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Employment Law: 2022 in review and outlook for 2023

Stuart Buglass, Partner, HR Advisory
19/01/2023
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With the passing of another new year, we round upwhat was noteworthy in 2022 and look forward to what’s on the horizon for 2023.

2022 was a quiet year for legislation, however there were a number of cases that made the headlines and are worthy of mention.

Holiday Pay (again)

Larger Contractor liabilities

In Smith v Pimlico Plumbers the courts had already established that Mr Smith had worker status and therefore was not self-employed. For round two, given his new worker status, Smith successfully claimed he was entitled to back pay for the holidays he had not taken during his tenure (a sum of around £74,000). The case is notable for two reasons. Firstly, it establishes that in cases where a worker does not take holiday because it would be unpaid, or where a worker takes unpaid leave because the employer refuses to recognise their right to paid holiday, their denied holiday entitlement carries forward each year. Secondly, because the claim was brought under the Working Time Regulations 1998, which doesn’t have a backstop, the claim stretched back over the full six years of tenure (historically claims have been brought under the Employment Rights Act 1996 as an unlawful deduction of wages, which has a two-year limit). The case therefore has a major bearing on potential liabilities attaching to misclassified contractors.

Suggested actions / key takeaways

  • Review your contractor arrangements and determine whether the relationship is truly independent. For Smith, the fact that he carried out his duties personally was deemed influential.
  • For relationships which are akin to employment, consider hiring the individual as an employee in order to minimise your ongoing liability for holiday pay. 

Part-year workers – time to review your holiday pay calculations

In Harper Trust v Brazel the Supreme Court took the view that a term time employee’s holiday entitlement should not be pro-rated, when compared to an employee who works for the full year. The court determined that an employee working on an indefinite contract should have 5.6 weeks of holiday based on their weekly working pattern, regardless of how many weeks they actually work in the year. The decision has the result that an employee that works for only one full week during the year would be entitled to 5.6 full weeks of holiday for that year. Employers should now review how they are calculating the holiday entitlement and pay for part-year workers (term-time, zero-hours etc.,) to ensure that they are compliant with the method laid out by the court and possibly look to minimise their exposure by using fixed term contracts which would then allow for a prorated approach.

Suggested actions / key takeaways

  • Identify who in your workforce are ‘part-year’ workers on indefinite term contracts.
  • For these part-year workers, review how you are calculating their holiday allowance / pay (this should not be pro-rated) and start calculating this in accordance with the court’s ruling. Claims for unlawful deductions of wages must be made within three months of the last breach. The sooner you start paying holiday at the correct rate, the sooner you will benefit from the three months buffer.
  • Consider converting part-year workers to fixed term contracts and using fixed term contracts for new starters. This allows you to pro-rata entitlement to reflect the duration of the fixed term, rather than paying a full year’s entitlement. 

What’s a disability?

Long COVID?

In the case of Burke v Turning Point Scotland, the Employment Tribunal held that long COVID could be a disability, if it satisfied the three-part test laid out in the Equality Act 2010. In this particular case, the tribunal found in favour of Mr Burke, because his long COVID was a physical impairment which had a lasting and sustained effect on his ability to carry out his normal day to day activities. The tribunal considered that despite him only having had the condition for nine months, it was likely that it would last beyond 12 months and thus satisfy the ‘long-term’ part of the test.

Menopause?

In Rooney v Leicester City Council, the Employment Appeals Tribunal held that the employee’s symptoms satisfied the definition of a disability because of their long-term nature (they had already lasted 12 months at the date of the tribunal) and also the substantial affect they were having on her ability to carry out her normal day to day activities.

Suggested actions / key takeaways

  • Both cases highlight a widening application of the disability definition under the Equality Act 2010. This is important because employers must ensure that those with a disability are not discriminated against, and must make reasonable adjustments to the working environment to accommodate their condition.
  • You should therefore take a considered approach when dealing with employees suffering from any physical or mental condition in order to evaluate the possible application of the Equality Act and whether medical advice and reasonable adjustments are requirement.
  • This can be particularly relevant to performance issues. A fact-find to assess whether performance issues are as a result of a medical condition is always recommended before taking formal action such as the employee’s termination.
  • Introducing a menopause policy and staff awareness training is recommended. 

TUPE - does a share incentive plan transfer under TUPE?

When TUPE applies, an employee transfers to the new owner on their existing terms of employment, and any change to these terms will be null and void.

In the case of Ponticelli UK Ltd v Mr A Gallagher, the transferring employee’s request that he be provided a similar share incentive plan was refused by his new employer on the basis that it a voluntary scheme and did not arise either ‘under’ or ‘in connection’ with his contract of employment. The tribunal disagreed and asserted that the employee was entitled to a substantially similar scheme because it clearly arose ‘in connection with’ the contract of employment.

Suggested actions / key takeaways

  • The decision confirms that even voluntary benefits that are not contained in the employment contract and covered in separate documentation, can transfer under TUPE.
  • Due diligence exercises therefore need to look beyond the employment contract to assess possible liabilities (a share scheme can be very difficult to replicate!)

