2021 has seen the effects of the coronavirus pandemic remain front of house so that, for example, the Employment Bill which was announced back in December 2019, still remains in the pipeline. We comment on both definite and possible employment law developments for the coming year, Also of interest is the potential effect of new EU Directives, to which the UK is no longer subject, on the future direction of domestic employment law, and also to the those businesses with EU wide operations.
Increase in National Insurance contributions 6 April 2022
A rise of 1.25% in NICs will apply to workers and employers in the UK, will apply to all working adults in UK matched by employers with the increase used to fund health and social care.
Increase in National Minimum Wage levels 1 April 2022
The new hourly rates will be:
- Age 23 or over (National Living Wage rate): £9.50 (from £8.91)
- Age 21 to 22: £9.18 (from £8.36)
- Age 18-20: £6.83 from £6.56
- Age 16-17: £4.81 from £4.62 to
- Apprentice rate £4.81 from £4.30
Statutory sick pay and family leave increases April 2022
The rate for Statutory sick pay will increase to £99.35 per week (currently £96.35) from 6 April 2022. Weekly rates for statutory family related leave (maternity pay, paternity pay, shared parental pay, adoption pay and parental bereavement pay) will rise to increase to £156.66 (currently £151.97) from 11 April 2022.
Changes to flexible working (as set out in Conservative Party's election manifesto)
Government consultation on reforms to Flexible Working Regulations 2014 (which closed on 1 December 2021) include:
- making right to request flexible working a "day one right"
- Changing administrative process regarding frequency of requests and time to respond,
- Considering whether 8 prescribed business reasons that employers can put forward to reject a flexible working request are still fit for purpose
- Requiring employers that conclude that the request can't be accommodated to show they've considered possible alternative working arrangements
- Raising awareness that its possible for employers to agree flexible working arrangements
The Employment Bill
Although this Bill was announced in the Queen's Speech in December 2019 it has not come into force. In March 2021 the government indicated that it would be introduced when parliamentary time allowed. It would include:
- establishment of a new single enforcement agency for employment rights (proposed as part of the Good Work plan) with the aim that vulnerable workers are aware of and can exercise their rights and also supports business compliance
- employers to pass on all tips and service charges to workers and, supported by a statutory Code of Practice, to ensure that tips would be distributed on a fair and transparent basis
- extended redundancy protection for employees on maternity, adoption and shared parental leave with the right to be offered suitable alternative employment ahead of other members of staff for an additional six-month period after they return to work
- neonatal leave and pay of up to 12 weeks for parents of babies requiring neonatal care
- entitlement to carer's leave as a "day one right" for employees. Unpaid carers would be entitled to take up to 5 working days of unpaid leave per year a block or in day or half day increments. Notice would need to be given. Employees could self-certificate and no evidence of entitlement would be required
- a duty on employers to prevent sexual harassment in their workplaces and to reintroduce protection for employees who are sexually harassed by clients and customers
- the right for casual workers to have a more predictable working pattern after 26 weeks service
- making flexible working the default (as outlined above)
- requirement for organisations to publish their modern slavery statements on a government registry.
Response on restrictive covenants awaited
Government consultation on measures to reform post-termination non-compete clauses in employment contracts, including banning them altogether closed on 26 February 2021. Over the same time period there was also consultation on extending the ban on exclusivity clauses in employment contracts, to prevent employers from contractually restricting low-paid employees (those earning under £120 a week) from working elsewhere. There is currently no timescale for next steps.
Gender and ethnicity pay gap reporting – key dates
Employers with 250 or more employees must publish their gender pay gap annually. Although deadlines were extended due to the pandemic, we anticipate that the timescales will revert to normal this year. This means that for private sector employers and voluntary organisations, the deadline for reporting is 4 April 2022 with a snapshot date of 5 April 2021. The government is also required to review the regulations by April 2022 to check whether reporting has achieved its objective.
The government's consultation on mandatory ethnicity pay gap reporting closed on 11 January 2019. The government confirmed it will respond to the consultation "in due course", in autumn 2021 but has not yet done so.
