On 10 May the UK government made a series of announcements that affect employment law.

Firstly, a significant change to the Retained EU Law (Revocation and Reform) Bill means that we are no longer on tenterhooks about what EU laws will continue to apply. The sunset clause, which provided that EU law would be automatically revoked on 31 December 2023 unless expressly retained, has been scrapped. Instead, the reverse now applies, with current laws remaining binding unless and until they are revoked. The government hopes this will provide some certainty for businesses, and while it commits to reviewing and amending EU laws, this new position allows for more time for proper assessment and consultation.
Secondly, the government has announced regulatory reform announcements specific to employment law in the areas of working time and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE):

  • The UK’s Working Time Regulations 1998 (WTR) are derived from EU Law, and while providing valuable protections for workers, are often seen as burdensome and complicated to navigate. It is therefore unsurprising that reforms to the WTR are high on the government’s agenda post-Brexit. The announcement about reforms in this area is light on detail but appears limited to changes aimed at reducing the administrative burden around employers’ recording keeping requirements and to holiday entitlements and pay. There is no suggestion of any reduction to holiday entitlements. The government also intends to permit the use of rolled-up holiday pay, and to reduce the complexity and administration around how holiday pay is calculated. It is presently unclear what is meant by this, but as the calculation of holiday pay has become particularly complicated in recent years following case law on the inclusion of commission and overtime, this is one area where reforms may be welcomed by workers and businesses alike.
  • The TUPE rules are similarly derived from EU Law, and while the government recognises that TUPE provides valuable protections for workers who work in businesses or services which transfer elsewhere, it intends to consult on changes to the information and consultation requirements. Under current rules, there is an obligation to consult with elected representatives on all TUPE transfers unless the micro-business exemption applies (i.e., where the employer has fewer than 10 employees). However, in an attempt to reduce the burden on employers, the government will consult on removing these requirements for employers with fewer than 50 employees and transfers of fewer than 10 employees. It is unclear whether both limbs need to be met to be exempt, or if they are alternatives (an issue to be clarified, and for parties to have their say, during the consultation). We suspect that an exception for small transfers (irrespective of business size) will be welcomed by many

The announcement is referred to as the first in a series of regulatory reform announcements, and so we cannot rule out more proposed reforms affecting UK employment law in due course. We will provide further updates through our Employment Law Watch blog as and when we hear more about the consultations on the WTR and TUPE proposals, or any other planned changes.

As we previously reported, New York State recently adopted a salary transparency law that, effective September 17, 2023, will require employers to disclose the pay range for any job that is advertised, including those for internal promotion or transfer opportunities. Last month, however, Governor Kathy Hochul signed A999/S1326 into law, amending the impending salary transparency law. As detailed below, the amendment modifies the scope of jobs covered by the law, eliminates its recordkeeping requirements, and provides a definition of “advertisements.”

Perhaps the most notable aspect of the amendment is that it clarifies the scope of jobs covered.  To that end, the prior iteration of the law applied to jobs that “can or will be performed” within the Empire State. The amendment modifies the scope of the law, however, by specifying that the forthcoming law will instead apply to jobs that either (i) “will physically be performed, at least in part, in” New York State or (ii) “will physically be performed outside of New York but reports to a supervisor, office, or other work site in New York.” The latter item is particularly noteworthy because it means that jobs that otherwise have no relation to New York State, may still be subject to the wage transparency law merely because, for instance, the employee’s supervisor is based in New York.

In addition, the amendment eliminates the recordkeeping requirements of the initial version of the law, which would have required employers to maintain records related to each job, promotion, transfer, compensation, and job description. Notwithstanding this amendment, it remains a best practice for employers to maintain records concerning compensation, job descriptions, and position changes to demonstrate compliance with wage-and-hour laws, as well as to ensure appropriate recordkeeping in the event of a claim brought by an employee. 

Moreover, the amendment also incorporates a definition of “advertisement,” which was absent from the initial version of the law. Under the amendment, “advertisement” means “to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity; makes technical corrections.” Notably, the term advertisement applies to both internally and externally publicized job listings.

