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Employment Update - September 2021

Employment Update - September 2021

Overview

Key employment and business immigration developments for employers.

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Autumn audit

With September here and many workplaces looking to reopen, autumn is set to be busy for many HR practitioners. Below we highlight some of the key issues on the HR agenda this autumn:

  • Workplace reopening: For many employers, the easing of COVID restrictions means staff returning to the workplace after almost eighteen months of working from home and/or significant periods on furlough. Many employers are still reflecting on what the return will look like, including refining their policies on hybrid working, staff vaccination, COVID-testing and other COVID-secure measures. Our article on whether employers can insist on staff returning to the workplace, by Ed Mills and Anna West, was recently featured in People Management.

  • Post-Brexit immigration: We have been helping several clients get to grips with the post-Brexit immigration regime introduced earlier this year. Some clients are looking to get set up as sponsors to avoid delays when seeking to recruit EU nationals in future. New requirements for right to work checks for EEA and Swiss nationals also came into force on 1 July 2021. Such individuals must now show that they either have status under the EU Settlement Scheme (if they were in the UK prior to the end of the Brexit transition period on 31 December 2020) or have a sponsored visa under the new points-based immigration system (if they arrived in the UK after the end of the Brexit transition period). We have been working with employers on a number of sponsored visas for EEA and Swiss nationals, and on updating their recruitment practices to reflect these changes.

  • Contracts and offer letters: With recruitment back on the agenda for many, some employers are taking the opportunity to review their template employment contracts and offer letters. Changes to the written particulars required in employment contracts and contracts for workers came into force in April 2020 amidst the pandemic, meaning not all employers had the opportunity to update their documents. Many employers are also taking a fresh look at post termination restrictive covenants to ensure they work in a hybrid world and with modern ways of working.

  • Diversity monitoring, reporting and training: With diversity a key theme for 2020 and 2021, many employers are turning their attention to measures to improve diversity and inclusion. As a starting point, many employers are looking at how they collect and monitor diversity data to inform initiatives. Some are also reviewing ethnicity pay gap figures with a view to reporting voluntarily or in anticipation of mandatory reporting (although the Government is yet to set out its plans in this regard). Many employers are also looking to refresh diversity and inclusion training in line with the return to the workplace and as hybrid working beds in.

  • Financial services pay: The FCA plans to introduce a revised prudential regime for FCA-authorised investment firms, the Investment Firms Prudential Regime ("IFPR"), on 1 January 2022. One aspect of the regime is that in scope firms must ensure all variable remuneration for material risk takers is subject to in-year adjustments, malus or clawback in certain circumstances (broadly, where an individual is responsible for significant losses to the firm or has failed to meet appropriate standards of fitness and propriety). We are working with clients in the sector to update contracts and bonus schemes to reflect the new requirements.

If you have any queries on any of the above, please get in touch with your usual contact in the Employment team.

Immigration radar

Right to work checks - temporary COVID-19 changes extended

Employers are required to check that all employees have the right to work in the UK. Normally this involves seeing original documents in the presence of the individual. However, during the pandemic, temporary changes were made to allow checks to be done virtually using scanned copies of documents with verification completed over a video call. The Home Office has now said that these temporary changes will continue until 5 April 2022. This is welcome news for employers, given the temporary changes were previously due to come to an end on 31 August 2021.

Employers who have done an adjusted check in line with the Home Office COVID-19 adjusted guidance, or who now do so up to and including 5 April 2022, will not need to carry out a retrospective check once the rules change on 6 April 2022.

Case watch

Redundancy and furlough

Two recent cases have considered whether furlough should be used as an alternative to redundancy.

Case 1: The first case involved a live-in care worker who was made redundant when her sole client was moved into a care home.  The employee had asked to be furloughed but the employer did not agree to this as it had no ongoing work for her, and the pandemic had made finding live-in care work very difficult. An Employment Tribunal ruled that the employee's redundancy was unfair. It said that the whole point of the furlough scheme was to avoid redundancies due to the impact of the COVID-19 pandemic. A reasonable employer would therefore have considered furlough as an alternative to dismissal on the grounds of redundancy. The employer's failure to explain why it had not considered furlough or not considered it appropriate in these circumstances made the dismissal unfair.

