Legal briefing | |

Employment Update - January 2023

Employment Update - January 2023

Overview

Key employment and business immigration developments for employers.

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In the News

Workplace investigations

According to news reports, Adidas is investigating claims that Kanye West created a "toxic and chaotic environment" during their collaboration, including allegations that he bullied workers and showed them pornographic videos and images. The investigation comes after an anonymous letter from workers was reported in Rolling Stone late last year, and difficult questions were asked by a major shareholder.

The matter highlights a trend we are seeing that shareholders and investors are increasingly concerned about cultural issues like this, and how they have been dealt with, because of the potential reputational damage. It also emphasises the need for employers to foster a "speak up" culture, where employees are encouraged to raise concerns internally and a "listen up" culture where managers take concerns seriously.

We have been working with a number of clients to roll out "speak up" training for staff, to empower them to raise concerns, as well as training for senior leaders and managers in how to handle complaints.

Employers who become aware of concerns such as these, whether through formal whistleblowing channels or otherwise, should investigate them as far as possible. If there is sufficient evidence of bullying, harassment or other inappropriate behaviour, employers should take appropriate action, which is likely to involve commencing a disciplinary process regarding the individual concerned. Failure to do so can have serious ramifications for workplace morale, as well as the business's reputation and ultimately the bottom line.

Immigration Radar

New electronic travel authorisation

The UK Government plans to introduce a new system of Electronic Travel Authorisation (ETA) in 2023. This will be similar to the ESTA system in the United States. Currently nationals from certain countries do not need a visa to enter the UK for tourism or short business trips (e.g. nationals from the United States, Australia, Canada, Japan and EEA nationals). However, the Government proposes to require all such nationals to obtain an ETA before coming to the UK. The ETA is not itself a visa but is a digital travel authorisation for travellers visiting the UK. Those nationals who currently need a visa to travel to the UK for any purpose, known as "visa nationals", will not be required to obtain an ETA as they will still be required to obtain a visa (e.g. nationals from China, Russia, India and South Africa).

A trial of the ETA will begin in the UK in January 2023, with the full system expected to be in place by Autumn 2023. It is anticipated that the application for an ETA will be online and take around 15 minutes, with a decision being provided within 72 hours. The European Union is also expected to introduce a similar system, known as the European Travel Information and Authorisation System (ETIAS) in November 2023. Employers should monitor developments of the ETA and ETIAS programmes and ensure applications are built into any business travel arrangements. Employment Update will report developments. 

New Immigration Skills Charge exemptions

Employers who are licensed immigration sponsors must pay a charge each time they assign a certificate of sponsorship to a sponsored employee. The so-called Immigration Skills Charge (ISC) is £1,000 per year per worker (reduced to £364 for small employers and charitable organisations). On 1 January 2023, new exemptions to the ISC payment were introduced. All work visas under the Scale-up Worker visa route are exempt from the ISC payment.  In addition, certain visas under the Global Business Mobility visa route are also now exempt if they satisfy the following requirements:

  • the certificate of sponsorship is assigned on or after 1 January 2023
  • the individual is a national of an EU country or a Latvian non-citizen entitled to a Latvian non-citizen passport (note that this does not apply to nationals of Iceland, Norway, Liechtenstein or Switzerland)
  • the individual is employed by an overseas company established in the EU which is linked to the UK sponsor by common ownership or control, and this is confirmed on the UK sponsor licence
  • the UK assignment is no more than 36 months.

This exemption was introduced as a result of the commitments set out in the EU-UK Trade and Corporation Agreement (December 2020) to remove taxes or charges applied to workers undertaking temporary intra-corporate assignments. 

Changes to start date notifications

Updated UK Visas and Immigration ('UKVI') guidance confirms that sponsoring employers are no longer required to notify the Home Office where a work start date has been delayed for less than 28 days. The guidance also now permits a start date to be delayed for more than 28 days if there is a "good reason" which is defined in the guidance as the following:

  • travel disruption due to a natural disaster, military conflict, or pandemic
  • the worker is required to work out a contractual notice period for their previous employer (if the worker is in the UK, their conditions of stay must allow them to do this)
  • the worker requires an exit visa from their home country and there have been administrative delays in processing this
  • illness, bereavement or other compelling family or personal circumstances.