Prior to the law’s effective date, employers should review their current and future job postings to ensure compliance with the updated salary transparency law. New York City employers should also take this opportunity to review their job postings and make any necessary changes to comply with the City’s salary transparency law, which went into effect last year.

As the 2023 Virginia legislative session comes to a close, Governor Glenn Youngkin signed into law two new pieces of legislation that will expand the Commonwealth’s existing restriction on employee confidentiality agreements and restrict how employers may use employee social security numbers. Both new laws go into effect July 1, 2023.

Expanded prohibition on confidentiality and non-disparagement agreements

In 2019, Virginia enacted Va. Code § 40.1-28.01, which prohibits employers from requiring an employee or prospective employee to agree to a confidentiality agreement as a condition of employment that has the purpose or effect of concealing details related to a claim of sexual assault as defined in certain provisions of the Virginia criminal code (namely, rape, forcible sodomy, or sexual battery).

On March 26, 2023, the Governor signed H.B. 1895, which: (1) expands the coverage of the law to include claims of sexual harassment as defined in Va. Code § 30-129.4 (“unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature when such conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance, or creates an intimidating, hostile, or offensive work environment”), and also (2) prohibits non-disparagement agreements that have the purpose or effect of concealing details related to a claim of sexual assault or sexual harassment. 

Like the original law, the expanded statute only applies to agreements with current and prospective employees and those agreements that are “a condition of employment,” and therefore does not cover post-employment settlement agreements. Apart from these Virginia-specific developments, employers should also be mindful of the NLRB’s recent action on non-disparagement and confidentiality provisions that we previously covered with important FAQs.

Restrictions on use of employee social security numbers

On March 21, 2023, the Governor signed S.B. 1040, which prohibits employers from using an employee’s social security number (or any derivation of it) as the employee’s identification number or on the employee’s identification or access card/badge. The Department of Labor and Industry may enforce the law with a $100 civil penalty for each violation.

In light of these developments, employers should review their non-disclosure, confidentiality, and non-disparagement practices and also their use of employee social security numbers. If you have any questions on these new laws, need assistance developing policies and procedures to adjust for such changes, or have other questions regarding your workforce, please contact Betty Graumlich at bgraumlich@reedsmith.com, Noah Oberlander at noberlander@reedsmith.com, or the Reed Smith lawyer with whom you normally work.

The UK government has announced that it will support the Worker Protection (Amendment of Equality Act 2010) Bill (the Bill), which represents one of the most notable changes to UK workplace discrimination law since the 2010 Equality Act. The Bill imposes a proactive duty on employers to take all reasonable steps to prevent the harassment of its employees, including by third parties, with a compensation uplift where they fail to do so.

Why the Bill is being introduced

In 2018, the Women and Equalities Select Committee (WESC) published a damning report on the prevailing extent of sexual harassment in the workplace. This report, along with campaigns by the Fawcett Society and other groups, led to the UK government undertaking its own consultation from 11 July to 2 October 2019, which found that 54% of respondents had experienced harassment at work.

High-levels of harassment, and notably sexual harassment, in the workplace has been common place for years. The 2022 Gender Equality in the Workplace report by Randstad found that 72% of the 6,000 women polled had experienced or witnessed harassing behaviour by male colleagues, and that 67% of them had experienced some form of gender discrimination. 32% of the women polled felt that their careers had been affected by sexual harassment.

Studies have shown that harassment is not limited to male colleagues, but is also inflicted by third parties. A 2018 report by the TUC found that 36% of 18-34 year olds who have experienced some form of workplace harassment said that the perpetrator was a third party.

Continue Reading Tracking the progress of the Worker Protection (Amendment of Equality Act 2010) Bill

The UK government has announced new, increased statutory rates and limits that will be in place in England and Wales from April 2023. The updates impact a range of employment payments including, among others, national minimum wage rates and statutory sickness, parental and redundancy payments.

