Employment Update - July 2024

New government: all change?

With Prime Minister Starmer now in No. 10 and new Labour government, the UK is likely to see significant changes to employment law. In the leadup to the election, the Labour party had promised "the biggest upgrade to rights at work for a generation". So, what can we expect from a Labour government?

By way of recap, some of Labour's key election pledges on employment law include:

• Unfair dismissal: Labour plans to remove the qualifying period for unfair dismissal, so the right would apply to all workers from day one. Labour has also said that employers will be able to operate probationary periods, but it is not yet clear whether employers will still be required to follow some sort of process to dismiss during the probationary period.
  
  
• Worker status: Labour plans to move to a single status of "worker", removing the distinction between "employee" and "worker". This would mean individuals are classified as either workers or self-employed for employment law purposes. The full suite of employment rights would be available to all workers from day one of their engagement.
  
  
• Collective redundancies: Labour plans to change the threshold for collective redundancy consultation so that the duty would be triggered by 20 or more redundancies across the business, rather than 20 or more redundancies at a single site. This means the collective consultation duty will be triggered more easily and employers will need processes to track redundancies across the business.
  
  
• Diversity reporting: Labour plans to introduce mandatory ethnicity and disability pay gap reporting for large employers, on top of the existing gender pay gap reporting duty. Large employers would also be required to publish action plans to close their gender pay gaps as well as action plans setting out how they will support employees through the menopause.  
  
  
• Flexible working: Labour plans to make flexible working the default position for all workers from day one, except where it is not reasonably feasible. This is likely to mean employers receive more flexible working requests and will have a higher onus for justifying when requests are turned down.
  
  
• Casual workers: Labour plans to ban exploitative zero hours contracts, end one-sided flexibility and give workers a right to a contract which reflects their regular hours.
  
  
• Fire and rehire: Labour plans to ban fire and rehire, except in limited cases where this is necessary to remain viable, to preserve the workforce and the business.

A summary of all of Labour's employment law pledges can be found on our Election 2024 webpage.

In terms of timing, Labour says it plans to introduce legislation within the first 100 days of government but that it will consult fully before legislation is passed. It seems likely that draft legislation will be published in the coming weeks on a number of these measures, with a consultation before the measures are introduced.

Right to work checks

The Home Office has published updated guidance on right to work checks. The updated guidance confirms that employers no longer need to conduct repeat checks on EU nationals that have pre-settled status under the EU Settlement Scheme (EUSS). Where an employee or applicant has settled or pre-settled status under the EUSS, employers need only conduct right to work checks once prior to the commencement of employment. Such checks are conducted using the Home Office online service. The guidance also confirms that employers do not need to re-check an employee's right to work where the employee has a physical biometric residence permit, provided that a valid check has been performed and the underlying visa expiry date is being tracked.

Redundancy pooling

A recent case has considered the employer's obligation to consult employees over the selection pool in a redundancy exercise.

The employee in this case worked as a liaison officer for a faith-based charity. He was based in Bolton and his role involved fundraising in the local community. He was made redundant when the charity experienced financial difficulty and had to change direction following the coronavirus pandemic. The employee brought an unfair dismissal claim arguing that his selection was unfair, as there were four others in similar roles nationally who were not considered for redundancy.

The Employment Tribunal initially ruled the dismissal was fair. It accepted the employer's argument that the employee's role was unique and so he was in a self-selecting pool of one. However, on appeal, the Employment Appeal Tribunal (EAT) ruled that the dismissal was unfair. There was no evidence that the employer had considered pooling the employee with other employees in the same role in different geographical locations. In addition, there was no consultation with the employee about why he alone was placed at risk of redundancy. This meant the consultation was not meaningful and the dismissal was unfair.

Whistleblowing detriment

The employee in this case operated a ticket barrier at a train station. In 2012, he made a protected disclosure and was dismissed, but was later reinstated after bringing unfair dismissal and discrimination claims. Subsequently, in 2018, there was an incident where the employee complained that a colleague had been assaulted by a member of the public. However, after CCTV footage showed no assault, the employee was suspended and subjected to disciplinary proceedings for allegedly making a false statement and himself unnecessarily laying hands on a customer. When the employee raised a grievance, an internal email from HR suggested the employee had a history of raising concerns and implied that he was difficult. The employee was ultimately given a first written warning for over-zealously putting himself at risk but the other allegations against him were dismissed. He brought a whistleblowing detriment claim.