This is not a comprehensive list and the guidance confirms that each case will be judged on its merit. The sponsoring employer is required to notify the Home Office where the start date is delayed by more than 28 days and provide an explanation.

Case Watch

Dismissal appeals – what happens next?

A recent case has considered what impact a successful appeal against dismissal has on the employment relationship.

The employee in this case was dismissed for gross misconduct. She appealed, initially seeking reinstatement. The appeal hearing was postponed to allow for further investigation. The employee then sent an email challenging the disciplinary process and stating that she no longer wanted to be reinstated because trust had broken down. Despite this, she attended the reconvened appeal hearing. Following the hearing, she was told her appeal was successful and that she would be reinstated with backpay and continuity of service preserved. However, she did not return to work and was dismissed for failing to attend. She brought an unfair dismissal claim relying on the original dismissal.

The Employment Appeal Tribunal (EAT) dismissed her claim. It ruled that, when she was reinstated on appeal, the original dismissal effectively 'vanished'. This meant the employee could no longer claim unfair dismissal. The EAT said the original dismissal would only stand if the employee had withdrawn her appeal but she had not done so here. Although the employee stated she no longer wanted reinstatement, this was not the same as withdrawing the appeal – she continued to participate in the appeal hearing and so had to accept the outcome.  

MARANGAKIS V ICELAND FOOD LTD

This case confirms that when an employee successfully appeals their dismissal, it is as though the dismissal never happened. The employee must be reinstated by the employer with continuity of service preserved, plus backpay covering the period between the dismissal and reinstatement.  Provided the employee is reinstated in this way, the dismissal will effectively 'vanish' even if the employee no longer wants reinstatement and chooses not to return to work. In contrast, the original dismissal would stand if the employee chooses not to appeal or subsequently withdraws any appeal. However, this case confirms that simply no longer wanting reinstatement does not amount to withdrawing the appeal. As the EAT pointed out in this case, there might be reasons other than reinstatement that an employee chooses to appeal – e.g. to clear their record so that it is easier to find a new job.

Restructuring and reasonable adjustments

A recent case has considered how far the duty to make reasonable adjustments goes in the context of a restructuring and redundancy consultation exercise.

The employee in this case suffered depression and arthritis and was disabled within the meaning of the Equality Act 2010. The employee's role was placed at risk of redundancy during a restructure and he, along with others, was invited to apply for a post in the new structure. He was invited to an interview but was on long-term sickness absence at the time. He did not respond initially but later said he would not attend the interview even if he was well enough because he thought his managers were conspiring to dismiss him. He was made redundant. He brought a claim arguing the employer had failed to make reasonable adjustments by requiring him to attend an interview instead of slotting him directly into a new role.

The Employment Appeal Tribunal (EAT) acknowledged that the interview requirement potentially put the employee at a disadvantage. He had problems with concentration and memory, as well as social interaction, which meant the interview process was more difficult for him than non-disabled colleagues. However, it would not have been reasonable to slot the employee into a new role without an interview, as there were 13 others at risk of redundancy who were competing for the new roles. In any event, the employee's disability was not the reason he missed the interview – he chose not to attend because he thought it was a sham designed to get rid of him. The disability discrimination claim therefore failed.

HILAIRE V LUTON BOROUGH COUNCIL

The case is a reminder of the need to make reasonable adjustments during a redundancy exercise. Although the employee ultimately lost his claim, the EAT confirmed that an employee suffering depression or other mental health issues might be put at a disadvantage by an interview process. The employer would therefore have a duty to make reasonable adjustments in such circumstances, e.g. by allowing additional time or additional breaks, or perhaps providing written questions in advance. However, the case also shows there are limits to the duty to make adjustments. It would not be a reasonable adjustment to slot the employee directly into a role without an interview in these circumstances, as this would be going much further than necessary to overcome the disadvantage and would be unfair to other employees. 

Employers must always consider the particular disadvantage suffered by the employee and how it can be overcome. There may be situations where it could be a reasonable adjustment to appoint an employee to a new role without a competitive interview – e.g. where the employee's disability means they cannot perform their current role and there is an existing vacancy which they are able to do. In contrast, the disadvantage suffered by the employee in this case related solely to performance at interview so there were other steps the employer could take to overcome this.