EU Directives
EU member states are required to implement two new directives by 1 August 2022. These are the transparent and predictable working conditions directive to create new protections for workers, including a presumption of employee status, providing a right for them to receive information on their working conditions at the start of employment and compulsory training to be free and be included in working time. Also coming into force will be the work-life balance directive which aims to improve families' access to family leave and flexible working arrangements
Although the UK no longer needs to implement new EU directives, interested parties within the UK are reviewing areas of divergence and the possibility of protection of UK workers' rights lagging behind those within the EU. International operations with workers across the EU are also keen to understand how differing rights impact on their businesses.
Forthcoming cases to watch out for in 2022
Gender critical views: which pronoun should you address someone by and is it up to you?
The clash in the workplace between religious belief and sexual orientation has been the subject of much case law over the years. At one time it seemed to represent the high point in terms of demonstrating how difficult it can be to reconcile or accommodate competing rights. However, much of the heat is now in the clash between proponents of transgender rights and those with gender critical views. Following on from the Forstater case last year, in which gender critical beliefs were held to be worthy of respect in a democratic society and capable of protection, the field is very much open for the lines to be drawn and redrawn on when and how infringements can occur and whose rights should prevail.
In March this year, the EAT will hear Mackereth v DWP, which concerns a doctor who was suspended then dismissed for refusing to address transgender patients by their chosen pronoun. An employment tribunal found his dismissal was not discriminatory on grounds of religion or belief and that the employer had acted proportionately to achieve a legitimate aim. The doctor's beliefs that God only created males and females and that a person cannot chose their gender, and his conscientious objection to transgenderism, were views incompatible with human dignity which conflicted with the fundamental rights of others and so were not protected religious or philosophical beliefs under the EqA 2010. The EAT will revisit this issue no doubt in light of the Forstater judgment.
While there may be some religious objections in workplaces to transgenderism, the wider issue is that some people hold gender critical views without it necessarily being a conscientious objection. Given the fact that some workplaces are considering whether to have a policy on pronoun use, this issue is set to become more mainstream.
Calculating holiday pay for atypical workers
The vexed question of how to calculate holiday pay for atypical workers, in particular those who do have a contract throughout the year but only work during term time, was considered by the Court of Appeal in Harpur v Brazel Trust in 2019. The case will return to the Supreme Court in March this year and we will get a further steer on the intricacies of the Working Time Regulations.
The case was difficult to understand and highly technical but essentially established that the approach that many employers have adopted to date, of applying a formula of 12.07% to annualised hours worked, to calculate what someone should receive as holiday pay, is not correct and can result in underpayments. Instead of applying a formula which assumes that the entitlement to 5.6 weeks' leave should be pro rated according to hours actually worked, the Court held that the entitlement is 5.6 weeks' leave, regardless of hours actually worked; the level of remuneration is what the Employment Rights Act 1996 determines to be a week's pay.
Does carry over principle apply where leave was taken?
The question of when leave may be carried over, and for how long, has formed the subject of much case law, with King v Sash Windows establishing that the right to paid leave carries over indefinitely where the employer refuses to afford paid leave to the worker.
Where someone is not recognised as a worker by the employer and they take unpaid leave, are they entitled to be paid retrospectively for it, piggybacking on the rule established in the Sash Windows case, that leave carries over indefinitely? No, according to the EAT in Smith v Pimlico Plumbers Ltd, on the basis that unpaid leave cannot necessarily be regarded as leave for working time regulations purposes. The Court of Appeal will consider Mr Smith's appeal in 2022 and it will be important for all industries where this is some level of ambiguity about worker/self-employment status.
Stop press! Vicarious liability: employer not liable for horseplay at work which resulted in serious injury
When deciding whether an employer should be vicariously liable for an injury caused by an employee, the law draws a distinction between employees engaged (however misguidedly) in furthering the employer's business and those engaged in a frolic of their own. Vicarious liability will be established if the person's harmful act is done 'in the course of employment', or if connected to the employer's relevant field of activities, but not if the act is to be regarded as outside the course of employment.
