2024 saw significant changes in the political landscape as we saw 14 years of Conservatives in government come to an end and a new Labour Government win a commanding majority in Parliament. A key element of Labour's manifesto in the 2024 UK general election was its 'Plan to Make Work Pay' and a pledge to introduce legislation in Parliament within 100 days of entering government.

The Employment Rights Bill 2024-25 published on 10 October fulfilled that pledge. This lengthy Bill includes reforms to trade union rights and numerous individual worker rights including measures on ‘exploitative’ zero-hours contracts and ‘fire and rehire’ practices, and establishes protection from unfair dismissal, as well as entitlement to sick pay and parental leave rights from day one of employment. See our Employment Essentials: Employment law changes 2024 tracker for more on the proposed changes under the Bill.

As the Bill will extensively amend the Employment Rights Act 1996 (ERA), in our 2024 Year Review we are taking the opportunity to reflect on the impact of some of the ERA's provisions (and beyond). Having taken on board the suggestion that some of our cultural 'pun' references could do with some updating, the writer has taken some inspiration from pop culture. In part one of our pick of the 'to know' 2024 legislative reforms and case law developments, we offer our 2024 ERA's Tour!

Later in part two, we offer our "=ities Tour" and in part three our "Reunion Tour"

Our 2024 "ERA's Tour"

Contract

Before launching into our ERA's Tour proper, we begin with a warm-up act and the foundation of the employment relationship – the contract of employment.

Can't Shake It Off

2024 is a year in which employers learned the hard way that contractual promises cannot be easily broken:

  • In Tesco Stores Ltd v USDAW and ors, the Supreme Court restored an injunction preventing the supermarket from using fire and rehire to withdraw a collectively agreed contractual 'enhanced pay' benefit it had described as 'permanent'. The correct interpretation of the contractual term was that the right to receive enhanced pay would continue for as long as employment in the same role continued, subject only to the limited qualifications within the term itself. The standard contractual notice clause could not be used for the purpose of depriving employees of their right to enhanced pay. Employers wishing to offer contractual sweeteners must avoid overzealous language landing them with promises made in perpetuity.
  • In Adekoya and ors v Heathrow Express Operating Company Ltd there was a reminder to employers to ensure that contractual documents, including written contracts, offer letters and other documents that may be 'apt for incorporation' into the contract, do not inadvertently give employees a greater contractual entitlement than would be covered by underlying third party insurance or an agreement for provision of benefits. In this case a life-long discount on rail travel remained a contractual benefit despite the withdrawal of that benefit by the third-party provider.

You can't do it with a broken contract

We also had a reminder from the High Court of the limitations of contractual clauses which purport to give employers flexibility to change an employee’s role. Such clauses often work well during a hand-over period. But to use such a clause to make significant changes to an employee's continuing role (removing several areas of responsibility) without consultation is highly likely to result in a repudiatory breach of contract by the employer.

Such clauses are subject to a requirement to exercise them honestly, rationally, for the purposes for which they were conferred and not in an arbitrary or capricious way (McCormack v Medivet Group Limited).

Enchanted extension?

Any renewal/re-engagement of a fixed-term contract that takes an employee beyond 4 years continuous service, will take effect as a permanent (indefinite) contract. This year the Employment Appeal Tribunal (EAT) reminded us of the limit on this limit. Under reg 8(2) the limit does not apply where there is an objective justification for extending the employment on a fixed-term basis beyond the period of four years. In the case of Lobo v University College London Hospitals NHS Foundation Trust, the continuation of a fixed-term locum appointment beyond four years in the context of a delayed recruitment process for a senior position was objectively justified.

Blank space between assignments

After 12 weeks in a given job, agency workers are entitled to the same basic terms and conditions that they would have been entitled to had they been directly recruited by the hirer for the same job. This year the EAT confirmed that once acquired, these rights only apply during the period of an assignment when the agency worker is working for the hirer and not to periods between assignments. As such an agency nurse was not entitled to suspension pay after being sent home from an assignment following an incident (Donkor-Baah v University Hospitals Birmingham NHS Trust and ors).

Employment status

We begin our ERA's Tour proper with the important starting point for determining what rights an individual may have, section 230 Employment Rights Act 1996 (ERA). Section 230 ERA underpins who is and who is not an employee or worker. To be an 'employee' an individual must work under a contract of employment (s230(1)). To be a 'worker' they must work under a contract of employment (s230(3)(a) or a contract to perform work personally (s230(3)(b)).

