In our latest Employment Essentials article, we share our top picks of recent employment law developments that may affect your business.

This month, our top 10 picks are:

Legislative changes

  1. Proposed Statutory Code of Practice on "fire and rehire" practices
  2. Increases to compensation limits & statutory rates
  3. Fit Notes
  4. Right to work checks
  5. Reporting/notification duties: GPGR, IR35 and climate-related information
  6. Revised Guidance: HSE, ICO, DHSC
  7. Increased Certification Officer powers

Case law updates

  1. Industrial action: protection from detriment for participating in industrial action not protected under TULRCA 1992
  2. TUPE: settlement agreement wide enough to cover transferee's failure to provide information to transferor
  3. Worker status: irreducible minimum of obligation not required

Legislative developments

The Employment Bill promised in the December 2019 Queen's speech, including reform of the right to request flexible working and increased redundancy protection for pregnant employees, has yet to materialise. Furthermore don't hold your breath, as it is highly rumoured that like last year, the Employment Bill will again not feature in the May 2022 Queen's speech. Nevertheless, April is a month of a number of routine legislative updates with a dash of new provisions and proposed changes.

1. Proposed Statutory Code of Practice on "Fire & rehire" practices

On 29 March 2022, the Government announced that a new Statutory Code of Practice will be published on the use of "fire and rehire" practices to bring about changes to employees' terms and conditions ("dismissal and re-engagement" in old money terms). The proposed new Code is to detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms. The Code is to include practical steps that employers should follow. As a statutory code, tribunals and courts will be required to take it into account when considering relevant cases, including unfair dismissal. They will have the power to apply an uplift of up to 25% of an employee's compensation where the Code applies, and the employer unreasonably fails to follow it.

The Government has been under pressure to address the use of "fire and rehire" for some time. Following an investigation by the Department for Business, Energy and Industrial Strategy (BEIS) in conjunction with Acas into such practices, on 11 November 2021 Acas published new advice. The advice is aimed at helping employers maintain good employment relations and reach agreement with staff if they are thinking about making changes to their contracts - Making changes to employment contracts – employer responsibilities. However, this existing Acas advice currently has no statutory force.

The Government's press release indicates that the change of heart from last year when mere guidance was seen as sufficient, to a move to a statutory code has been prompted by the P&O Ferries mass dismissals. While P&O's actions did not concern "fire and rehire" - there was no "re-hire" - the new Code will in future reinforce the requirement to consult. This essentially reinforces the requirement to consult about ways of avoiding the dismissals by increasing the potential financial cost of an employer simply choosing to ignore their consultation obligations by moving straight to dismissal, rather than seeking to achieve the commercial aim by consulting over changes to terms and conditions.

Further details of the Statutory Code of Practice are now awaited.

2. Increases to compensation limits & statutory Rates

Tribunal awards

From 6 April 2022:

  • a week's pay - £571 (previously £544).
  • maximum basic award/statutory redundancy payment - £17,130 (previously £16,320).
  • maximum compensatory award – the lower of £93,878 (previously £89,493) or 52 weeks' pay.

Note: The new rates apply where the "appropriate date" occurs on or after 6 April 2022 (e.g. for unfair dismissal the effective date of termination) not the date of the corresponding tribunal hearing.

In addition the so-called Vento–bands on injury to feelings and psychiatric injury awards in discrimination claims also increased on 6 April to:

  • Lower band: £990 to £9,900 (previously £900 to £9,100)
  • Middle band: £9,990 to £29,600 (previously £9,100 to £27,400)
  • Upper band: £29,600 to £49,300 (previously £27,400 to £45,600)
  • Most exceptional cases: £49,300+ (previously £45,600+).

Statutory payment rates

From April:

  • the standard rates of statutory maternity, paternity, adoption, shared parental leave and parental bereavement pay increased to £156.66 per week (previously £151.97) from 6 April; and
  • the standard rate of statutory sick pay increased to £99.35 per week (previously £96.35) from 11 April.

National Minimum Wage (NMW)

From 1 April the National Minimum Wage rates increased:

  • rate for 23+ year olds (the national living wage): £9.50 per hour (previously £8.91)
  • rate for 21 to 22 year olds: £9.18 per hour (previously £8.36)
  • rate for 18 to 20 year olds: £6.83 per hour (previously £6.56)
  • rate for 16 to 17 year olds: £4.81 per hour (previously £4.62)
  • rate for apprentices: £4.81 per hour (previously £4.30)

3. Fit Notes

Welcome to the digital age. From 6 April 2022, fit notes may be issued digitally without a wet-ink signature.

Previously, fit notes had to be signed in ink by the issuing doctor, although given the significant shift to virtual GP consultations since the outbreak of the COVID-19 pandemic, there has been increasing demand for fit notes to be provided digitally.

A new version of the fit note has been introduced that must contain the name of the doctor authorising the form, rather than needing it to be physically signed. While this change is being rolled out, the previous version of the fit note that requires physically signing will still also be legally valid.