Hot off the press, the Court of Appeal has confirmed in Chell v Tarmac Cement and Lime Ltd, that an employer was not vicariously liable for the injury caused during 'horseplay' when an employee fired a pellet gun at a contractor. Even though this incident happened on work premises during working hours, using some work equipment, the employee was clearly not furthering the employer's business interests. Neither was there a sufficient nexus with the employer's field of activities. This decision is in keeping with the approach taken in Morrisons, a Supreme Court case in which an employer was not vicariously liable for a data breach carried out by a vindictive employee who sought to damage the employee's reputation.
It seems right that employers should not be liable for all and any pranks that go on at work, however this does leave a policy gap in terms of how the injured party is meant to seek redress. Senior Associate Joe Aiston commented in Personnel Today that the decision is 'common sense'.
Interestingly, the Court did not rule out the possibility of liability arising in future, based on different circumstances, in connection with horseplay. The judgment suggests that the outcome might have been different if there had been a supervisory relationship between the parties or if previous threats of violence had created a clearly foreseeable risk. As with any negligence claim, the factual matrix giving rise to the duty of care will always be paramount.
Pensions look ahead for 2022
Auto enrolment – possible changes
2022 marks 10 years since automatic enrolment started to be rolled out and employers should continue to ensure they are complying with these important legal requirements, including the obligation to re-enrol every three years and in particular, paying the necessary minimum contributions. That is especially so because the Pensions Ombudsman has become increasingly willing to look at cases where there have been issues with contributions, with the additional possibility of awards for distress and inconvenience in favour of the employee. Automatic enrolment reforms might also be in the pipeline. In 2017, the Government (with a timescale of the mid 2020s) expressed an ambition to lower the qualifying age for auto enrolment purposes from age 22 to 18 and to remove the lower limit on the band of qualifying earnings upon which contributions are based so that pension contributions are calculated from the first pound earned. This, and certain other connected measures, have now been taken up by a private member's bill which is due to have a second reading at the end of February. If made law, employers would need to take on board the changes to the regime in their compliance measures. We will continue to monitor this and report on any changes as they occur.
Pension Schemes Act 2021 – more to come
This year looks to be a continuation of the significant developments emerging from the Pension Schemes Act 2021. Most of these affect occupational pension schemes (that is, pension schemes that are set up under trust and managed by trustees) and the most significant of them relate only to defined benefit pension schemes.
In relation to defined benefit pension schemes, there was much focus last year on the new criminal offence provisions which came into force from October 2021. However, the proposed changes (expected April 2022) to the sorts of activity which must be reported to The Pensions Regulator and at a much earlier stage in the process are likely to have much more practical impact on corporate transactions. Employers will need take this into account in their planning process where there is a defined benefit pension scheme involved. There should also be developments in the scheme funding requirements for defined benefit pension schemes, though consultation on proposed regulations on that will be in the spring and on the new funding code consultation has been pushed back to late summer.
Trustees of occupational pension schemes will also be looking at a number of other issues depending on the type of scheme and size - for example the £1billion plus schemes will be subject to new governance and reporting requirements in relation to climate change from 1 October 2022 which builds upon a regime that started to apply to the £5billion plus schemes from 1 October 2021. Schemes will also be continuing to grapple with the new transfer requirements that were brought into force very quickly last November and which have a significant impact on how transfers are handled and the legal conditions around that. There are other issues too which will affect occupational pension schemes, particularly defined benefit ones: amendments for certain schemes to member communications to include a 'stronger nudge' towards pensions guidance, changes in relation to charge caps and the roll out of simpler annual benefit statements for defined contribution schemes used for auto enrolment, superfund developments and risk transfer, and more – the list is long. If you are or think you may be involved in any of these types of schemes do please get in touch with our Pensions Team who would be happy to advise on how these laws may affect you and how to manage them.
Collective Defined Contribution Schemes – a look to the future?
Of wider interest to employers may be the developments in relation to collective defined contribution arrangements, the framework for which was established by the Pension Schemes Act 2021. Final drafts of regulations fleshing out much of the detail in relation to these were published last December, further paving the way for Royal Mail and the Communication Workers Union to put in place an arrangement of this type – likely to be the first employers to do so under this regime. Developments in this area may be of interest to employers looking, in the medium term, for the prospect of a better pooling of risk for defined contribution pension savers.'
