Employment Update from Hunter Adams – Q4 2023

Changes in Employment Law

A number of bills received Royal Assent this year, so we can expect them to become law in the near future. We’ve included some key take aways below:

Carer’s Leave

Carer’s leave introduces a new and flexible entitlement for employees to take one week’s unpaid leave per year to care for a dependent who has a long-term care need. Employees will be eligible to take this leave from day one of employment and the employee does not need to provide any evidence to take the leave, they can self-certify their absence. There is no limit on the type of care that is needed in order to take this leave, and there is also no restriction on how the leave is used. Usual definitions of individuals who are considered a dependent will apply.

There is no confirmed date for this change, but it is currently expected that Carer’s Leave will be implemented in April 2024.

Flexible Working

As outlined in our Q3 update, changes to eligibility for employees to submit a flexible working request and how employers should handle these requests is coming! There is no confirmed date for these changes, but it is currently expected that they will be implemented in April 2024.

Protection from Redundancy (Pregnancy and Family Leave)

This legislation will extend the current redundancy protection in place to employees who are on maternity leave. Once implemented, the protection will apply from the point that the employee lets their employer know they are pregnant, whether this is verbally or in writing, and will end 6 months after the employee gives birth. This protection will also extend to employees who are on adoption leave and shared parental leave. This means that in cases of redundancy, employers will be required to prioritise employees in these categories, and offer a suitable alternative vacancy, where one exists, to such employees during the protection period.

There is no confirmed date for this change, but it is currently expected that this will be implemented in April 2024.

Employer’s Obligations: Sexual Harassment

Employers will soon be under an obligation to take reasonable steps to prevent sexual harassment of their employees. This also covers incidences of sexual harassment by colleagues and also by third-parties such as customers or contractors.

The Equality Act 2010 will be updated with a new section which imposes the new obligation on employers. This will come into force in October 2024. From this same date, employment tribunals will be able to award an increase of compensation of up to 25% in cases of sexual harassment and where an employer is also found to have breached the new duty to prevent sexual harassment.

We would recommend that you review any existing Anti-Harassment policy, and update this to ensure it effectively deals with matters of sexual harassment, or where you do not have a policy, please get in touch.

Given there could be four different generations working for an employer at the same time, and all with different ideas, attitudes, values and expectations shaped over the course of their lifetimes, we also recommend that you consider carrying out awareness training for all employees.  This will help to ensure that individuals understand what sexual harassment is, how to report it and how managers should respond to such concerns. With the differing expectations of different generations in mind, you could choose to widen the training to cover harassment in general, with recorded training being something which would also help to demonstrate that an employer did everything reasonable to prevent harassment from occurring.  If you need any support with this, please get in touch and we can discuss how we can best support you.

Holiday Pay

Normal Remuneration

Under current legislation, employees who work full-time are entitled to a minimum of 5.6 weeks paid annual leave per annum, this is made up of 4 weeks leave as stipulated by EU law and 1.6 weeks leave under UK law. Different rules apply as to the elements of pay that should be included when calculating holiday pay for these two ‘pots’ of leave. The government consulted to simplify this and apply the same rules to both pots. Following conclusion of the consultation, the government has decided not to group the holidays into one pot, however, to provide clarity on what is deemed ‘normal remuneration’, the regulation will be updated.  In practice, it is very uncommon that employers choose to differentiate between the leave entitlement from the EU and the UK, which is largely due to the administration element required.  If employers do wish to pay for 1.6 weeks of paid holiday at basic instead of normal rate and this is not already specified in the Statement of Terms and Conditions of Employment, a consultation would be required to propose this change.  It would also be necessary to specify which holidays were considered to be the ‘EU’ 4 weeks which required average rather than basic pay.

Calculating holiday pay for part-year or irregular hours workers

Following last year’s ruling in the Harpur v Brazel supreme court decision, which centred on how holiday pay should be calculated for part-year workers, the government recognised the extreme nature of the decision and opened a consultation to seek feedback from employers. Feedback from employers included that they favoured the accrual method for calculating holiday entitlement, giving accrued leave which is proportionate to the time workers have worked in the leave year.

Despite it becoming illegal to operate rolled up holiday pay since 2006, due to concern that failure to pay for holidays at the time they were taken would deter workers from taking leave, the government have now drafted regulations that state holiday entitlement for irregular hours workers and part year workers will accrue at 12.07% of hours worked in each pay period, to be paid at the end of each pay period.

The 12.07% comes from subtracting 5.6 weeks from the 52 weeks in a year in order to determine there are 46.4 weeks remaining which are available for work.  Then the 5.6 weeks is divided by those 46.4 weeks to reach 0.12067, which is 12.07%.

It’s important to note that the Working Time Regulations are Health & Safety legislation intended to ensure appropriate rest and recuperation for workers.

Therefore, although part year and irregular hours workers will accrue annual leave entitlement on the last day of each pay period at the rate of 12.07% of the number of hours worked, there remains an onus on employers to make the worker is aware of their opportunity to take their 5.6 weeks off.

How this will work in practice remains to be seen as it is only possible to determine what a weeks’ work will be at the end of each pay period, when the individual has been paid the 12.07%.

The Employment Rights (Amendment, Revocation and Transitional provision) Regulations 2023 which includes this provision, will come into effect on 1 January 2024.  This legislation will also codify previous case law regarding ‘normal pay’ during holidays being required to include commission, overtime and bonus related to employee performance, averaged over the previous 52 week period.

Removing pandemic-related extended carry over of leave

It doesn’t seem that long ago that in response to the pandemic, the government temporarily amended legislation to allow workers to carry over up to four weeks of accrued but unused holidays into the following two holiday leave years.