4. Right to work checks

As we set out last month, the Home Office is now also further embracing the digital age having created a new digital right to work checking solution for use since 6 April 2022. The digital system can be used in relation to British and Irish citizens who hold valid passports (or Irish passport cards) who are currently outside the scope of the Home Office's existing online service (largely limited to EEA nationals with settled status).

On 22 March the Home Office updated its Codes of Practice that also came into effect on 6 April:

The guidance also confirms the move to using online checking only for those who hold a biometric residence permit, biometric residence card or a frontier worker permit (those covered by the previously existing online system).

The updated guidance now also contains details of the extension until 30 September 2022 of the coronavirus adjusted right to work manual checks concession as a transitional measure.

5. Reporting/Notification duties: GPGR, IR35 and climate-related Information

Employers/HR teams should ensure they have complied with their reporting duties including:

  1. Gender Pay Gap Reporting (GPGR): The start of the new reporting year is now here. The 2021 reporting figures should have been published by 30 March 2022 for public-sector employers and 4 April 2022 for private-sector and voluntary-sector employers. Organisations are required to publish reports on their website and on the gender pay gap reporting portal on the GOV.UK website.
  2. IR35: The changes to the IR35 rules on off-payroll working for the private sector took effect on 6 April 2021. Under the rule change the organisation engaging the contractor is responsible for determining their employment status and assessing whether IR35 applies and notifying the worker of that determination. Organisations should bear in mind that since 6 April 2022, the HMRC's enforcement "grace period" no longer applies. In any event, status determinations should be regularly reviewed to ensure that they are still accurate.
  3. Climate-related information: While not an employment law measure, an employer's approach to its impact on the climate is a factor of increasing importance to many job applicants and existing employees. From 6 April 2022, the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 introduce a requirement for some larger employers to provide climate-related financial disclosures in their strategic report. The information to be disclosed includes descriptions of the climate-related risks and opportunities material to its business; its governance and risk management approaches to these; how these risks and opportunities impact its strategy and business model; and the targets and performance indicators it applies to managing them. BEIS guidance is available at "Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs".

6. Revised Guidance: HSE, ICO, DHSC

Following the relaxation of COVID-19-related measures across the UK with a move to "living with COVID-19", a number of Government departments and non-departmental public bodies have updated their coronavirus related guidance.

A. Health and Safety Executive (HSE)

On 31 March 2022, the HSE published revised advice to workplaces regarding COVID-19. By way of general advice:

  • The HSE "no longer requires every business to consider COVID-19 in their risk assessments or to have specific COVID-19-related measures in place". There remains, however, a specific public health requirement for a COVID-19 risk assessment and reasonable measures applicable to employers in Wales, but this is not regulated by the HSE.
  • Employers must continue, as always, to comply with general health and safety law. Although the HSE will no longer require COVID-19 control measures, employers must continue to consult workers and their representatives on any changes they make that might affect health and safety.

The advice is due to be further reviewed by 30 April 2022.

B. Information Commissioner's Office (ICO)

The ICO has published guidance, "Data protection and Coronavirus-19 – relaxation of government measures", for organisations and employers to help them to comply with their data protection obligations from 1 April 2022. The updated guidance recommends that employers:

  • Review the approach and emergency practices they put in place during the pandemic to ascertain whether the personal data they collect is still necessary. They should ensure that it is still reasonable, fair and proportionate to the current circumstances, taking the latest Government guidance into account.
  • Assess any additional personal data collected and retained during the pandemic and ensure that it is securely disposed of if it is no longer required.
  • Identify a lawful basis other than "legal obligation" when collecting vaccination information if the legislation originally relied upon has expired.
  • A reminder that data protection law does not prevent employers from keeping staff informed about potential or confirmed COVID-19 cases among colleagues, however, naming individuals should be avoided and the provision of information should be no more than is necessary.

C. Department of Health and Social Care (DHSC)

Following the requirement for vaccination for deployment in care homes having been removed, revised guidance has been issued which applies from 4 April 2022 - "COVID-19 supplement to the infection prevention and control resource for adult social care". Among the issues addressed are:

  • Providers are advised to complete risk assessments which take into account the vaccination status of staff members and providers may consider taking additional steps such as prioritising the deployment of vaccinated staff to care for those who are at higher risk of severe COVID-19 infection.
  • Workers without symptoms should test twice a week with lateral flow tests (LFTs). If a worker is symptomatic, they should take an LFT immediately and take another LFT 48 hours later. Symptomatic staff should stay away from the workplace and only return if both LFT results are negative. For workers testing positive, the guidance remains unchanged. They should stay at home until they have had two consecutive negative LFT results (taken at least 24 hours apart and no earlier than five days after their symptoms started or their initial test date).

7. Increased Certification Officer powers

On 1 April 2022, key reforms to the role of the Certification Officer, who is responsible for statutory functions relating to trade unions and employers' associations, came into force. Notably:

  • Wider proactive and enhanced investigatory powers in relation to a number of statutory duties on trade unions;
  • Strengthened enforcement powers to enable the Certification Officer to issue financial penalties of up to £20,000, in addition to issuing an enforcement order; and
  • The power to impose a levy on trade unions and employer associations on a cost recovery basis.

