Employment Update - March 2023

Workplace sexual harassment 

According to news reports, McDonald's recently signed a legally binding agreement with the Equality and Human Rights Commission (EHRC) in response to concerns about its handling of sexual harassment complaints by UK staff. Under the agreement, McDonald's has committed to improving its harassment training and its procedures for responding to complaints. We could see more of this type of enforcement action when new laws on preventing sexual harassment are implemented.

Under draft legislation, which is currently making its way through parliament, employers will have a new positive duty to prevent workplace sexual harassment. This will involve taking proactive steps such as training for managers and staff, as well as having robust procedures for responding to complaints. The duty will be enforceable by the EHRC under its existing powers and will be backed up with a new statutory code of practice detailing what action employers should take. An employer who fails to take reasonable steps could also face an uplift in compensation if an employee brings a successful sexual harassment claim. 

The new duty is contained in the Worker Protection (Amendment of Equality Act 2010) Bill which will come into force one year after enacted, although there is currently no date for that.

New third party harassment laws

In addition to the sexual harassment specific obligations mentioned above, employers will have a new duty to prevent all forms of harassment of staff by third parties under a proposed new law which is currently making its way through parliament. Under the proposal, employers will be liable if they fail to take reasonable steps to prevent harassment of staff by a third party, such as a customer, client, supplier or contractor. The law will apply to any form of harassment (not just sexual harassment). As with existing harassment laws, a single incident could be enough and the victim does not necessarily need to be the target of the harassment.

The change will affect all employers but will perhaps have a particular impact in sectors such as hospitality and retail where an employee could be harassed by simply overhearing an offensive conversation by customers. Employers will therefore need to adopt a zero-tolerance approach to offensive comments and make sure customers, clients and other third parties are aware of this.

These changes are also contained in the Worker Protection (Amendment of Equality Act 2010) Bill which is currently being considered by parliament. There is no date for implementation yet.

Four day working week - The future?

A recent trial of a four-day working week has been heralded a "resounding success", according to a report published by research organisation Autonomy. The trial, which ran from June to December 2022, was organised by campaign group 4 Day Week Global and is thought to be one of the largest of its kind in the world. Some 2,900 workers in 61 companies took part, with 92 percent of participating companies deciding to continue with four-day working for the time being and almost 30 percent confirming the policy as a permanent change.

While there are some obvious attractions for both employers and employees, careful thought should be given before trialling or implementing a four-day working week. In particular, employers need to consider which four-day week model (or combination of models) works best for the business (e.g. whether all employees would have the same fifth day off or employees would work staggered days). Employers must also be careful to avoid counter-productive behaviours such as employees skipping breaks or working excessive hours to achieve the same output in four days. As ever, communication will be key and employers will need a clear policy setting out expectations for staff, which is backed up by training and awareness campaigns.

You can read more on this issue in our article, which recently featured in People Management: Could a four-day week be the future? (peoplemanagement.co.uk)

Right to work checks

On 28 February 2023, the Home Office published an updated version of its Employer's Guide to right to work checks. Primarily, this provides helpful clarification on the right to work for students and graduates who have pending work visa applications. Student visa holders are permitted to work in temporary roles only and any full-time work must be outside of term time or at the end of their course. However, whilst their Skilled Worker visa application is pending, students are permitted to take up a full-time permanent role up to three months prior to their course completion date or once they have successfully completed their course. Similarly, student visa holders who have a pending Graduate visa can now be employed in a full-time permanent role.

India young professionals scheme visa  

On 28 February 2023, the first ballot for the India Young Professionals Scheme visa opened. The scheme permits Indian citizens between the ages of 18 and 30 to live and work in the UK for up to two years. However, applicants must be selected from the India Young Professional Scheme ballot before they can apply for the visa. To be eligible for the ballot, applicants must demonstrate that they have a bachelor's degree level or above, savings of at least GBP 2,530 to support themselves and no children under 18 who they live with or support financially. There were 2,400 visas available in the February ballot and individuals are selected at random. If successful, applicants must apply for a visa within 30 days of being notified of selection. Whilst entering the ballot is free, successful applicants will need to pay for the visa fee of GBP 259 and the Immigration Health Surcharge (currently GBP 470 per year) at the time of submitting the online application.