You belong with employme

This year we had an interesting EAT judgment on the possibility of volunteers having 'worker' status. Could a volunteer in the Coastal Rescue Service be a worker under 230(3)(b)? In Groom v Maritime and Coastguard Agency, the EAT pointed out that 'volunteer' is not a term of art. The crucial issue will be whether or not there is a contract between the organisation and its volunteers and if so, the nature of that contract. If a contract has arisen between an organisation and a volunteer (as it did in this case at least in relation to certain remunerated activities), that person is likely to have 'worker status'. (This case is currently on appeal due to be heard by the Court of Appeal in November 2025)

Also, this year, as regards 'in employment' status for tax purposes, the Supreme Court in HMRC v Professional Game Match Officials Ltd confirmed that 'match day' = 'tax day' for a group of part-time football referees. Contracts between the referees and their administrative body, which were entered into each time they were engaged to officiate at a particular match, met the minimum requirements necessary to establish the existence of a common law contract of employment establishing employment status for tax purposes.

Unlawful deduction of wages

Our next stop on our ERA's Tour is section 13 – unlawful deduction from wages

Don't blame me, pay me

Where an employee is charged with a serious criminal offence, this leaves an employer wishing to suspend that employee pending conclusion of the criminal proceedings in a difficult position. In the absence of a contractual right to suspend on no pay (very unusual) the employee will be entitled to full pay while suspended. This year Mendy v Manchester City Football Club Ltd provided an extreme example. A footballer was suspended for a period of almost two years while facing serious criminal charges for which he was ultimately cleared. He was prevented from playing and training due to a Football Association suspension and by his bail conditions. Nevertheless, a tribunal upheld the footballer's claim of around £8.4 million for unlawful deduction of wages on the basis that he was in law 'ready, able and willing' to work during the non-custody periods and was prevented from doing so by impediments which were unavoidable or involuntary on his part.

National minimum wage (NMW)

Next up on our ERA's Tour is s13 ERA adjacent. A worker who does not receive the NMW can bring a claim for unlawful deduction from wages under s13 ERA or alternatively can make a complaint to HMRC. While the right to receive the NMW is conferred by the National Minimum Wage Act 1998, enforcement (in part) is under the ERA 1996.

22 21

Following the trend to reduce the minimum age at which the National Living Wage (NLW) applies, on 1 April, the age band for those entitled to receive the NLW was extended from those aged 23 and over to include those aged 21 and over.

Cruel Rule Summer

This year we had two cases illustrating that as far as NMW enforcement is concerned 'rules are rules' even if that produces outcomes that may seem unfair in individual cases.

  • In Revenue and Customs Commissioners v Lees of Scotland Ltd, the EAT restored HMRC's notice of underpayment to an employer who operated a holiday savings scheme for its employees, where contributions to the scheme took wages below the NMW. Acknowledging that there was no impropriety by the employer, with whom the EAT had considerable sympathy, the EAT stated a 'strong line' is needed on NMW, "even if this means that certain arrangements, not objectionable in themselves, cannot be permitted".
  • In Taylors Service Ltd (dissolved) and another v The Commissioners for HM Revenue and Customs, the EAT has held that time spent ‘just’ travelling from home to place of work is not 'time work' for NMW purposes. The mere fact that the travel (which could be up to four hours) for a group of poultry workers was travel that the workers were obliged to undertake by the employer using the employer's minibus, did not turn that travel time into 'work'. As pointed out by the EAT, to the extent that this created an injustice, owing to the sheer length of the travel time in this case, that could only be rectified by Parliament through legislation.

Holiday

Remaining ERA adjacent, our next stop is holiday rights. Rights to statutory annual leave are contained within the Working Time Regulations 1998. Under section 1 ERA details of holiday entitlement must be provided within the written statement of particulars and claims for unpaid holiday pay may be pursued under s13 as an unlawful deduction from wages.

