5th March 2024
Employment law changes effective in April 2024
1. National Minimum Wage. The National Minimum Wage is increased on an annual basis and last Autumn it was announced that the amount will increase to £11.44 for workers aged 21 or over (also known as the National Living Wage). This change will be effective as of 01 April 2024 and the rate for workers aged 18 to 20 will increase to £8.60 an hour at the same time. There are corresponding increases for the lower 16 – 17 age bracket and also the apprenticeship rate. Further into the distance, it is speculated that a single rate for all workers over the age of 18 may be introduced along with the apprenticeship rate being scrapped and apprentices instead receiving the standard national minimum wage applicable to their age bracket.
Until now, there has also been a National Minimum Wage exemption for domestic live in workers. That will cease to apply as of 01 April and such workers will become entitled to the National Minimum Wage applicable to their particular age.
2. Recent changes to holiday entitlement calculation have been introduced starting on 01 January this year with further parts to be implemented as of 01 April this year. One of those changes concerns something known as rolled-up holiday pay. Rolled-up holiday pay is the practice of paying an enhancement above base salary to reflect holiday pay entitlement but not separately paying the worker when they actually take holiday. For many years this has occupied a somewhat strange position in law whereby rolled-up holiday pay has been unlawful but, provided there has been a transparent enhancement to basic pay, workers could not take action. The change as of 1 April 2024 is to expressly permit the practice of paying rolled up holiday pay in particular circumstances; those circumstances being part year workers (for example a seasonal employee or an employee in a nursery setting whose contract only requires term time working) and people who work variable, irregular hours.
Another change applicable to irregular and part-year work that is being introduced is to permit holiday accrual to be calculated at a rate of 12.07% of actual hours worked. This rate had long been used in practice (indeed was endorsed in ACAS guidance) as equating to a pro-rata statutory minimum entitlement of 5.6 weeks’ paid annual leave per year but it did not actually accord with the calculation method contained in the Working Time Regulations. That led to the Supreme Court ruling that the 12.07% method produced the wrong result for certain term time only workers but the right calculation method instead resulted in those term-time workers receiving proportionally more holiday than whole year workers. The government legislation is therefore intended to reverse the effect of the Supreme Court decision.
3. On 06 April the Flexible Working (Amendment) Regulations will come into force. These provide that the right to make a flexible working request will become a ‘Day 1’ right rather than contingent on having 26 weeks length of service, that an employee has a statutory right to make two requests per year rather than one and that the timescale for an employer’s response will be reduced to two months from the current three. Aside from the last change, it is questionable how much difference these amendments will make in many workplaces because, in practice, if a new employee sought to change their hours
or a long-standing employee sought to change their working days on two separate occasions within the same year, it is unlikely that an employer would have point-blank refused to consider the requests simply because they were not mandated by statute to consider the requests.
4. An Increase in the weekly cap for Statutory Redundancy Payments and maximum ordinary Unfair Dismissal awards will take place on 06 April 2024. The new weekly cap will be £700 per week which means that the maximum statutory redundancy payment (applicable where somebody has twenty or more continuous years’ service all over the age of 41) will be £21,000 as a tax free payment. Maximum compensation for ordinary Unfair dismissal claims is also increasing both due to the increase in the weekly cap to £700 having the same effect on Basic Awards for unfair dismissal as it does with statutory redundancy payments and also because the maximum compensatory award is being increased by circa £10,000 to £115,115. Please note that statutory cap will be disapplied in instances of automatically unfair dismissals.
5. A new statutory right to unpaid Carer’s leave will be introduced on 06 April 2024. That right is for an employee who has a dependent with long term care needs. The right will be to take one week off, which can be broken down into either full days or half days, in every rolling twelve-month period. As with the statutory mechanism (which can be varied by contract) for holiday notification contained in the Working Time Regulations, the required notice will be twice as many days as the employee wishes to take; i.e if they wish to take two consecutive days off they will need to give four days’ notice. An employer will be able to postpone the carer’s leave in certain circumstances.
6. An extension to the protected period to encompass the entire period between when a pregnant employee notifies their employer that they are pregnant until eighteen months after returning from maternity leave. One effect of this will be with regards the law of redundancy in that, while all redundancy scenarios should require consideration of whether there may be suitable alternative work for an employee provisionally selected for redundancy, people who are in a protected period have an enhanced right to actually be offered a suitable alternative role even if there may be another employee who is in line to be made redundant but would be better suited themselves to the available alternative role. Statistically, a disproportionate number of employees returning from maternity leave have been made redundant shortly after their return and limiting that is a key reason for the change.
