Employment Law Update - October 2024
News ??
Labour’s Employment Rights Bill has been released
The Labour government’s new Employment Rights Bill was released on 10 October 2024. As yet, there is no firm implementation date for the new legislation, although commentators are suggesting possibly as late as October 2026, meaning that these reforms may only come into force 2 years down the line. Notwithstanding that delay, we think that this is a good opportunity to start to put in place practices and procedures that prepare you for the changes that are coming.
The main reforms proposed by the Bill are:
Under the current law, with a few exceptions, an employee cannot bring an unfair dismissal claim in the Employment Tribunal unless they have two years’ service with the employer. Under the Bill, this two-year service requirement will be removed – employees will have the right to bring an unfair dismissal claim as soon as they have started work.
It looks like these rules will be relaxed during a statutory probationary period, which may be as long as 9 months, during which time it is likely that new hires will be able to be fairly dismissed for disciplinary or capability reasons, subject to a minimum level of procedural requirements being met.
We think that employers need to start being more alert to putting better procedures in place now to try to ensure that the right people are recruited, and to better use the probationary period to identify issues with new recruits and to properly manage those issues (including dismissing unsuitable hires) during the probationary period.
2. Fire and rehire to become automatically unfair
The process of fire and rehire is sometimes used by an employer to vary the terms of an employee’s contract of employment. Under the Bill (where the Government describes the process as ‘a scourge to be abolished’), any dismissal for the principal purpose of (1) dismissing an employee because they refused to vary the terms of their contract or (2) recruiting another person (think of the P&O Ferries situation), or rehiring the employee under new terms, will be automatically unfair.
The Bill does include a defence that may render such a practice to be fair, where the reason for the variation of the contract was to eliminate, prevent or significantly reduce or mitigate the effect of financial difficulties faced by the employer and the variation could not have been reasonably avoided. Based on the wording of the Bill, it looks like this defence will have very limited scope, thus almost entirely prohibiting this unpopular practice, and with an inevitable knock-on effect on the standard contractual term often found that an employer may impose unilateral contract variations on giving one month’s notice.
3. Zero-hours contracts to become more regulated
Employers with workers on zero-hours or ‘low hours’ contracts will have to offer the worker a ‘guaranteed hours contract’ at the end of a specific term (the ‘reference period’) to reflect the hours that the worker has been working during that term. If an employer fails to make the offer, there will be a tribunal claim that workers can bring to recover financial loss.
Zero-hours workers, and workers with irregular hours, will also be given a right to reasonable notice of hours and shift changes.
4. Flexible working requests
As it stands, employees can request flexible working up to twice a year, which an employer can fairly refuse so long as it is for one of the eight reasons listed in section 80G Employment Rights Act 1996. These include: the burden of additional costs, detrimental effect on the ability to meet customer demand, or inability to recruit additional staff.
The Bill places an additional responsibility on the employer to explain why it is reasonable to refuse the request, i.e. why any of the eight reasons apply.
5. Collective redundancy consultation
The current position under European case law requires employers to undertake collective redundancy consultations when 20 or more employees are being dismissed within 90 days at one establishment, meaning each separate place of business.
The Bill proposes to reform this – instead of calculating the number of redundancies at each separate place of business, redundancies across the whole business should be combined. This could see many businesses that are based across several sites having to undertake collective redundancy consultation exercises more often.
Of course, there are more changes made under the Bill, however these are the areas that Labour has targeted for more extensive reform. They also don’t need to be a concern for employers – yet – but may require a more in depth change in processes once we know when they are due to come into force.
Duty to take reasonable steps to prevent sexual harassment in the workplace
This duty, which we have been covering in our previous newsletters, is due to come into force this month on 26 October 2024.
The guidance from the Equality and Human Rights Commission has recently been updated to explain what steps employers can take to meet this duty:
These steps should be taken urgently, as well as providing relevant training, as discussed in September’s newsletter.
The burden on employers to crack down on third part harassment of their staff will be greater when the Employment Rights Bill is implemented, as it is proposed that employers will have to have taken all reasonable steps to prevent sexual harassment. Additionally, there will be new provision for the whistle-blowing ‘qualifying disclosures’ to include that someone has complained that sexual harassment has occurred, is occurring or is likely to occur.
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Minimum Wage enforcement
The government has recently published evidence and analysis of the National Living and National Minimum Wage for the year 2022-2023. This identifies that 108,000 workers were not paid correctly, with HMRC issuing 750 penalties to non-compliant employers totalling ￡13.72 million. The largest cohort impacted were employees aged 23 years and over.? The full report analysis can be read here.
Case Law Update ??
USDAW v Tesco Stores
The Supreme Court held that Tesco could not use ‘fire and rehire’ to end extra payments that previously had been promised to some employees.
In 2007, Tesco undertook a mass relocation of warehouse employees, on the basis that they would receive ‘Retained Pay’ – a payment that was to be paid each month in addition to usual pay, and described as permanent.
In 2021, Tesco tried to remove this Retained Pay by a process of ‘fire and rehire’- under this practice, employers dismiss employees but then offer to rehire them under a different contract with new terms. The new contract in this case did not include any provision for Retained Pay.
The Court of Appeal had previously overruled the High Court and had held that Tesco was able to give notice and dismiss the employees. However, the Supreme Court overturned the Court of Appeal’s decision. They decided that there was an implied term in the employees’ contracts that qualified Tesco’s right to give notice to dismiss. This could not be exercised with the purpose of removing Retained Pay entitlements. The Court therefore imposed an injunction on Tesco to stop them from firing and rehiring in this way.
Finn v British Bung Manufacturing Company
The Employment Appeal Tribunal has upheld a finding of sex-related harassment in relation to a male employee who was called ‘bald’ and threatened with physical violence by a colleague.
In this case, the claimant worked in a manufacturing job, which had predominantly male employees. During an incident with another colleague, he was called a ‘bald c***’ by the colleague.
The EAT upheld the original finding at Employment Tribunal that this comment was sex-related harassment, as it was unwanted conduct that was said with the purpose of violating the claimant’s dignity and creating an intimidating, hostile, degrading, humiliating or offensive environment for him.
The comment was sex-related as, although women can suffer from baldness, it is predominantly a problem suffered by men.
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