These rates are reviewed on an annual basis but, in 2023, given recent economic and inflationary pressures, they are set to increase considerably. For some employers, these increases could have a material impact on their overall wage bill and the cost of some types of operational change. We discuss some of the main changes below. Please see a list of the key new rates and limits and how they have changed.

National minimum wage (from 1 April 2023)

National minimum wage rates are set to materially increase at all levels and age categories. By way of example, the national living wage (for workers aged 23 and over) is set to rise from £9.50 per hour to £10.42 per hour.

Steps will need to be taken to increase pay for workers currently below these limits from 1 April 2023. Attention will also need to be given to workers whose pay is close to the new threshold to confirm that, when their hourly pay is calculated in accordance with national minimum wage legislation, it continues to meet statutory minimum requirements. Not doing so risks costly penalties for non-compliance (up to £20,000 per worker) as well as payments of arrears and being named and shamed on government lists.

Where changes are made to some workers’ pay for compliance with these changes but not others, employers may also want to consider the impact on overall pay structures. Is there now a smaller gap / increased pressure between the lowest paid roles and slightly higher paid roles? Will there be increased pressure from other workers to also receive an inflationary pay rise? Employers should review contracts and pay review practices to assess how these type of issues will be managed and be ready to answer employee questions. Some employers may consider one-off payments/bonuses to employees to support them during the cost of living crisis but targeting such measures at employees at the lower end of the pay scale can create its own problems in terms of justifying an arbitrary cut off point.

Continue Reading Are you ready for the new employment rates and limits in England & Wales?

As reported on our blog in November, the idea of a four-day working week is gaining momentum in the UK. Last month, the not-for-profit organisation, 4 Day Week Global, reported the results of its six-month UK trial. With 92% of reporting companies confirming they will continue with the four-day week, the trial has been reported as a resounding success. In this article, we review where the four-day working week movement may go from here and what employers should be thinking about now.

What is a four-day working week?

The UK trial typically involved working hours being reduced to 80% (or full time employees working 4 out of 5 days a week) crucially without any drop in pay. The expectation is that productivity matches or even exceeds usual standards.

There are numerous ways to structure a four-day working week depending on what best suits a particular business, including a whole business shut down on one day, staggered days off or different sets ups for different teams or times of the year (e.g. to meet seasonal demand).

Why is a four-day working week becoming increasingly popular?

Coming out of the pandemic there has been an increased focus on work life balance, mental health and wellbeing, and employers’ roles in supporting employees on these fronts. Employers in some industries have also seen a talent war emerge as they find it harder to recruit and retain the best talent.

These conditions have arguably assisted the four-day working week in gaining momentum. Happy employees enjoying a healthy work life balance are less likely to fly the nest and join the so-called “great resignation”. For the moment at least, offering a four-day working week is also sufficiently unusual that it is likely to give a competitive advantage when recruiting new talent.

If it is correct that productivity is not negatively impacted, a four-day working week provides a way to recruit and retain without the cost burden of increasing salaries. It also offers cost savings in terms of recruitment costs and, potentially office running costs and, for some employees, potentially childcare costs. Of course, the more companies that make the move, the more pressure other employers in the same industries may feel to do the same.

Other benefits include reducing carbon footprint due to less frequent commuting and a potential social impact if employers use their time off for voluntary work. There is also a view that a four-day working week could improve equality by better enabling employees with caring responsibilities to manage those responsibilities around work and therefore remain in the workforce.

What were the conclusions of the trial?

The UK trial involved just under 3000 employees across 61 organisations. The headline results were as follows:

  • Company revenue stayed broadly the same over the trial period, rising by 1.4% on average
  • There was a 57% drop in staff leaving over the trial period
  • There was a 65% reduction in absenteeism (i.e. sick and personal (non-holiday) days)
  • 54% of employees said it was easier to balance work with household jobs
  • 39% of employees were less stressed
  • 60% of employees found an increased ability to combine paid work with care responsibilities
  • 62% of employees reported it was easier to combine work with social life

However, it is important to note that these statistics are based on a relatively small pool. The survey response rate from the participating employees was only 58% by the end of the trial and in some cases, the no/negative change was greater than the positive story. For example, whilst 39% of employees reported being less stressed by working a four-day week, 48% reported no change in their stress levels and 13% reported increased stress. The retention and absenteeism statistics may also be skewed by the small populations involved.