The Employment Tribunal ruled that the employee had suffered a number of detriments as a result of having blown the whistle years earlier in 2012. These included being suspended, being accused of making a false statement and being subjected to disciplinary proceedings. While neither the investigating officer nor the station manager were motivated by the prior whistleblowing, the Tribunal found that there was a "collective memory" within the employer which had infected the approach of HR and those advised by HR. In making its finding, the Tribunal relied on the email from HR which had suggested the employee had a history of being difficult. This was upheld on appeal by the Employment Appeal Tribunal and the employee therefore won his whistleblowing detriment claim.

Sexual harassment

From 26 October 2024, employers in the UK will come under a new positive duty to take reasonable steps to prevent workplace sexual harassment. The legislation for this duty was passed prior to the election, so the duty will come into force despite the change in government. Labour has promised to strengthen the duty but it is not yet clear how or when the duty would be changed. Employers should therefore continue preparing for the duty to come into force in October 2024.

The EHRC had been planning to consult on updated statutory guidance over the summer, with a view to publishing final guidance on the new duty in September 2024. The election has delayed the consultation but there are steps employers can be taking despite the delay, such as reviewing anti-harassment policies and training, implementing a standalone sexual harassment policy and considering a wider culture audit to identify risk areas. For more information, please see our briefing or speak to your usual Employment department contact.

Fire and rehire

On 18 July 2024, a new statutory code of practice on dismissal and re-engagement (or "fire and rehire") is due to come into force. Fire and rehire is a tactic used to make changes to terms and conditions of employment when an employer is unable to reach agreement with employees. In its current form, the statutory code of practice suggests fire and rehire should only be used as a last resort after meaningful consultation and exploring all the alternatives. In its election campaign, Labour had said it would strengthen the code of practice and end fire and rehire in all but exceptional cases where this is necessary for the business to remain viable. It is therefore expected that the code of practice will be revised further in future. In the meantime, employers should think carefully about using fire and rehire, and take advice where this could form part of a process to make changes to terms and conditions.

TUPE

The Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") protect employees on the transfer of a business or part of a business, including on the sale of a business or in an outsourcing situation. Where a TUPE transfer takes place, there is an obligation on the employer to inform and, in some cases, consult employees affected by the transfer. This must normally be done through trade union representatives or employee representatives specifically elected for this purpose. However, for TUPE transfers on or after 1 July 2024, employers can now inform and consult employees directly where there are no existing employee representatives and either:

• the employer has fewer than 50 employees in total; or
  
  
• there are fewer than 10 employees affected by the transfer.

Confidentiality and non-disclosure agreements

Prior to the election, the Conservative Government passed legislation that will make confidentiality provisions and non-disclosure agreements (NDAs) unenforceable if they prevent victims from reporting a crime. The legislation makes it clear that confidentiality clauses and NDAs cannot prevent employees from reporting information relating to criminal conduct to the police and other law enforcement bodies, lawyers or support services who have their own confidentiality obligations (such as counsellors, advocacy services and medical professionals). It is already common practice for confidentiality provisions in settlement agreements to make it clear that such disclosures are permitted, and this practice may become more widespread under the new legislation. However, other parts of confidentiality clauses and NDAs are not affected (e.g. provisions dealing with commercially sensitive information). The new legislation requires an order to be brought into force and there is no indication yet of when this is likely to be.

The Institute of Directors has published a consultation paper on a proposed new code of conduct for directors. The code would apply to directors of organisations of all sizes and in all sectors. The code is designed to be a voluntary commitment and aims to help directors make better decisions and to promote high levels of integrity. It is structured around six principles: leading by example; integrity; transparency; accountability; fairness and responsible business. The Institute of Directors is also seeking views on how awareness and adoption of the code can be encouraged. The consultation on the draft code is open until 16 August 2024.  

In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Cord Global, Code Your Future, the Luminary Bakery, Advocates for International Development, Foundervine and Justice and Care.

Since the last Employment Update, our work has included:

• advising in respect of process around an investigation into whistleblowing and grievance matters
  
  
• advice around the issue of positive action and positive discrimination under the Equality Act 2010
  
  
• advising a manufacturing client on the collective consultation obligations associated with the closure of a UK site
  
  
• conducting training sessions on professional conduct and speak up for managers and staff of an asset manager covering London and Dublin 
  
  
• supporting a global technology business with a business change project across c.50 jurisdictions
  
  
• advising on an investigation into harassment allegations against a senior executive
  
  
• advising on a multi-jurisdictional settlement agreement for a financial services client