Case 2:  The second case involved a flying instructor at a private airfield. During the first national lockdown, the airfield closed and the employee was placed on furlough. Shortly afterwards, the employer considered making redundancies on the basis that its business had been struggling even before the pandemic and the employer envisaged a reduced need for flying instructors once the pandemic ended. The employee was given notice of redundancy some one and a half months after being placed on furlough and his employment terminated at the end of his twelve-week notice period. He brought an unfair dismissal claim, arguing he should have been kept on furlough rather than being made redundant. The employer argued that, at the time, it did not know how long the furlough scheme would run and, had it waited until the scheme ended, the company would have incurred the cost of the employee's notice pay which it could ill-afford.

The Employment Tribunal ruled that, even though another employer may have kept the employee on furlough longer, the failure to do so did not make the dismissal unfair. The employer needed to cut costs irrespective of the furlough scheme and wanted to use the Government subsidy to pay some of the redundancy costs (which was acceptable at the time but is no longer possible). However, the Tribunal ruled that the redundancy dismissal was unfair for other reasons, as the employer had effectively made up its mind before starting consultation and the same manager heard the appeal as had taken the decision to dismiss.

MHINDURWA V LOVINGANGELS CARE LTD; HANDLEY V TATENHILL AVIATION LTD

The cases show that redundancy will not necessarily be unfair simply because the employee could have been kept on furlough longer. Employment Tribunals will consider all the circumstances at the time of the redundancy dismissal, including the financial position of the company and the uncertainties surrounding the furlough scheme and the pandemic generally. However, it may be that a redundancy dismissal will be unfair where the employer has failed to consider furlough or has no good reason for not continuing furlough longer. This will come down to the facts – these cases are just examples of some of the claims starting to make their way through the Tribunals in the wake of the pandemic and demonstrate the importance of carefully considering the redundancy rationale and drafting appropriate documentation to support decisions.

Redundancy – is there a right of appeal?

The employees in this case were physical education teachers at a community secondary school. The Council decided to close their school and replace it with a new community school covering primary and secondary education. The employees were told that their contracts would be terminated and they would be invited to apply for positions at the new school, and if unsuccessful, they would be made redundant. The employees applied for positions at the new school but were unsuccessful and so were given notice of redundancy. The employees brought unfair dismissal claims, arguing that there had been no consultation about the redundancies or opportunity to appeal their dismissals. The Council argued that any consultation or appeal would have made no difference, as redundancies resulted from the decision to close the school and the employees being unsuccessful in applying for alternative roles.

The Employment Tribunal and the Employment Appeal Tribunal ruled that the dismissals were unfair. On appeal, the Court of Appeal agreed. The Court confirmed that the absence of an appeal process does not of itself render a redundancy dismissal unfair. However, the employees in this case had no opportunity to be consulted about the way the redundancy exercise would be carried out and no opportunity to challenge this after the event. It was impossible to say that consultation or an appeal would have been meaningless as the employees might have challenged the process that led to their dismissal. This made their dismissals unfair.

GWYNEDD COUNCIL V BARRATT

This case is a timely reminder of the importance of process in any redundancy exercise. Employees who are at risk of redundancy should be consulted about the way the redundancy exercise will be carried out and be given an opportunity to comment. This is the case whether the redundancy is a result of a simple reduction in the number of employees performing a particular role or where roles are removed completely, and employees are invited to apply for new or alternative roles. It is not normally acceptable to move straight to considering applications for new roles; Tribunals will typically expect employers to consult with employees about the reasons for the redundancy of their existing role. Whilst there is generally no obligation to offer an appeal in relation to a redundancy dismissal, employers should consider doing so where there is a selection exercise which involves scoring employees against a set of criteria. Whether or not an appeal is offered, employers should consider hearing any appeal which is raised by an employee, as a failure to do so could render the dismissal unfair. 

