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Employment Update - November 2021

Employment Update - November 2021

Overview

Key employment and business immigration developments for employers.

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In the news

Return to Work

The Government has encouraged people to get back to work and, at this stage, is not advising that employees work from home. During his speech at the Conservative party conference in October, Prime Minister Boris Johnson said that a "productive workforce" only comes from "face to face meetings and water cooler gossip." While some employees have been eager to return, others have been more reluctant, for a variety of reasons.

So, can employers insist on employees returning to the workplace?

Most employment contracts specify the office as the place of work. If that is the case, the employer can require staff to return in accordance with the contract. The fact that people have worked remotely during the pandemic would not, of itself, mean the contract has been varied. However, it is possible that, in some cases, the contract has been varied verbally if, for example, managers have given assurances about longer-term remote or hybrid working.

In any case, employers should be sensitive to individual reasons why employees are reluctant to return. For example, if an employee wants to work remotely because of an underlying health condition, the employer would need to consider whether this amounts to a disability and whether ongoing remote or hybrid working is a reasonable adjustment. Similarly, if an employee has caring responsibilities, the employer would need to consider carefully whether on-site working is really required or whether this can be accommodated in order to avoid a potential indirect sex discrimination claim (or a potential indirect disability discrimination by association claim – see Case Watch below). To defend such claims, the employer would need clear and justifiable reasons for any refusal, ideally backed up by evidence, and would need to have considered alternatives.

Many employers who are encouraging a return or partial return to the office are seeing a significant increase in flexible working requests from employees. A variety of reasons are being given, but many people have changed childcare arrangements, moved further from the office, or just have enjoyed working remotely during the pandemic. Employees who have at least six months' service have a right to request flexible working and employers must consider such requests reasonably and within a three-month period. However, the employer can refuse such requests on certain specified grounds, including the impact on performance or quality of work or the ability to meet client needs, and we are seeing some clients nervous about agreeing a permanent change when hybrid working is in its infancy. For the reasons outlined, additional care should be taken where the request is based on caring responsibilities or a disability.

Despite having the right to ask staff to return, many employers are not requiring staff back in the workplace full-time but are instead switching to remote or hybrid working arrangements, largely for recruitment and retention reasons, and employers requiring full time office working are in the minority at least for now. While most employers are not amending employment contracts at this stage where possible, it is important to have a clear policy on what is expected both in terms of office attendance and availability when working remotely, to avoid disputes and ensure consistency. Employers should also make it clear whether such arrangements are expected to be long-term or are subject to review and change in line with business needs.  Financial services businesses should also bear in mind guidance issued by the FCA on this subject.

As has been reported in the press, the Government's stance on working from home could well change in the coming weeks. There have been several calls for the Government to implement its "Plan B" contingency measures, which involve mandatory face coverings in some settings and advising people to work from home. Employers should prepare now for a possible return to homeworking should the Government implement Plan B at short notice.

Fire and Rehire

Acas has published new guidance for employers on changing terms, including advice on dismissal and re-engagement ("fire and rehire"). Changing terms using "fire and rehire" has come under the media spotlight in recent months and has been debated in parliament. The Government has resisted calls to ban the practice altogether, and preferred more guidance for employers, which Acas has now produced. It contains practical advice on how to change terms and in particular on consulting employees about the changes.

The guidance recommends that employers do not introduce the proposal to "fire and rehire" too early in the consultation process as this may undermine discussions with employees. This could create a tension with the collective consultation rules (which apply where 20 or more employees are dismissed in a 90 day period). This is because if dismissal and re-engagement is one of the possible outcomes of the process then this would need to be disclosed from the outset under the collective consultation rules, rather than waiting until later in the consultation process.

There are many considerations to take into account when proposing changes to terms and specific advice should always be taken at an early stage. However, the guidance is helpful reading for any employer who is thinking about making changes in the future.

Immigration radar

New temporary visas

On 11 October 2021, the Government introduced temporary visas for poultry workers and heavy goods vehicle (HGV) drivers to ease supply chain pressures in food and haulage in the lead up to Christmas 2021. These emergency changes were made to the Seasonal Worker immigration route on a temporary basis and will allow 5,500 poultry workers and 4,700 HGV drivers transporting food goods to work in the UK up until 31 December 2021 and 28 February 2022 respectively. The Government further expanded the Seasonal Worker route on 1 November 2021, to allow for temporary visas for up to 800 pork butchers. The deadline for these applications will be 31 December 2021 and permission to work can be granted for up to six months. To recruit temporary workers under the scheme, employers must request workers from one of four named scheme operators.

Case watch

Discrimination by association and hybrid working

Discrimination by association occurs where an employee is discriminated against, not because of a protected characteristic they have, but because of a characteristic of someone they associate with, for example a disabled spouse or child. This case shows how far the protection can potentially extend.