Holiday Lover

We welcomed 2024 in with significant changes to holiday pay and accrual under the Working Time Regulations 1998. 1 January heralded a new era with:

  1. Codification of carry over rights: to reflect various pieces of retained EU case law (including the differing rules for reg 13 leave, reg 13A leave and the new reg15B leave).
  2. Codification of "normal pay": provisions as to what constitutes "normal remuneration" for the purposes of reg 13 leave and the new reg 15B leave for irregular hour workers and part-year workers.
  3. Clarification of record keeping requirements.

    And for leave years beginning on or after 1 April 2024:

  4. Two new classes of workers: 'irregular hour workers' and 'part-year workers'.
  5. Introduction of new annual leave entitlement provisions for irregular hour workers and part year workers ('reg 15B leave') by introducing an accrual method to calculate entitlement at 12.07% of hours worked in a pay period in the first year of employment and beyond.
  6. Introduction of permissible rolled-up holiday pay for irregular hour workers and part-year workers only.

While it is too early for case law on the new provisions, we have learnt from the tribunals this year:

  • The employer bears the burden of showing that it has ensured workers have the opportunity to take holiday, by encouraging them to take it and informing them in good time that leave not taken during the holiday year will be lost (outside the statutory carry over provisions – i.e. sickness absence, maternity etc) - Knight v Off Broadway Ltd. While this has been the position since 2018, many employers have not been alive to this requirement. Since 1 January 2024, this obligation has been codified making it clear that employers must comply.
  • Following the 2023 Supreme Court judgment in Agnew, whether deductions of wages constitute a series is essentially a question of fact answered by taking account of all relevant circumstances including the similarities, differences, frequency, size and impact of the deductions, as well as how they came to be made and applied and what linked them together. It is immaterial to that link that the interval between the payments was, from time to time, in excess of three months or that there was one correct and lawful payment (Deksne v Ambitions Ltd and British Airways plc v De Mello).

Tips

Next on our ERA's Tour is the new Part 2B of the ERA.

Fifteen percent

The Employment (Allocation of Tips) Act 2023 together with the statutory Code of Practice on Fair and Transparent Distribution of Tips came into force on 1 October introducing a new Part 2B (sections 27C to 27Y) into the ERA.

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 on 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.

Businesses found non-compliant with the legislation risk facing claims in the employment tribunal with compensation awards of up to £5,000 in respect of each worker. For claims regarding allocation or payment of tips, a significantly longer 12-month limitation period applies.

Whistleblowing

The next stop on our ERA's Tour is a dual stop at the two levels of protection for whistleblowers section 47B (protection from detriment) and section 103A (protection from unfair dismissal). There are some important differences in the protection afforded under the different provisions. For example, under s103A the protected disclosure must be the reason or principal reason for the dismissal. However, under s47B the protected disclosure need only have 'materially influenced' on the detrimental treatment. This year we have learned:

Influencer's bad blood?

  • In April, the EAT in William v Lewisham and Greenwich NHS Trust confirmed that the Supreme Court’s decision in Royal Mail Ltd v Jhuti [2019] did not govern causation in whistleblowing detriment claims under s47B. If an individual who makes a decision which inflicts a detriment did not know of the protected disclosures it follows that they could not have been materially influenced by them. This means that the knowledge and motivation of another individual who influenced the decision-maker cannot be ascribed to the decision-maker themselves.
  • But beware. In First Greater Western Ltd v Moussa [2024], the EAT upheld a tribunal decision that an employer had subjected an employee to a detriment on the ground that he had made protected disclosures, six years previously. While the tribunal dismissed claims against two individual respondents, it found that there was a 'collective memory' within the employer which had its origins in the protected disclosures and had permeated the approach of the HR department and those advised by it.

Look what you vicariously made me do

A few years ago, the Court of Appeal in Timis and Sage v Osipov and ors [2018] confirmed that there is no obstacle to an employee recovering compensation for dismissal consequent on detriment via a claim under s47B with the employer being vicariously liable for actions of a wrong-doing co-worker (subject to any reasonable steps defence). The concept of 'dismissal consequent on detriment' has been controversial and that controversy continued this year.

  • In March, the EAT in Wicked Vision Ltd v Rice considered that Osipov was only binding authority in relation to a co-worker's individual liability and not in relation to an employer's vicarious liability. The EAT therefore concluded in that case that the vicarious liability claim was barred by s47B because the alleged detriment amounted to a dismissal.
  • However, in August, a differently constituted EAT in Treadwell v Barton Turns Development Ltd held that a claimant can claim that their employer is vicariously liable under s47B for the act of a co-worker for the ‘detriment of dismissal’. Applying Osipov, all that section 47B excludes is a claim against the employer in respect of its own act of dismissal.