Discrimination and Protected Characteristics

Philosophical beliefs

In Forstater v CGD Europe and others, Ms Forstater has the belief that a person's sex is an immutable biological fact and cannot be changed. Social media posts made by Ms Forstater in connection with this belief were reported to her employer as offensive and the employer took the decision not to renew her contract. Ms Forstater claimed direct discrimination. The tribunal upheld her claim on the basis that her beliefs were a protected characteristic under the Equality Act 2010 and that the social media communications were simply an assertion of this protected belief, and despite being provocative or mocking on occasion this was merely the ‘common currency of debate’ and could not be considered objectively offensive or unreasonable.

Suggested actions / key takeaways:

  • Employers have the unenviable job of balancing the protection of employee’s beliefs and ensuring other employees are not offended, especially transgender people who also have protected rights under the Equality Act.
  • An employer should have a clear policy on staff social media use and harassment (in this particular case the employer’s position was weakened by the lack of a policy).

Gender

In Finn v The British Bung Manufacturing Company Ltd and Mr J King, Mr Finn was shouted at by a colleague who referred to him as a ‘bald {expletive}’. Finn brought a case for unlawful harassment on the ground of sex. The Tribunal found in Finn’s favour asserting that baldness being more prevalent in men than women is inherently related to sex, and his claim was successful because the remark met the statutory definition of harassment.

Suggested actions / key takeaways:

  • It is not always obvious that comments made to or about an employee touch upon a protected characteristic. This is particularly the case when comments are made about an individual’s appearance or speech.
  • Where there is a claim, an employer needs to demonstrate that they have taken appropriate steps to prevent such instances occurring, such as having anti-harassment policies and training in place.
  • Employers should take all complaints seriously and not simply put it down to workplace banter and thoroughly investigate. 
People working and looking at laptop

What is expected in 2023?

Looking ahead to what we can expect in 2023, the main point to note is that the long-awaited Employment Bill won’t materialise, and will instead be replaced by separate private member’s bills. There are six Bills expected to be passed in 2023, with implementing regulations to follow in 2023 and 2024, namely:

  • The Carers Leave Bill
    This will introduce a ‘day one’ right to at least one week of unpaid leave per year, to care for a dependent.
  • The Neonatal Care Leave and Pay Bill
    Another right available from the first day of employment. It will provide a minimum of one week of leave to be taken by parents of a child who is receiving, or has received neonatal care. For employees with 26 weeks service the leave will be paid at the prescribed rate.
  • Employment Relations (Flexible Working) Bill
    The Bill will enhance an employee’s right to request flexible working by allowing employees to make two requests in a 12-month period rather than just one, and require an employer to consult with an employee before refusing a request.
  • Worker Protection (Amendment of Equality Act 2010) Bill
    Employers will be required to take reasonable steps to prevent workplace harassment in their employment and secondly from third parties (such as customers).
  • Protection from Redundancy (Pregnancy and Family Leave) Bill
    Once passed, the Bill will enable the Secretary of State to introduce regulations that extend current redundancy protections provided to women on maternity leave, so that includes the period of pregnancy and also six months after returning to work.
  • Employment (Allocation of Tips) Bill
    Employers will have a legal duty to fairly allocate all qualifying tips, service charges and gratuities between employees and support this with a written policy and records.

In addition to the above Bills, a Code of Practice on the use of ‘fire and re-hiring’ is expected in 2023. The code will set out expectations for transparent consultation with employees when changes to employment terms are being proposed. Tribunals will be required to refer to the code and uplift any award by 25% in the event that the employer has failed to apply it.

Employers should look out for new guidance from the Information Commissioners Office on workplace monitoring and processing health data. Both are due to be released later this year following a January deadline for consultation, and will provide much needed guidance on how to lawfully process personal data in these areas.

2023 is also a key year for EU law which will be revoked on 31 December 2023, unless specific legislation is introduced to preserve it. Employment rights under the Working Time Regulations, Agency Worker Regulations and TUPE could therefore be under threat, and to date there has been very little indication of the Governments direction of travel on this.

With regards to key cases to look out for during 2023, the following are on our radar.

Agency worker rights

In Kocur v Angard Staffing Solutions Ltd the Supreme Court will be reviewing whether regulation 13 of the Agency Worker Regulations gives agency workers a right to apply and be considered for internal vacancies on the same terms as internal candidates (rather than just a right to be notified).

Holiday Pay

The Supreme Court will issue its decision in the case of Chief Constable of the Police Service of Northern Ireland v Agnew which focuses on the issue of whether holiday pay claims can be brought where there is a gap of three months or more between periods of underpayment (currently law is that a gap of three months or more breaks the series of claims). If the court finds in favour of the employee then employers could face increased liabilities stretching back up to two years.

Resignation or termination?

The Court of Appeal will hear the case of Fentem v Outform EMEA Ltd. Mr Fentem resigned and during the 9 months’ notice period his employer exercised their contractual right to terminate the employment early with a payment in lieu of notice. Mr Fentem brought a claim for unfair dismissal. The Employment Appeals Tribunal found that the employee had not been dismissed. The decision is controversial because it suggests an employer can unilaterally decide on an early termination date and the termination remains a resignation – the outcome of this case could therefore significantly impact the use of PILON clauses when an employee resigns.

How can Crowe help?

If any of the areas covered in this article are of interest to you, please get in touch with Stuart Buglass or your usual Crowe contact.

Contact us

Stuart Buglass
Stuart Buglass
Partner, HR Advisory, Global Business Solutions
Cheltenham