7. Amendments to the right to take paternity leave will come into effect in circumstances where the expected week of childbirth (or adoption) is on or after 06 April 2024. Previously, the right was to take either one or two weeks as paternity leave but that had to be in consecutive blocks and taken within eight weeks of the birth or adoption. Now, it will be possible to take a week, return to work for a bit and then take another week provided that both weeks are taken within the first year after childbirth or adoption.
Phil Sayers, Employment Law for Wilde Law
6th November 2023
Autumn 2023 case law update
Over £100,000 awarded as compensation for gender critical belief discrimination
Forstater v CGD Europe and others ET/2200909/2019
A long-running legal saga appears to have reached its conclusion with the Claimant, Ms Maya Forstater, being awarded over £100,000 in compensation. Ms Forstater had been engaged by a company under a series of fixed-term consultancy agreements. In 2017 and into 2018 she started to make high-profile online comments regarding gender identity and gender fluidity; the general thrust of her comments was that gender is biological and a man does not become a woman or vice versa by identifying as the opposite sex.
In October of 2018 some of the Claimant’s colleagues complained that her comments were “transphobic”; something she denied in correspondence while maintaining that she would continue to state that she had no issue with how people chose to identify but identifying as the opposite sex did not actually make someone the opposite sex. When her contract expired on 31 December 2018 it was not renewed and she (correctly as subsequently found) linked that with the dispute about her comments when issuing proceedings alleging discrimination in relation to her philosophical beliefs.
The primary case law authority as to what constitutes a philosophical belief that is capable of being protected under discrimination law was set out in Grainger PLC v Nicolson [2010] ICR 360. That case specifies that the belief must genuinely held (which often requires the Claimant to demonstrate how they live their life in accordance with the belief) and must be worthy of respect in a democratic society, not be incompatible with human dignity and not conflict with the fundamental rights of others. At the initial Tribunal hearing the Claimant failed to establish the requisite grounds due to those requirements; in other words her belief that gender is something someone is born with and cannot change in a biological sense (even if they have gender reassignment operations) was held to be incompatible with human dignity, in conflict with the fundamental rights of others and not worthy of respect in a democratic society.
Ms Forstater appealed the initial decision to the Employment Appeals Tribunal and was successful in her appeal. The basis on which she was successful was the EAT holding that the original Tribunal had applied too low a threshold and that the sort of philosophical views that should be excluded from protection are limited to those akin to support for Nazism. The EAT were at pains to stress in their judgment that Ms Forstater’s beliefs being protected did not mean that she was therefore free to refuse to use transgender people’s favoured pronouns; doing so could constitute harassment.
The matter was then returned to a freshly constituted Employment Tribunal who upheld the Claimant’s complaints and awarded compensation of over £100,000. Specifically, they awarded £91,500 as compensation and further £15,000 in interest to represent the passage of time since the original discriminatory acts. To be clear the award was only that significant due to the direct financial loss that the Claimant had suffered from the non-renewal of her well remunerated position with the Injury to feelings element being assessed at £25,000. That put it in the middle band of the three bands used to assess injury to feelings although towards the top of the middle band.
There have been several other high-profile recent cases arising out of similar circumstances.
Contractual condition specifying that employee must serve a minimum period of employment is potentially valid but injunction not granted on the particular facts
Hine Solicitors Ltd v Jones and another [2023] EWHC 1708 (KB)
Although the outcome of this case was decided against the employer for other reasons, it did address an interesting point of law regarding the enforceability of an unusual provision in Ms Jones’ employment contract. Her contract specified that she was unable to give notice to her employer for a period of three years after commencement of employment and was therefore under an obligation to serve (subject to possible termination by the employer) a minimum of three years and then a three month notice period. She resigned in breach of that requirement after approximately a year’s service.
Her employer brought proceedings which partially relied on her breach of that contractual term and in response she argued that the provision was unenforceable as it could not be reconciled with the minimum notice periods set out in the Employment Rights Act 1996. Those are that an employee needs to give a minimum of one week regardless of length of service whereas an employer needs to give one week per completed years’ service; up to a maximum of twelve weeks’ notice. Although the Court did not need to decide in this instance whether or not the three-year minimum service clause actually could be relied upon, they did hold that it was plainly arguable that the provision was valid and effective.
Statutory Redundancy Payment entitlement not restored if employee subsequently seeks to accept suitable alternative work having previously rejected it.
