.
Practical implications
Should you wish to review and/or participate in the consultation go to the ICO website at ICO and stakeholder consultations | ICO
As the final versions of the topics are published, employers will want to ensure that their own policies and procedures reflect the up to date guidance from the ICO.
Collective consultation
In March, 786 employees of the P&O Ferries group were dismissed without prior warning or consultation and replaced by cheaper agency workers. The "option" of following a formal consultation process to implement the necessary changes was rejected as P&O took the view that it would have made no difference. P&O used individual settlements to buy off the consequences of their failure to comply with s188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) which requires collective consultation with appropriate representatives of the affected employees where an employer proposes to dismiss as redundant 20 more employees from one establishment within a period of 90 days or less.
Of more concern to P&O directors would have been the risk of criminal prosecution for any failures to notify the secretary of state of the proposed redundancies, as would ordinarily be required of employers proposing collective redundancies under s193 and s194 of TULRCA. Those calling for a prosecution had, however, overlooked the maritime twist in s193A of TULRCA which required P&O to notify not the UK state but the competent authority of the state where the relevant vessel is registered – which had been done. The UK government had therefore been caught unawares. P&O's chief executive endured a public and select committee mauling but ultimately, bellicose talk of investigations and prosecutions were quietly dropped later in the year.
Practical implications
HR teams often come under pressure to cut corners on consultation. Doing so creates financial risks and in a sense these are manageable if the business is prepared to take or pay off the financial risk of claims. Reporting collective consultation proposals to the Secretary of State on the other hand potentially carries criminal liability which can be considerably more career inhibiting for company directors. Even the P&O directors did not take that risk.
Fire and rehire
The P&O episode fed into the on-going debate about whether or not to legislate against the practice of "fire and rehire". This practice involves imposing unilateral changes to employee terms and conditions by terminating contracts of employment and rehiring staff on new (inevitably less favourable) terms. Where the number of affected employees is 20 or more, s188 of TULRCA is engaged because of the wide definition of "redundant" in TULRCA. The government has promised a statutory Code of Practice on fire and rehire "in the near future".
Practical implications
Look out for the Code of Practice when it is eventually published.
Share incentive plan and TUPE
In Ponticelli UK Ltd v Gallagher [2022] I.R.L.R. 1031 the Employment Appeal Tribunal held that an employee’s rights to participate in his employer’s share incentive plan arose ‘in connection with’ his contract of employment for the purposes of TUPE. The plan was directly connected to the way in which the employee was remunerated for his services and involved the provision to him of matching shares paid for entirely by his employer. It was part of his broader financial package of benefits as an employee. As such, the employee was entitled to participate in a plan of substantial equivalence following his TUPE transfer to a new employer.
Practical implications
This case could present some difficulties on a TUPE transfer, particularly if the transferee does not operate a similar share scheme for its existing employees but is obliged to provide a share scheme of substantial equivalence to the one the transferring employees enjoyed with their previous employer. Any practical solutions will need to be picked up in the information and consultation with affected employees.
Employment bill
It also remains the government's position that the Employment Bill, first promised in December 2019, which among other things was to create a single labour market enforcement body, will be brought forward "when parliamentary time allows". So something to look forward to in 2023 as light relief from any changes introduced via the EU Revocation Bill.