A conjoined appeal in both Wicked Vision and Treadwell is to be heard by the Court of Appeal in October 2025.

Volunteers speak now

Those who qualify as a 'worker' for whistleblowing protection purposes is a much broader category than those having 'worker' status which apply in relation to other rights set out elsewhere in the ERA 1996. But just how wide is the scope:

  • In October, in MacLennan v British Psychological Society, the EAT provided a strong steer that Articles 10 and 14 European Convention of Human Rights require that a charity trustee should be protected from whistleblowing detriment. While a trustee may not fall within the definition of a ‘worker’, they are likely, depending on the facts, to be in a position 'akin to an occupational status' given the nature of the role, responsibilities and regulatory regime.
  • But note, in January the EAT confirmed in Sullivan v Isle of Wight Council that a non-NHS external job applicant did not have a status 'akin to an occupational status' and therefore did not have whistleblowing protection. This case is pending appeal and due to be heard by the Court of Appeal in February 2025.

Family friendly

Next on our ERA's Tour are three neighbouring stops – section 80A (the right to paternity leave), section 80F (the right to request flexible working) and section 80J (the right to carer's leave).

Loving story

  1. Paternity leave – Amendments to paternity leave came into force for children whose expected week of childbirth/placement for adoption was on or after 6 April 2024. Changes include being able to take the two weeks of paid leave in two separate blocks, extending the period within which the leave can be taken and changes to the notification periods.
  2. Flexible working – On 6 April, revised provisions relating to the flexible working request process together with the corresponding revised ACAS statutory Code of Practice came into force. The right to request flexible working arrangements for any reason is now a day one right for all employees - previously a 26-week service requirement applied. Other changes include:
    • Two rather than one request can be made in any 12-month period;
    • Consultation by the employer before refusing a request (although there is no legislative de minimis requirement of what that ‘consultation’ needs to include);
    • Employers must respond within two rather than the previous three months, unless an extension is agreed;
    • Removal of the requirement for the employee to set out how the effect of their request may be dealt with by their employer.
  3. Carer's leave – On 6 April the new right to Carer's Leave came into force for employees caring for a dependent with a long-term care need (not ordinary childcare needs). Carers have a statutory entitlement to one week of unpaid carer's leave per year which can be taken in one block or in blocks of no less than half a working day.

Settlement negotiations

We now head over to s111A of the ERA. Under s111A employers and employees are able to engage in confidential 'off the record' discussions and negotiations about parting ways on the basis of mutually agreeable terms. That conversation cannot later be used as evidence that a subsequent decision to dismiss was predetermined in subsequent ordinary unfair dismissal proceedings. There is, however, a proviso that s111A protection will not apply where anything said or done was 'improper' or 'connected with improper behaviour'.

Fearless conversations

To date there has been very little case law guidance on what would amount to improper behaviour. The ACAS Code of Practice on Settlement Agreements does state that a form of undue pressure can be telling an employee that, if they do not accept the offer, they will be dismissed. However, this year the EAT in Gallagher v McKinnon’s Auto and Tyres Ltd, pointed out that it is important to distinguish redundancy situations from disciplinary situations. Telling an employee that their role was potentially redundant does not mean that dismissal is inevitable as there is still the possibility of alternative employment. Accordingly, raising the possibility of a redundancy exercise taking place if settlement is not agreed does not amount to improper behaviour.

Redundancy

We now head to section 139 on our ERA's Tour which defines the meaning of redundancy for unfair dismissal purposes.

I knew you were in 'at risk' trouble

This year on the non-collective redundancy front we have learned:

  • At the end of 2023, the EAT caused a stir when stating that ‘general workforce consultation’ should be regarded as the usual standard in cases of small-scale redundancies (where collective consultation is not triggered) and that a lack of such consultation (without reasonable explanation) rendered a dismissal by reason of redundancy unfair. This year the Court of Appeal has restored the orthodoxy. There was no justification for departing from the well-established principle that the adequacy of consultation in redundancy situations has to be considered on a case-by-case basis. In small-scale redundancy exercises, general workforce consultation is not mandatory but may be useful depending on the facts of the case. There is not a presumption that a dismissal where there has been no 'general workforce consultation' will be unfair which the employer must rebut, as held by the EAT.
  • The EAT also remind us that when considering the choice of selection pool, the starting point is usually to consider which particular kind of work is ceasing and which employees perform that kind of work. While a pool of one may be reasonable, the employer does need to genuinely apply its mind to the issue of the pool which may include a need to consider others located at different sites (Valimulla v Al-Khair Foundation).