Continue Reading What now for the four-day working week?

The UK government has largely rejected recommendations to reform the existing legal framework for employees experiencing menopause, instead promoting employer-led education and support. In this article, we review the government’s response to the House of Commons Women and Equalities Committee’s (the “WEC”) July 2022 report, “Menopause and the workplace” (the “WEC Report”), and consider what it means for employers.

The WEC Report considered the ways in which menopause affects women* in work and, in its own words, “wanted to understand what drove women to leave their jobs, the impact on the economy of haemorrhaging talent in this way, and the legal redress for women who have suffered menopause-related discrimination.” It made a number of recommendations to address the needs of menopausal employees and drive change, ranging from the publication of guidance and the appointment of a Menopause Ambassador, to larger scale reform of the legal framework.

The government has now confirmed that it will not be adopting the majority of the recommendations. The Chair of the WEC has voiced their disappointment and concern with the response, deeming it a “missed opportunity”.

The Report’s main recommendations and the government’s responses relevant to employers and the workplace are summarised below.

Continue Reading Menopause and the workplace – UK employers in the driving seat

On February 21, 2023, the National Labor Relations Board issued a landmark decision in McLaren Macomb that has the potential to seismically change how employers approach and manage employee separations that include severance packages. In response to this landmark decision and the impact it will have on many employers, Reed Smith’s Labor & Employment team has detailed some common FAQs related to the decision.

If you have further questions, contact a member of the Labor & Employment team or the Reed Smith Lawyer with whom you normally work.

On February 21, 2023, the National Labor Relations Board issued a landmark decision in McLaren Macomb that has the potential to seismically change how employers approach and manage employee separations that include severance packages. Overturning well-settled precedent, the Board held in a stunning decision that severance agreements containing non-disparagement and confidentiality provisions are unlawful under the National Labor Relations Act.

The issue presented in McLaren Macomb was whether the severance agreement that the respondent-employer offered to 11 employees violated the NLRA. Specifically at issue were the following two provisions:

  • Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than a spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.
  • Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parents and affiliated entities and their officers, directors, employees, agents and representatives.

In Tuesday’s ruling, the Board held that these standard, run-of-the-mill severance agreement provisions do indeed violate Section 8(a)(1) of the NLRA. In reaching this conclusion, the Board majority concluded that prior rulings on this issue improperly conditioned a finding of unlawful coercion on factors outside the language of the agreement itself, such as whether the employer proffered the agreement in coercive circumstances and whether the employer harbored animus against Section 7 activity. The majority couched its decision to overrule Board precedent, explaining that the Board would “return to the prior, well-established principle that a severance agreement is unlawful if its terms have a reasonable tendency to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights, and that employers’ proffer of such agreements to employees is unlawful.

Using this framework, the Board then held that both provisions substantially interfered with employees’ Section 7 rights. Given the broad nature of the non-disparagement provision at issue, the majority argued that the non-disparagement provision would unlawfully prohibit employees from publicly criticizing employer policies, including asserting that the employer had violated the NLRA, and raising complaints about the employer with former coworkers, their union, government agencies, the media, or the general public. Similarly, the majority reasoned that the confidentiality provision would unlawfully prohibit the employee from discussing the terms of the severance agreement with former or future coworkers or unions, or even disclosing the existence of an unlawful agreement provision to the Board.

The lone dissenting Board member argued that the majority had mischaracterized and unnecessarily overruled “sound law” established by two 2020 decisions. He nevertheless found the that proffering the severance agreements was unlawful under such precedent because the employer had unlawfully bypassed the employees’ union on the permanent furlough and severance agreement issues.

The Board did not address whether including explicit carve-outs for Section 7 activity in the severance agreements would have been sufficient to render them lawful.