Love v M B Farm Produce Ltd ET/2304946/2022
In a redundancy scenario an employee is generally entitled to a Statutory Redundancy Payment calculated based on their length of service, salary (subject to a weekly cap) and age should the redundancy scenario result in their departure. However, there is an exception where the employer offers the employee suitable alternative work and the employee unreasonably rejects that offer of suitable alternative work. Such an alternative role would generally be subject to a trial period and the suitability or otherwise is broadly assessed from the employee’s viewpoint; for example, a job at the same level and with the same pay as the role being made redundant may not be suitable if there is a further hour’s daily commute involved.
Mrs Love was employed at a farm shop but her employer decided to close that farm shop thus leaving her role redundant. The employer offered a similar role at another farm shop and offered to pay her travel expenses along with agreeing an initial trial period. She rejected the offer as she was not a confident driver although her employer had been willing to agree to such things as not requiring that she drive in adverse weather conditions. Her employer argued that she had forfeited her entitlement to a SRP as she had unreasonably rejected an offer of suitable employment and at that point Mrs Love sought to reverse her rejection of the offer and agree to trial the role. Her employer would not permit her to change her mind and she brought proceedings for Unfair Dismissal and failure to pay a Statutory Redundancy Payment (SRP).
The Tribunal upheld her Unfair Dismissal claim noting that it was unreasonable not to permit her to undertake the trial period notwithstanding her prior rejection of the role. However, the Tribunal rejected her claim for a SRP with the |Judge observing that there was nothing in the statutory rules governing entitlement to a redundancy payment or in subsequent case law which addressed the scenario of an employee changing their mind. However, on his reading of Section 141 of the
Employment Rights Act 1996, the logical construction was that once entitlement had been lost it could not subsequently be restored.
Bank found liable for Unfair Dismissal and Disability Discrimination following dismissal of employee who used racially offensive language for illustration purposes during equality training.
Borg-Neal v Lloyds Banking Group ET/2202667/22
Mr Borg-Neal was a manager at Lloyds Bank and was dyslexic. He attended an equality training session with the training undertaken by an external provider. In the course of the session he asked a question about how a line-manager should respond if they heard a member of an ethnic minority using language about that minority that could be considered a racial slur if used by someone who was not a member of that minority. When he did not immediately receive a response he then followed up with an example in which he used the N Word; stating that word in full.
The external training provider reported that to Lloyds after the training session had ended. The bank then conducted an investigation which resulted in disciplinary proceedings. They concluded that he had not intended to be offensive and that the question he had asked was a relevant one but also concluded that he should have known better than to use the full word in a professional setting. Although he had immediately apologised he was dismissed for gross misconduct; in part because the trainer had been off work and unwell for four or five days after the incident.
Mr Borg-Neal brought proceedings for Unfair Dismissal, Disability Discrimination and Race Discrimination. He succeeded in the first two of those claims but not the last. The Tribunal accepted that the language used could be deemed misconduct by a reasonable employer but found that the context was all important in this situation. In the circumstances the employer did not have a reasonable belief that he was guilty of gross misconduct and also found the investigation conducted to be unfair; particularly that the bank had not sought to obtain direct evidence from the trainer.
Furthermore, Mr Borg-Neal succeeded in his claim for disability discrimination as the Tribunal found that his dyslexia had contributed to the situation through affecting how he had expressed himself but Lloyds had not taken this into account when deciding to dismiss. However, he did not succeed in an argument of race discrimination whereby he had alleged that a hypothetical black comparator would not have been dismissed for similar conduct. The Tribunal struggled to construct an appropriate comparator and noted that centuries of intolerance had created a situation where that particular word was uniquely offensive and that no derogatory description of white people had comparable impact.
Phil Sayers, Employment Law for Wilde Law
16th October 2023
Recent Case Law – holiday pay and unlawful deductions from wages
Recent months have seen a few important developments in employment law case law including a Supreme Court ruling that has important implications for the ability of employees to go back in time to claim substantial sums in arrears of wages where the claim arises from an alleged series of unlawful deductions.
Chief Constable of the Police Service of Northern Ireland and another v Agnew and others (Northern Ireland) [2023] UKSC 33
Holiday pay has been a hot topic in employment law during recent years. Cases have held that annual leave should be based on usual remuneration rather than basic salary; therefore the calculation of how much should be paid as holiday pay should factor in things like overtime and commission payments when such sums are a regular feature of the employment relationship.
One effect of those rulings was to create significant historical liabilities for all employers who had previously been paying employees holiday pay calculated on basic salary only but whose employees received a portion of their usual remuneration via additional payments. That is because, while there is a usual three-month time limit for claims based on underpayments, that three months only starts to run from the last deduction where there have been a series of similar deductions. In other words, earlier deductions beyond the three-month time limit for bringing a claim can still be sued for if the final deduction is a series is within the three-month period.