As of 1st January 2024, this provision will be removed. This means that workers will no longer accrue Covid-19 carry over leave. Workers that still have leave accrued prior to 1st January 2024 will be allowed to use it on or before 31st March 2024, otherwise it will be lost.

Carry-over of other leave

The new regulations also refer to an employer’s obligation to appropriately manage worker’s right to paid annual leave. Where an employer fails to allow workers a reasonable opportunity to take their leave, does not encourage them to use the leave and inform them that any accrued but untaken leave which cannot be carried over will be lost, will result in workers being entitled to carry that leave over into the following leave year. Such carried over holidays will continue to be carried over into a subsequent leave year until the employer meets its obligations.

In addition to allowing workers a reasonable opportunity to take their leave,  and encouraging them to take it, we recommend that you issue written reminders to employees at regular intervals throughout the holiday year, i.e. at the outset of the holiday year, mid-year, and prior to the end of the holiday year, detailing their remaining holiday balance and the date by which such holidays must be used by, ensuring that you clearly explained what will happen to the holidays if they are not used by the specified date. We would also recommend that you review and update your existing Annual Leave policy to ensure it is complaint with legislation and aligned to custom and practice. If you wish to discuss or need any support, please get in touch.

Data Protection

On 7th November 2023, King Charles III delivered his first King’s Speech and outlined the government’s legislative plans for 2023-2024. King Charles focused on the now renamed Data Protection and Digital Information (DPDI Bill).

This Bill aims to modernise the UK’s approach to data protection and maximise post-Brexit freedoms to boost the UK economy.

The Bill is still in the early stages, however, one particular point of concern is the potential impact of any changes to the EU-UK adequacy decision, which currently confirms that the UK has adequate protection for personal data to be transferred from the EU to the UK.

As an aside to this update, following the introduction of the General Data Protection Regulation (GDPR) in 2018, individuals have the right to access and receive a copy of their personal data, and other supplementary information held by any organisation or institution. This is commonly known as a data subject access request (DSAR).

Many employers are experiencing a marked increase in DSAR’s, and should, therefore, be mindful of the information they are capturing in writing (including emails and collaboration tools such as Microsoft Teams or Slack). As the increasingly heard saying goes ‘dance like nobody is watching; email like it might be read out at a tribunal’.

Right To Work Checks

In the biggest shake up since 2014, the Home Office have announced that they are tripling fines for UK employers who are found to be employing individuals working illegally in the UK. The civil penalty for employers, which was last increased in 2014, will be raised from £15,000 to up to £45,000 per illegal worker for a first breach, and from £20,000 to up to £60,000 for repeat breaches.

Employers should already be carrying out valid checks to confirm an individual’s right to work in the UK. There are a number of ways to do this including a manual check of original documentation, or where an individual is a non-British or Irish citizen, via the Home Office’s online checking system which can be accessed via the following link. However, it’s important to ensure you are checking every workers right to work rather than making any assumptions about Nationality, therefore, where it is necessary to carry out a right to work check remotely for a British or Irish citizen, employers must use an approved Identity Document Validation Technology (IDVT) provider.

At Tribunal

In one of the reportedly largest awards ever made by a British Tribunal, a female banker was awarded £2 million for her claims of sex discrimination, victimisation and equal pay against her employer.

During her employment, the employee was subjected to acts of sexism in a predominantly male environment. One example was when a witch’s hat was left on her desk and she was told “not now Stacey” by her manager. This happened so frequently that it became an ‘in’ joke among her colleagues.

The Tribunal also found that the employee, at the time she was recruited, had more relevant experience than her real life male comparator. Despite this, the employer offered her a significantly smaller annual salary of £120,000 compared to her male comparator’s annual salary of £160,000. The employee’s manager tried to justify this by saying the employee was more junior compared to her male comparator, however, the Tribunal was unable to find any evidence to support this. The Tribunal also connected the fact that there was a lack of records and transparency in the recruitment process that justified this, and concluded that this, in itself, was an element of sex discrimination.

During employment, the employee was rated the same performance band as her male comparator, despite this she received a significantly lower bonus of £10,000 compared to her male comparator who received £68,950. Again, the Tribunal was unable to find any justification to reasonably explain this.

The Tribunal went so far as to decide that the use of subjective words for the employee’s male comparator such as “pleasure to work with” and “good cultural fit” in appraisals could allow for discrimination to be implied. The employer tried to establish that it is accepted practice that banks and financial institutions have obscure pay structures and ways of awarding bonuses, however, the Tribunal did not accept this explanation.

After the employee raised a grievance to her employer, they failed to carry out a robust investigation into why there was a difference in pay, leading the Tribunal to find that the employee was subjected to victimisation. In addition, the employee was also victimised during her performance reviews where her alleged “underperformance” was linked to her raising issues about equal pay which in turn led to her not receiving any bonus for those years. For this act of victimisation on its own, the employee was awarded £15,000. The Tribunal also awarded a 20% uplift on the total award due to the employer’s failure to follow the ACAS Code on Disciplinary and Grievances by not carrying out a necessary and robust investigation.

As a consequence of the findings, the Tribunal also ordered the employer to carry out an equal pay audit.

Whilst such a large pay-out seems unprecedented, employers should note the importance of carrying out a robust and ACAS compliant investigation into grievances raised by employees. This is also a landmark case that indicates that employers who fail to appropriately protect and support employees who raise matters of sex discrimination, will be viewed with little compassion where the facts do not support this.

If you have any questions about an employee relations matter, or you have any general questions about how to appropriately manage employee relations, please get in touch with us at h100@hunteradams.co.uk