In light of this decision, employers should re-evaluate their severance agreements and practices. If you have any questions on this decision, need assistance developing policies and procedures to adjust for such changes, or have other questions regarding your workforce, please contact Betty Graumlich at bgraumlich@reedsmith.com, Mark Goldstein at mgoldstein@reedsmith.com, Noah Oberlander at noberlander@reedsmith.com, or the Reed Smith lawyer with whom you normally work.

The practice in the UK of ‘fire and rehire’ (i.e. dismissing an employee and offering them a new employment contract on new terms) as a way to change terms and conditions of employment is lawful, but it has been under the spotlight and subject to increased scrutiny in recent years as cases of misuse by some employers have hit the headlines.

In autumn 2021, legislation curbing dismissal and re-engagement was shelved by the UK government and replaced with a commitment for updated and more detailed Acas guidance. That guidance (which is not binding) focusses on the importance of thorough and constructive consultation with staff to explore all alternative options to terminating employment, describing fire and rehire as ‘a last resort’. By spring 2022, the government announced its intention to publish a statutory code of practice intended to crackdown on the inappropriate use of the tactic, with increased punitive financial sanctions for non-compliance.

That draft statutory code of practice has now been published, and a consultation on its content launched. The consultation closes on 18 April 2023, but the publication of any resulting final version is reliant on parliamentary time allowing its completion.

Key points arising from the draft code are as follows:

  • It sets out guidance and accepted standards on how employers should approach changing terms and conditions, with an emphasis on meaningful consultation, transparency and openness. It says that fire and rehire should be a last resort, and that dismissal should not be used as a threat or negotiating tactic where dismissal is not in fact being contemplated.
  • It applies where an employer wants to make changes to terms and conditions of employment and envisages that if employees do not consent to those changes they might dismiss them and offer re-employment on new terms or engage new employees on the new terms. It does not apply where the reason for the dismissal is redundancy, but it is not immediately clear how this will operate where terms and conditions changes are being explored as an alternative to redundancy.
  • The code applies regardless of the number of employees affected and regardless of the business objectives or reasons for seeking the changes (presumably unless it is a redundancy situation where the code does not apply).
  • There is a big emphasis on ‘meaningful consultation’ (i.e. in good faith and with a view to reaching agreement), and taking all reasonable steps to explore alternatives. If negotiations are not fruitful, the draft code requires employers to revisit their business strategy and plans. The code also reminds parties that Acas can assist with resolving conflict and help with negotiation, although it is unclear whether an unreasonable failure to involve Acas would itself be a breach of the code, or how far a ‘reasonable’ employer would be expected to go in revisiting their strategy.
  • It also promotes transparency and openness in sharing information (the extent of which might usually be reserved for collective consultation where 20 or more employees are affected), and for employers to be honest about dismissal and re-engagement as an option if agreement cannot be reached.
  • It recommends that employers seek to mitigate against the impact of the changes e.g. through a phased implementation, regular reviews, and providing practical support (e.g. relocation assistance, and career and emotional support through coaching/counselling). Again, it is unclear how far an employer would be expected to go to avoid being unreasonably in breach of the code.
  • The code will not be legally binding, but it will be relevant to whether an employee who has been dismissed as part of a ‘fire and rehire’ has been fairly dismissed under UK unfair dismissal laws. In addition, the employment tribunal will have the power to uplift or reduce compensation by 25 per cent where there is unreasonable non-compliance with the code. It is unclear how this penalty will operate, particularly whether the uplift could allow compensation awards to exceed the current financial caps under unfair dismissal law. Assuming the 25 per cent uplift works in the same way as non-compliance with the established Acas statutory code on discipline and grievance, financial penalties would remain subject to existing caps. If this is the case, the proposed new penalty may be more style over substance, unlikely to have much impact on affected staff, nor significantly increase an employer’s financial exposure.

Although the new code will be welcomed by many, it remains to be seen if it will be sufficient to deter abuse of this practice. Employers who operate fire and rehire strategies responsibly will welcome the code as setting out the steps an employer needs to follow in order to fairly dismiss an employee as part of a ‘fire and rehire’.

Parties wishing to comment on the draft code can do so online before 18 April 2023.