Sponsored visas – increased salary thresholds

The Home Office has announced an increase to the minimum salary thresholds required for sponsored work visas. From 12 April 2023:

• the minimum salary required for a Skilled Worker visa will increase from £25,600 to £26,200 per year; and
• the minimum salary required for a Senior or Specialist Worker (Global Business Mobility) visa will increase from £42,400 to £45,800 per year.

Employers sponsoring an employee under these categories must pay at least the minimum salary threshold set out above or the "going rate" for the particular role, whichever is higher.  The "going rate" for a particular role can be found on the list maintained by the Home Office according to the occupation code for the role. These "going rates" will also increase with effect from 12 April 2023.

New electronic travel authorisation

The Home Office has announced further details of its new system of Electronic Travel Authorisation (ETA). The new ETA will be similar to the ESTA system in the United States. Eventually any non-British or Irish national coming to the UK for tourism or short business trips will need either an ETA or a visa. The ETA was originally expected to be in place by autumn 2023. However, the Home Office has now said that the ETA will be phased in from October 2023. It will launch for Qatari nationals from 25 October 2023 and then, from 1 February 2024, it will apply to nationals of Bahrain, Jordan, Kuwait, Oman, United Arab Emirates and Saudi Arabia. The full scheme will then be in place by the end of 2024, by which time any non-British or Irish national coming to the UK for any purpose will need either an ETA or a visa.

Sponsorship compliance and redundancy

Where an employer is considering redundancies or restructures and potentially affected employees hold sponsored work visas, it is very important to be mindful of the sponsorship compliance obligations and factor these into the process. We have pulled together some frequently asked questions (FAQ) on the process – this is linked here.

Dismissal – when is it effective?

A recent case has considered whether an employee was validly dismissed when the employer got the reason for termination wrong.

The employee in this case had suffered a back injury at work which meant he could no longer do his job. The employer sent the employee a letter headed "without prejudice" which said that employment would terminate by mutual agreement. However, while there had been some prior discussion about a settlement agreement, no such agreement had been reached. The letter confirmed the employee's last day of employment, which was the same date the employee received the letter, and stated that the employee would be paid in lieu of notice. The letter went on to offer an ex-gratia payment subject to the employee signing a settlement agreement. The employee was ultimately paid in lieu of notice a week later.

The employee brought an unfair dismissal claim. A preliminary question arose as to when employment ended. If it was when the employee received the letter, the claim was out of time. However, if it was when the employee received the payment in lieu of notice, the claim would have been in time. An Employment Tribunal ruled that the employee was dismissed when he received the letter. Even though the letter was labelled "without prejudice" and wrongly stated that there had been mutual agreement about termination, the letter was still sufficiently clear that employment was being terminated. The employee's claim was therefore out of time. The employee appealed but the decision was upheld by the Employment Appeal Tribunal.

Capability dismissal – when is it discriminatory?

The employee in this case was an administrative officer for HMRC. He suffered from anxiety and depression and so was disabled within the meaning of the Equality Act 2010. In the last two years of his employment, he was off work a total of 245 days on 23 occasions, each time for different reasons and periods. HMRC decided to dismiss him after a period of about seven months' absence, concluding that his absence impacted on productivity and morale, that all reasonable adjustments had been made and that he was unfit to return to work. HMRC was also unable to find any suitable alternative roles for him.

The employee brought a disability discrimination claim, arguing that his dismissal was discriminatory because he had been dismissed for absence which was related to an underlying disability. However, the Employment Tribunal ruled that the dismissal was justified. The dismissal was a proportionate way for HMRC to meet the aims of maintaining a fair, effective and transparent sickness management regime, and ensuring the efficient use of resources. The employee's absence had a very real impact on management time and team morale. This ruling was upheld by the Employment Appeal Tribunal.  