The employee in this case was a senior lending manager at a building society. She was employed on a homeworker contract and worked primarily from home to allow her to care for her disabled mother. However, she regularly attended the office two to three days per week. Another male colleague was also employed on a homeworker contract but was not a carer nor himself disabled. The employer decided to reduce the number of senior lending managers and to require the role to be office-based fulltime. Although there were enough volunteers for redundancy to avoid compulsory redundancies, the employer convinced some of the volunteers to stay and instead dismissed the two homeworkers. The employee brought claims for, among other things, direct and indirect disability discrimination by association based on being a carer for her disabled mother.

The Employment Tribunal rejected the direct discrimination claim, as the employee was dismissed not for her caring responsibilities but because she was a homeworker. However, the Tribunal found that the redundancy dismissal constituted unlawful indirect disability discrimination by association. The employer's requirement that senior lending managers be office-based indirectly discriminated against the employee as a carer. Further, the office-based requirement was not justified. The employer argued that it was necessary to provide effective on-site managerial supervision and support to junior staff. However, the employer failed to take account of the employee's history of excellent feedback on supervision, and also failed to consider less discriminatory ways of achieving the same result, such as having the employee based at home but coming into the office two or three days a week, as she had done previously. The employee was therefore discriminated against, not because of any disability she had but because of her mother's disability.

FOLLOWS V NATIONWIDE BUILDING SOCIETY

This case highlights the dangers of employers imposing a requirement for staff to be completely office-based without considering the individual circumstances of employees. Such a requirement is likely to discriminate indirectly against women, who are more likely to have caring responsibilities, and it may also lead to indirect discrimination by association for employees who care for disabled relatives. Indirect discrimination can, in some cases, be justified. However, the employer would need to show that it has a very good reason for insisting on office-based working and that it has considered all the alternatives, such as hybrid working arrangements. An employer could insist on a role being office-based if remote or hybrid arrangements are unworkable, but it would need to have tested this assumption and ideally have evidence to back it up. This is particularly challenging for many employers given the widespread pandemic-related working from home.

It was previously assumed that the concept of discrimination by association only applies to direct discrimination and harassment. This case extends it to indirect discrimination as well. As an Employment Tribunal ruling, the decision is not binding but it is based on European case law which remains applicable in the UK following Brexit. It remains to be seen whether the ruling will be appealed and whether a similar approach will be taken by Tribunals in future.

Collective redundancy consultation

Where an employer has a proposal to dismiss as redundant 20 or more employees within a rolling 90-day period, it has an obligation to consult collectively with employee representatives about the proposals. There is a limited exception where "special circumstances" make it not reasonably practicable for the employer to comply with the requirements.  However, the exception is extremely narrow, as this case shows.

The employer in this case, a FTSE 100 construction and facilities management company, began to face financial difficulties in July 2017 and went into liquidation in January 2018. A large number of employees were made redundant, some of whom brought claims for failure to comply with the collective consultation duty. The employer argued that there were special circumstances making collective consultation impossible. It argued that the company's liquidation was prompted when key financial stakeholders decided not to approve short-term lending arrangements, when the company had previously expected stakeholders to provide lending support.  The company had a number of public sector contracts and board members considered the company "too big and important" to be allowed to fail. 

The Employment Tribunal and Employment Appeal Tribunal (EAT) rejected the special circumstances defence. The EAT confirmed that to qualify for the defence, the circumstances must be unusual or out of the ordinary. For example, a sudden disaster making it necessary to close a business will constitute special circumstances but a gradual run-down of the company leading to liquidation will not.

CARILLION SERVICES LTD (IN COMPULSORY LIQUIDATION) AND ORS V BENSON AND ORS

This case shows how difficult it is for employers to rely on the special circumstances defence to avoid collective consultation obligations. It is not enough for the circumstances to be unforeseen, they must also be out of the ordinary or uncommon. It remains to be seen whether the COVID-19 pandemic would amount to special circumstances. Whether or not that is the case, the special circumstances must render consultation not reasonably practicable, and this will depend on the precise impact of the pandemic or other disaster on the business. The availability of furlough, for example, has made consultation possible in many cases. In addition, even where special circumstances exist, the employer must take whatever steps as are reasonably practicable to comply with the collective consultation duty. Accordingly, employers should always take whatever steps they can to consult collectively where multiple redundancies are proposed.

Trade union inducements

It is unlawful for an employer to make direct offers to members of a recognised trade union to induce them to step outside of collective bargaining arrangements. But when will an employer's offer amount to an inducement?

The employer in this case had a collective agreement with a recognised trade union, which provided that pay negotiations would take place annually. However, during pay negotiations for 2016, the union rejected the employer's offer after members voted against it in a consultative ballot. The employer then went directly to employees with the same offer, giving them the chance to sign up on an individual basis. The offer, which comprised a two percent pay rise and a Christmas bonus alongside some less favourable changes to terms and conditions, was made twice to employees, once at the end of 2015 and once again in early 2016 for those who had not yet signed up.  A group of employees brought claims alleging that the employer's direct offers constituted unlawful inducements for them to step outside of collective bargaining.