The government passed legislation to limit the effect in Great Britain (but not Northern Ireland) by stating that claims for a series of unlawful deduction of wages can only go back a maximum of two years in time. Please note this does not just affect holiday pay (although holiday pay was the reason for its introduction) and instead affects all claims regarding shortfalls in wages.
The Employment Appeals Tribunal were also conscious that case law decisions made in relation to the correct calculation of holiday pay had potentially opened the door to a very large number of employees bringing valuable claims against their employers based on historical practice (albeit it is only those employers who did not take into account previous rulings about holiday pay needing to consist of usual remuneration rather than just basic pay who are at risk because employers who have been paying properly for at least the last three months would be in a fairly secure position anyway as claims would be out if time).
In the case of Bear Scotland Ltd v Fulton and other cases [2015] IRLR 15 the EAT ruled that a series of deductions would be broken if there were more than a three-month gap between underpayments in the series. Therefore, in Great Britain, claims could only go back a maximum of two years and could not do that if there was a gap of more than three months between underpayments within that two-year period. A technical reason related to the difference between EU derived leave and additional domestic leave further restricted the ability of potential Claimants to litigate underpayments they had historically received. In contrast, in Northern Ireland, there was no two-year limit but it was harder for certain Claimants (in this instance Police Officers) to cite the concept of a series of deductions in the first place due to the way legislation was drafted.
Both a Northern Ireland Employment Tribunal and the Northern Ireland Court of Appeal issued judgments in the present case that did not follow the approach set out in Bear Scotland Ltd v Fulton in that they permitted the recovery of a series of underpayments where there were sometimes gaps of over three months between the individual underpayments and there were also some lawful (i.e at the correct level) payments in between individual underpayments. They focused instead on whether the underpayments said to consist of a series of underpayments were all of a similar nature rather than the precise timings between them. They did deem how frequently or otherwise similar underpayments were made to be a relevant factor in considering whether it could be said that they consisted of a series but it was not deemed determinative in the way that the Employment Appeals Tribunal had decided.
The matter came before the UK Supreme Court who have now issues their judgment. In that they noted that prior to the decision in Bear Scotland Ltd v Fulton (which it must be said was a controversial decision) there had not been a suggestion in previous case law that a gap of over three months between individual underpayments would be fatal to an argument that underpayments formed a series. They also noted that it created practical difficulties including Claimants feeling the need to keep issuing claims of a similar nature so as to be sure they would not be time-barred; something the Claimants could not be faulted for doing given the legal position but was undesirable due to cost and an administrative burden on the already stretched Employment Tribunal system.
The Supreme Court agreed with the approach taken by the Northern Ireland courts and overruled that aspect of the Bear Scotland Ltd v Fulton decision in a way that also sets precedent in the rest of the United Kingdom. Therefore, the decided legal position with regards unlawful deductions of wages claims (all types; not just holiday pay) is that while the frequency and similarity of alleged unlawful deductions are highly relevant in deciding whether it can be said that they form a series; a gap of over three months between the alleged individual unlawful deductions or lawful payments at the correct level being made in between the alleged unlawful deductions are not necessarily fatal to the argument that there has been a series.
It should be noted that in Great Britain there is still an overall bar on such claims going back beyond two years in time although that bar has itself been subject to challenge with more challenges anticipated in the future. Therefore, the impact here will not be as great as in Northern Ireland where the cost of meeting the claims brought in this particular case was estimated at £30 million if they were successful (as now seems likely when they return to the Employment Tribunal system for determination following the Supreme Court ruling).
The Supreme Court also clarified that there was no particular order in which the annual leave from the EU derived right to four weeks and the domestic right to an additional 1.6 weeks has to be taken. That is mixed news for employers as on the one hand it might make it a little easier for potential Claimants to sue in certain scenarios but on the other hand will ease administrative and conceptual complexity that had pervaded the area of holiday entitlement and pay.
Phil Sayers, Employment Law for Wilde Law
21st July 2023
Employment Law Developments in 2023
As with every year, 2023 has already been a busy year for employment law developments with many more to come as summer turns to autumn and then to winter. A public consultation closed in early July which sought views on the Working Time Regulations, holiday pay and TUPE while several other recent consultations have now resulted in proposals for legislation. The current state of play with many developments is that we know the proposed direction of travel but not the intended timings.
The below sub-headings are just a few of many possible or confirmed upcoming developments. Other aspects of employment law that are under review (and have been for a few years now) are such things as looking at employment status in light of difficulties in applying traditional approaches to the gig economy and reform of the Employment Tribunal system.