Right to request predictable work pattern

In order to provide more job security for individuals labelled as casual and zero hour workers, the Government plans to introduce a new right for workers and agency workers to request a more predictable working pattern:

• the right is expected to apply to workers with at least 26 weeks' service
• the right would apply where the workers' working pattern lacks certainty in terms of their hours, days or times they work, or where the worker is on a fixed contract of 12 months or less
• such workers could make a formal request to their employer to vary their terms and conditions to provide more certainty
• up to two requests could be made per worker per year
• employers would have to follow a set procedure when considering such requests and only reject a request on specified business grounds (similar to a flexible working request).

In practice, the new right will capture many casuals and zero hours workers, as well as agency workers and those on short fixed-term contracts. The proposal is contained in the Workers (Predictable Terms and Conditions) Bill, which is currently making its way through parliament, but there is no date for implementation yet.

Unfair dismissal compensation

On 6 April 2023, the maximum compensatory award for unfair dismissal will increase from the lower of a year's pay and £93,878 to the lower of a year's pay and £105,707.

Statutory redundancy pay

On 6 April 2023, the maximum amount of a week's pay, for the purposes of calculating statutory redundancy pay (among other things) will increase from £571 to £643. The maximum statutory redundancy payment will therefore increase from £17,130 to £19,290 for redundancies taking effect on or after 6 April 2023.

Fire and rehire

The Government has launched a consultation on a draft statutory code of practice on dismissal and re-engagement. The code sets out the steps an employer should take if it envisages it might use "fire and rehire" to make change to employees' contracts of employment. "Fire and rehire" is a tactic used to implement changes when employees do not agree to them, where the employer dismisses the employee and offers re-employment on a new contract with the revised terms. The draft code of practice makes it clear that employers should engage in meaningful consultation with employees over any changes to terms and conditions, including providing as much information as possible and genuinely considering all alternatives. It also says that employers should only use "fire and rehire" as a last resort and be transparent if they are prepared to implement changes unilaterally.

When in force, employers who unreasonably fail to follow the code could face an uplift in compensation of up to 25 percent where an employee brings a successful employment tribunal claim. The consultation on the draft code is open until 18 April 2023.

Employment Tribunal panel composition

Currently most unfair dismissal claims are heard by an Employment Judge sitting alone. However, most discrimination and whistleblowing claims are heard by a panel of three, comprising an Employment Judge with two non-legal panel members (one from an employee background and one from an employer background). The Senior President of Tribunals has published a consultation paper which proposes changing this, so that the default position would be that all cases would be heard by an Employment Judge sitting alone. It would then be decided on a case by case whether the panel should consist of one Judge, two Judges or a panel of three members, depending on the complexity of the case and the issues to be considered. The aim is to reduce the time taken to hear matters, by having smaller panels in most cases. The consultation closes on 27 April 2023.

Ethnicity pay gap reporting

The Government has promised guidance for employers on ethnicity pay gap reporting. In March 2022, the Government confirmed that it would not introduce a mandatory requirement for employers to report on the ethnicity pay gap but would encourage employers to do so voluntarily. Guidance was expected in summer 2022 but has not yet been published. In February 2023, a Government representative confirmed in parliament that the guidance would be published in "due course" but no date has been set. Employment Update will report developments.

• In recent weeks our team has been involved in a variety of pro bono work for organisations such as Wonder Foundation, Orchid Project, Strive and Chatterbox.
  
  
• In February 2023, several members of our team spent the afternoon volunteering with food charity the Felix Project helping prepare meals and sort surplus food to be delivered to charities and schools.

Since the last Employment Update, our work has included:

• assisting with an urgent sponsor licence application for a financial services business which is expanding in the UK for the hire of a key, senior role
  
  
• advising a service provider on the data protection issues associated with sharing employee information with the client on an outsourcing retendering exercise
  
  
• conducting a number of investigations into whistleblowing complaints concerning allegations of sexual harassment and other alleged breaches of legal obligations
  
  
• advising a client on safely navigating post termination restrictions when hiring new employees
  
  
• advising on a number of collective consultation exercises in relation to restructures and redundancies
  
  
• assisting a listed company with the appointment of a new Chief Executive Officer.