The Employment Tribunal and the Employment Appeal Tribunal (EAT) initially ruled that the direct offers were unlawful inducements. On appeal, the Court of Appeal ruled that that the offers were not unlawful, on the basis that they covered one year only, and an offer would only be unlawful if it took employees' pay or other terms outside of a collective agreement on a permanent basis. However, on further appeal, the Supreme Court has now ruled that the offers were unlawful inducements. The offers had been made before the collective bargaining process had been exhausted, after only the first consultative ballot. At that stage, there was still a possibility of reaching agreement with the union and therefore still a possibility that pay terms could have been determined by a collective agreement for that year. The offers were therefore an unlawful inducement to step outside of the collective bargaining process. 

KOSTAL UK LIMITED V DUNKLEY

While this case provides some certainty for employers, it presents some real challenges in terms of timing. The Supreme Court confirmed that there is nothing preventing an employer from making a direct offer to employees after it has followed and exhausted the collective bargaining process. Accordingly, before an employer can safely make an offer directly to employees, it must ensure it has completed all the steps in its collective bargaining agreement. In some cases, this may include referring a matter to ACAS for conciliation, which may mean the employer has to delay the implementation of a pay rise or other changes which are the subject of consultation.

Employers should, where possible, review their collective bargaining agreements to make sure they are clear what steps are required in the bargaining process and when the process is exhausted. Despite the ruling, it may be possible for employers to make changes without exhausting collective bargaining in exceptional cases where the employer has a compelling business need and can show that its aim is to fulfil that need rather than to side-step collective bargaining. However, great care should be taken in this area – the penalty for an unlawful inducement is £4,341 per union member to whom an offer is made.

New law

Financial services regulation

On 1 January 2022, the new Investment Firms Prudential Regime (IFPR) will come into effect in the UK. Under IFPR, investment firms regulated by the FCA will be required to introduce rules relating to pay for staff members who are "material risk takers", including the ability to apply malus or clawback to bonuses and other variable remuneration in certain circumstances. We are working with a number of firms on implementation projects, including the documentation required to implement malus and clawback arrangements. If you would like to discuss the impact for your firm, please speak to your usual Employment department contact.

National minimum wage

The Chancellor has announced the annual increase to the National Living Wage and the National Minimum Wage that will apply from 1 April 2022. The applicable rates from 1 April 2022 will be:

  • £9.50 per hour for workers aged over 23 (rising from £8.91 per hour)
  • £9.18 per hour for workers aged 21 to 22 (rising from £8.36 per hour)
  • £6.83 per hour for workers aged 18 to 20 (rising from £6.56 per hour)
  • £4.81 for workers aged under 18 (rising from £4.62 per hour)

The apprenticeship rate, for apprentices aged under 19 or in the first year of their apprenticeship, will also rise from £4.30 to £4.81 per hour.

Consultation

Flexible working

The Government has published a consultation on how the current rules on flexible working can be changed to encourage and support more flexible working. The key proposal is to make the right to request flexible working available from the start of employment (currently only employees with at least six months' service have the right to request). The consultation will also consider:

  • whether the permitted grounds for refusing a flexible working request remain appropriate or should be revised;
  • whether employees should be able to make a request more than once every 12 months (which is the current limit);
  • whether employers should be required to suggest alternatives when refusing a request; and
  • whether employers should be given a shorter time to respond to requests (currently employers have three months to respond).

The consultation closes on 1 December 2021. 

Watch this space

Carer's leave

The Government has said that it will introduce a new right to unpaid carer's leave. This will allow employees to take up to one week of unpaid leave per year to care for a dependant with a long-term care need. It will be available to all employees irrespective of how long they have worked for the employer and will be able to be taken as individual days or half days up to a block of one week. Employees will need to give notice that is twice the length of time being requested, plus one day. Employers will not be able to deny a request but will be able to postpone the leave where the business would be unduly disrupted. The Government has not given a date for when the new leave will become effective but has said that it will be introduced when parliamentary time allows.

Tips and gratuities

The Government has said it will introduce a new law to prevent employers making deductions from tips, gratuities, cover charges and service charges, other than those required by tax law. Under the new law, employers will have to distribute tips and other gratuities in a way that is fair and transparent, with a written policy and a record of how they have been distributed. Employers will also be required to have regard to a new statutory Code of Practice on Tipping when setting their policies and practices. Employees will have a right to request information relating to the employer's tipping records and employers will have four weeks in which to reply. The new rules are designed to ensure workers receive tips and gratuities in full, without employers deducting any administrative or other charges. No timeframe has been given yet for the new rules to come into force.

Our work

Since the last Employment Update, our work has included:

  • investigating a grievance involving whistleblowing and regulatory issues

  • presenting a client training session on post-employment notice pay, with particular consideration around issues coming out of settlement arrangements

  • advising on TUPE implications for a client outsourcing a business service function for the first time

  • advising on multiple hybrid working policies and flexible working applications

  • advising a client on a sensitive investigation carried out by an external investigator

  • defending a claim for loss of equity in the High Court

  • advising on the dismissal of a senior executive following an investigation into sexual misconduct allegations

  • advising a client on the enforcement of post-termination restrictions against a competitor targeting the recruitment of their staff.
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