New law

Furlough subsidy

On 30 September 2021, the Coronavirus Job Retention Scheme ("CJRS") will come to an end. Under the CJRS, employers have been able to put staff on furlough (paid leave) for reasons related to the COVID-19 pandemic, provided the employee was paid at least 80% of their normal wages for any hours not worked, up to a maximum of £2,500 (prorated for any hours worked). Previously, the Government covered the 80% of wages up to the maximum £2,500. However:

  • on 1 July 2021, the Government subsidy dropped to 70% of wages (up to a maximum of £2,187.50 per month); and

  • on 1 August 2021, the Government subsidy dropped further to 60% (up to a maximum of £1,875 per month).

The Government subsidy will remain at 60% of wages until the scheme closes on 30 September 2021. Employers must top up the subsidy so that employees on furlough continue to receive at least 80% of their normal wages for any hours not worked (up to a maximum of £2,500 per month). Any claims for the CJRS subsidy in relation to September must be submitted to HMRC by 14 October 2021. For further details of the CJRS, please see our furlough extension briefing.

Gender pay gap reporting

Gender pay gap reports for the reporting year 2019/20 are now due by 5 October 2021. Employers with 250 or more employees are required to publish figures on their gender pay gaps annually, and the figures must normally be published by 5 April each year in respect of the previous year. However, the deadline for reporting for 2019/20 was delayed from 5 April 2021 to 5 October 2021 due to the pandemic (although employers have been encouraged to report earlier if possible and many have done so).

Health and social care levy

The Prime Minister has announced a new health and social care tax to be introduced across the UK to help fund reforms to the NHS and care sector. The tax will begin as an increase of 1.25 percent in both employer and employee National Insurance Contributions ("NICs") from April 2022. From 2023, the levy will become a separate tax on earnings, calculated in the same way as NICs. This will affect all NICs, including Class 4 NICs paid by self-employed people, but Class 2 self-employed NICs (which are paid at a fixed rate) and Class 3 voluntary NICs will be unaffected. Those above state pension age who do not currently pay employee NICs will pay the levy from April 2023 if they are employed. Income from share dividends will also see a 1.25 percent tax rate increase from April 2022.  

Consultation

Data protection and employment

The Information Commissioner is looking to update its guidance on data protection and employment practices, and is seeking views to help shape the revised guidance. The existing Employment Practices Code published by the Information Commissioner has not been updated since the General Data Protection Regulation ("GDPR") came into force, and the way employers use data has changed considerably during the lifetime of the Code. The Information Commissioner is seeking views from relevant stakeholders, including employers, professional associations, recruitment agencies and employees on what the revised guidance should cover through a survey which can be completed online or sent by email. The consultation closes on 21 October 2021.

Watch this space

Workplace sexual harassment

The Government ran a consultation in 2019 on possible reforms to the law on workplace sexual harassment. It has now published its response to that consultation in which the Government says that it plans to:

  • introduce a new positive duty on employers to prevent workplace sexual harassment, with a statutory code of practice setting out what that will look like in practice;

  • introduce explicit protections for employees from harassment by third parties in the workplace (such as clients, customers and suppliers);

  • look closely at extending the time limit for bringing discrimination and harassment claims in an employment tribunal from 3 to 6 months.

The Government has not yet set out a timetable but has said the changes will be introduced as soon as parliamentary time allows.

Our work

Since the last Employment Update, our work has included:

  • advising on potential structures for recruiting software engineers globally

  • supporting a listed client with the investigation into a grievance against the CEO

  • advising on a claim of alleged discrimination by association

  • work on an integration project for a client following a global business acquisition, including obtaining and coordinating advice from over 20 jurisdictions around issues relating to integration

  • advising an asset manager client on its preparations for the incoming IFPR regime 

  • advising on right to work issues and what an employer should do when an employee loses the right to work. 
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