New Law

Flexible Working

The Government has published its response to an earlier consultation on making changes to the right to request flexible working, which ran in 2021. The response confirms that:

  • the right to request flexible working will become a day one right (currently, the right to request is only available to employees with at least 26 weeks' service);

  • employees will be permitted to make two flexible working requests in any 12-month period (currently there is a limit of one request per 12 months);

  • employers will be required to respond to a request within two months (currently employers have three months in which to respond);

  • employers will be required to consult with the employee and show they have considered alternative options before rejecting a request (although it is not yet clear exactly what will be required in this regard);

  • when making a request, employees will no longer be required to explain what effect the proposed change would have on the employer and how this could be dealt with; and

  • there will be no change to the eight business grounds on which employers can currently refuse a flexible working request.

There is no change proposed to the compensation currently payable for breach of the flexible working legislation (eight weeks' capped pay). It is not yet clear when the above changes will be implemented. However, the Government has announced that it is supporting draft legislation that will implement at least some of these changes and which is currently making its way through Parliament. Employers should therefore schedule a review of their flexible working policies for early 2023, to ensure they align with these changes.

National Minimum Wage

The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) that will apply from April 2023. The hourly rates applicable from 1 April 2023 will be:

  • £10.42 per hour for workers aged 23 or over (rising from £9.50 per hour)
  • £10.18 per hour for workers aged 21 to 22 (rising from £9.18 per hour)
  • £7.49 per hour for workers aged 18 to 20 (rising from £6.83 per hour)
  • £5.28 per hour for workers aged 16 to 17 (rising from £4.81 per hour)
  • £5.28 per hour for apprentices aged under 19 or in the first year of their apprenticeship (rising from £4.81 per hour).

The Government intends for the NLW, which currently applies to workers aged 23 and over, to apply to workers aged 21 and over from 2024. The above rates are in line with the recommendations from the Low Pay Commission and are designed to support low-paid workers at a time when many are facing increased pressure due to the rising costs of living.

Statutory Sick Pay

With effect from 6 April 2023, the rate of statutory sick pay will increase from £99.35 to £109.40 per week. The weekly rate of statutory sick pay increases annually every April.

Statutory Maternity and Parental Pay

With effect from 3 April 2023, the weekly rate of statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase from £156.66 to £172.48 per week. The rates increase annually every April.

Consultation

Holiday pay for irregular workers

The Government has published a consultation which proposes changes to the way holiday entitlement is calculated for part-year and irregular hours workers, i.e. workers on permanent contracts who do not work every week of the year and are only paid for time worked. 

The consultation follows the Supreme Court ruling in Harpur Trust v Brazel that holiday entitlement should not be prorated for such workers but that all workers, regardless of their working pattern, should receive 5.6 weeks' paid holiday per year. Holiday pay for such workers is calculated by reference to their average pay over a 52-week reference period, which ignores any weeks in which they did not work. This means that some part-year and irregular hours workers receive a larger entitlement to holiday and/or holiday pay than part-time workers who work the same total number of hours across the year.  

The Government proposes new rules that would allow employers to prorate holiday entitlement for part-year workers and workers with irregular hours so that they receive leave in proportion to the total annual hours they work. The consultation is open until 9 March 2023. Employment Update will report developments.

Watch this Space

Review of SMCR

Chancellor Jeremy Hunt has announced a review of the senior managers and certification regime (SMCR) to take place in the first quarter of 2023. The announcement is part of a package of wider reforms to UK financial services regulation. The Government will launch a call for evidence on the SMCR in early 2023, to seek views on the regime's effectiveness, scope and proportionality, with the FCA and PRA also reviewing the regime's regulatory framework. It is expected that this would then be followed by a consultation on possible reforms. Employment Update will report developments

Community Engagement
  • In recent weeks our team has been involved in a variety of pro bono work for organisations such as Charity: Water, GiveOut, Justice & Care and Human Rights Watch.

  • Several members of our team have also participated in the firm's Christmas gift giving appeal for the Single Homeless Project (SHP), purchasing gifts for people living in SHP hostels
Our Work

Since the last Employment Update, our work has included:

  • advice on employment exits involving ongoing share ownership and restrictive covenant issues

  • advising on the redundancy consultation process for a business closure in the UK

  • acting for a new employer in response to action relating to a breach of restriction by the former employer of a new employee

  • carrying out an investigation, with the support of forensic specialists, into various types of alleged wrongdoing at a technology business

  • advising a client making changes to its management team

  • advising a client whose former employees are publicly defaming it
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