Phil Sayers, Employment Law for Wilde Law
TUPE consultation requirements
The government is currently considering the responses it has received to the recent public consultation regarding TUPE. Nothing is set in stone and there is a possibility that there will be no changes at all in this area. If changes are made, one possibility that has been touted is to remove the requirement that TUPE consultation on any ‘measures’ (a wide definition that potentially encompasses an incoming employer proposing to alter pretty much any aspect of working conditions) be via employee representatives where there are ten or more people employed in a business and instead permit the consultation to take place directly with the affected employees where there are fewer than fifty in a business or where fewer than ten employees are due to transfer in a business of any size.
Rolled up holiday pay
Various different alterations (for the most part fairly minor in probable impact) are also proposed with regards to working time and holiday pay. However, one change that could be quite significant is a proposal to permit rolled up holiday pay. That is holiday pay which is not paid when the worker actually takes holiday but instead as an addition to their usual wages in the periods they are working. The Courts and Tribunals have held that rolled up holiday pay is unlawful because the purpose of paid annual leave is as a health and safety / wellbeing measure but workers who are not specifically paid for the time they have off are disincentivised to actually take holiday. The current state of the law is rather curious; rolled up holiday pay is unlawful but, if it is paid in a transparent manner as a genuine enhancement to usual salary, workers have no real remedy for only receiving holiday pay on a rolled up basis. The proposal to expressly permit rolled up holiday pay is in recognition that calculating holiday leave entitlement, and the amount to pay the worker during leave taken, is administratively and conceptually difficult where workers are engaged to work irregular hours.
Another proposed change is with regards to how holiday entitlement is calculated and that is potentially being introduced to reverse the outcome of the Supreme Court case Harpur Trust v Brazel. Prior to that decision it had been common (and indeed endorsed by the ACAS website) to think of holiday entitlement for workers who work irregular hours as being 12.07% of the total hours they work but that is not actually what the Working Time Regulations state. The method of calculation contained there, as interpreted by the Supreme Court, has given rise to an anomaly
whereby workers who only work part of the year, for example term time only teaching assistants, arguably receive a proportionately greater holiday entitlement than full time workers which is what the government is seeking to address.
Duration of non-compete clauses – intention to restrict announced in May 2023.
It is very unlikely that this change will actually be implemented in 2023 as there is no specified timescale in which to legislate but back in May the government announced an intention to restrict the maximum duration of non-compete clauses in employment contracts (and ‘worker’ agreements such as those entered into by consultants) to three months from the termination of employment. We await further detail as to whether this will have retrospective effect with regards non-compete covenants that have already been agreed and entered into (which are commonly of six month duration and sometimes twelve months) but what is clear is that this will only affect restraints of trade relating to being in competition at all; there will be no automatic restriction of three months for non-solicitation restrictive covenants although, as is already the case, the onus will be on the business to establish that the covenant is enforceable.
Extending enhanced redundancy protection
As the law currently stands, employees who are on maternity leave have a form of enhanced protection against being made redundant that does not apply to any other employees, including those who have recently returned to the workplace from being on maternity leave. The enhanced protection is that, while in any redundancy situation a key component of fairness is considering whether there may be suitable alternative work, if suitable alternative work exists the employee on maternity leave must be offered it (even if that ensures that another employee for whom the alternative work is even more suitable is instead made redundant). However, as mentioned above, that enhanced protection currently ceases from the moment an employee returns from maternity leave and disproportionate numbers of people are made redundant soon after returning to the workplace. The protection is therefore to be extended for a further six months after the end of maternity leave and the same will also apply with regards returning from adoption leave. The primary legislation to enact this change has already been passed into law but the exact implementation date is still unknown as additional regulations need to be passed to give effect.
Carer’s Leave – more likely for 2024 than 2023
There is already an existing legal provision for emergency unpaid time off to care for dependants which is designed to encompass situations like needing to take a child to a hospital’s Accident and Emergency department. That legislation is specifically in relation to ad hoc emergency events that may arise and alternative scenarios, such as taking the child to hospital for a long-planned operation, would not normally fall within its scope. The government will therefore introduce the right for employees with care responsibilities to take up to one unpaid week per calendar year off to look after those they care for. However, it will only apply where the person who needs care will need care for at least three months or alternatively meets the definition of having a disability as contained within the Equality Act (which generally requires a medical condition that will last at least a year). Therefore, this proposal may nor may not address the scenario mentioned above of taking a child to hospital for a long-planned operation as that would depend on the child’s own characteristics. As with extending redundancy protection, the primary legislation to enact this new right has already been passed but an implementation date for it coming into effect has not yet been announced; indications are that it is more likely to be in 2024 than in 2023.