All too, well it depends

Two EAT judgments remind us that when it comes to considering suitable alternative employment for those having priority due to being on maternity leave, there is an important distinction between a reduction in the number of roles and a reduced number of reorganised roles.

  • It is not an automatic consequence of there being a business reorganisation that there is a redundancy situation. The two are entirely self-standing concepts. The test for redundancy under s139 focuses on whether the employer’s requirement for 'employees to carry out work of a particular kind' had ceased or diminished (or were expected to cease or diminish). It does not inevitably follow from a reorganisation, that there has been a redundancy. That question must be addressed first before moving on to consider suitable alternative employment (Ballerino v Racecourse Association Ltd).

     

  • In a conventional redundancy scenario in which there is simply a reduction in the number of existing roles, the maternity protection does not override a valid selection process requiring, in effect, a woman eligible for the protection but who scored lower than others to bump someone who scored higher. It is only when roles are merged or significantly altered during a redundancy process, that any newly created position may qualify as 'suitable alternative employment' if it remains similar to the previous role (Carnival Plc v Hunter).

Unfair dismissal

We now head to a key part of the ERA, Part X Unfair Dismissal (sections 94 to 134A). This year we have learned:

We are never ever getting back together

  1. In Alexis v Westminster Drug Project an employee raised a grievance that a selection process in a reorganisation exercise was unfair on the basis that the adjustments made due to her dyslexia were inadequate. Despite being offered a fresh interview with additional accommodations, the employee refused to accept the largely favourable outcome of her grievance and further appeal and continued to inundate the grievance decision-maker and company chair with complaint e-mails. The tribunal and EAT both agreed that in such circumstances it was open to the employer to consider that the employment relationship had irretrievably broken down. Once trust and confidence had irretrievably broken down, the only option was dismissal, and the employer was not required to consider alternatives. As such her dismissal for 'some other substantial' was fair.
  2. We also have a reminder that an employee's failure to process their complaint through their employer's grievance procedure is not relevant to whether they can claim constructive dismissal in relation to that complaint. The test for constructive dismissal is whether the employer has acted in such a way as to repudiate one or more of the terms of the employee's contract of employment (Nelson v Renfrewshire Council).
  3. The right to take unpaid parental leave and the protection from dismissal for seeking to take unpaid parental leave are two different rights. An employee can become protected from dismissal for seeking to take parental leave without having complied with formal notice requirements whether these are set out in an employer's policy or where the statutory default scheme applies (Hilton Foods Solutions Ltd v Wright).
  4. Masiero v Barchester Healthcare Ltd provides a good example of how a tribunal should approach the balancing exercise where an employee argues that dismissal has breached their human rights where the potential infringement is aimed at protecting the human rights of others. In this case the dismissals of care home employees for refusing to comply with the employer's mandatory COVID-19 vaccination policy were fair - even a small reduction in the risk to life of care home residents was capable of outweighing the claimants' right to a private life.

You need to calm your dismissal threat down

The statutory Code of Practice on Dismissal and Re-engagement devised under the previous Conservative Government came into force on 18 July 2024. The Code sets out how employers should act when seeking to change employment terms and conditions if the employer envisages dismissal and re-engagement. It 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. It seeks to ensure dismissal and re-engagement is used only as a last resort.

A failure to observe the Code does not give rise to any standalone claims. However, it will be taken into account when considering relevant cases, including claims in relation to unfair dismissal (brought under s111 ERA) and unauthorised deduction of wages claims (brought under s23 ERA). Where applicable, tribunals will have the power to increase an award by up to 25%, if the employer has unreasonably failed to comply with the Code.

Going forward, the Labour Government has stated it will further strengthen protections against fire & rehire practices.

To discuss any of the points raised in this article in relation to employment law developments, please contact Connie Cliff or Jonathan Chamberlain.