The Certification Officer has published guidance on how it intends to use these increased powers.

In relation to the annual levy to be imposed, it will be capped at 2.5% of a union or employers' association's annual income. The first levy period will relate to the period 1 April 2022 to 31 March 2023. Levy notices will be estimated in November 2022, issued in March 2023 and payable by 31 May 2023.

Case law updates

8. Industrial action: protection from detriment for participating in industrial action not protected under TULRCA 1992

It has long been common practice by some employers to withdraw discretionary benefits from employees who take part in industrial action. Following two Employment Appeal Tribunal (EAT) judgments last year, employers adopting practices of this kind were at risk of being held to have acted unlawfully. Instead, the EAT judgments meant they could only safely deduct from an employee's pay an amount commensurate with the period for which they were taking industrial action. However, the Court of Appeal has now overturned the EAT.

Departing from previous case law, in June 2021 the EAT in Mercer v Alternative Future Group Ltd held that workers are protected from detriment short of dismissal for taking part in industrial action and in a bit of judicial legislative drafting, added words to Part 3 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) to achieve this result. In November 2021, the EAT in Morais v Ryanair DAC agreed the position as held in Mercer. Both cases were appealed to the Court of Appeal.

On appeal, with the Secretary of State for Business, Energy and Industrial Strategy intervening, the Court of Appeal in Mercer has held that protection from detriment for participating in industrial action cannot be read into Part 3 TULCRA, which protects workers from being subjected to dismissal and detriment to deter them from taking part in trade union activities. This is because industrial action (which is not considered a trade union activity) is instead covered by Part 5 TULRCA and Part 5 only provides protection against dismissal and not detriment.

The Court of Appeal acknowledged that failure to give employees legislative protection against any sanction short of dismissal for taking official industrial action might put the UK in breach of Article 11 of the European Convention on Human Rights, even in the case of a private sector employer, but only if the sanction was one which struck at the core of trade union activity. However, an attempt to address this by reading down section 146 would result in impermissible judicial legislation and was therefore a matter that should be left to Parliament.

Takeaways

Essentially, the CA has confirmed that UK legislation does not prevent an employer taking action short of dismissal in response to an employee's participation in industrial action. The Court's comments in relation to possible breach of Article 11 "if the sanction was one which struck at the core of trade union activity" leaves open the question of when detrimental treatment of employees short of dismissal will amount to an Article 11 breach, leaving a grey area.

The appeal in Ryanair remains outstanding.

9. TUPE: settlement agreement wide enough to cover transferee's failure to provide information to transferor

Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE):

  • The transferor employer must inform employee representatives about any measures that it envisages the transferee will take in relation to the transferring employees in connection with the transfer (reg 13(2)(d)).
  • The transferee must provide information about any such measures to the transferor employer with enough time to allow the transferor employer to perform that obligation (re 13(4)).
  • The transferor employer will have a defence where the transferee has failed to provide information under regulation 13(4), provided it gives notice of that defence to the transferee, which automatically makes the transferee a party. The tribunal can then order the transferee to compensate the employees (reg 15(5)).

In Clark v Middleton and another, Ms Clark brought a claim against the transferor in relation to failure to inform and consult over measures proposed by the transferee and also claims against the transferee for unpaid wages, holiday pay and unfair dismissal. Following Acas conciliation, Ms Clark settled all claims against the transferee.

When the claim against the transferor was heard, the tribunal found that there had been a failure to inform and consult over proposed measures. However, the transferor succeeded in its defence under reg 15(5) (the transferee failed to provide the information) and so the award for liability was instead made against the transferee (reg 15(8)).

The EAT noted that an award against a transferee on account of a failure to provide a transferor with the requisite information is contingent upon a claim being made against the transferor, and the transferor then relying upon the transferee's non-compliance as a defence. Nevertheless, the remedy for failure to inform and consult that passed to the transferee was still covered by the agreed settlement of "all claims" against the transferee, including this contingent claim.

On a separate point, the EAT also confirmed that the duty to notify employees (or their representative) of the fact that a transfer is to take place includes notifying them of the precise identity of the transferor, including, if it is to be a limited company, the name of that company.

Takeaways

  • As ever, where parties are settling claims, care needs to be taken over the description of the claims being settled.
  • Even where, as in this case, it is known that the new employer is likely to be a newly-formed company, and who its proprietor will be, it still matters to know the name and identity of the unique legal person who will be the employer.

10. Worker status: irreducible minimum of obligation not required

In Nursing and Midwifery Council v Somerville, the Court of Appeal has confirmed that an 'irreducible minimum of obligation' is not a prerequisite of 'worker' status. Under the statutory definition, it is sufficient that the contract includes an obligation on the individual to perform work or services personally, and that the other party is not a client or customer. There is no indication that there must be some distinct, superadded obligation to provide work or services, independent from the provision of work or services on a particular occasion.

Takeaways

Once a contract is agreed between an employer and an individual to personally perform work on a particular occasion and the end user is not a client or customer of a profession or business carried on by that individual, 'worker' status may be established for the duration of that contract without anything more.

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