On 23 September 2022, the new Chancellor, Kwasi Kwarteng, unveiled the Growth Plan 2022 detailing the UK government’s set of economic policies aimed at, as the name suggests, boosting economic growth in the UK by improving competition and improving living standards by allowing people to retain more income. Much has been said in recent days on the merits and dangers of the plan and whilst we have seen an immediate impact on the value of the pound, it remains to be seen whether in the longer term the plan meets its aims and supports the country in navigating the likely impending recession. In the meantime, we summarise below the key elements of the plan from a UK employment perspective:

  • National Insurance cuts: On 6 April 2022, national insurance contributions (NICs) were increased by 1.25 percentage points, with a plan that this would make way for a new health and social care levy at the same level from April 2023. These have now both been scrapped. The NIC increase will be reversed from November 2022 and the health and social care levy will no longer be introduced next year. This is intended to make it cheaper for employers to employ staff, and allow more workers to keep more of what they earn.
  • Income tax cuts: The basic rate of income tax will reduce by 1 percentage point, from 20% to 19%, from April 2023, a year earlier than planned, and the highest income tax band of 45% for income over £150,000 is being abolished, again from April 2023. As with the NIC changes, this is intended to enable workers to retain more of their earnings.It is also hoped that the abolition of the top income tax band will attract more high earning talent to the UK.
  • Banker bonuses: A cap on banker’s bonuses was introduced by the EU following the 2008 financial crisis as it was believed that unlimited bonuses encouraged high-risk taking behaviour, and that a cap would limit the behaviour, which resulted in the crash. However, the cap came in for criticism for pushing up base salaries and bank’s fixed costs without allowing for adjustment for financial performance. Following Brexit, and the UK’s freedom to depart from the EU rules, that cap (of up to 2 times fixed salary) is now being removed. The thinking is that without the cap, the UK can be more competitive globally, being able to align pay practices with other markets, promoting UK economic growth, and to allow the UK to attract and retain talent in the UK.

Continue Reading UK Employment Law: key messages from the UK Government’s Growth Plan

On 22 September 2022, the Retained EU Law (Revocation and Reform) Bill 2022-2023 was introduced to the House of Commons, and if passed could give rise to the most significant shake up of employment rights since Brexit. 

In summary, the Bill acts to automatically repeal all retained EU law, and remove the principle of the supremacy of EU law, on 31 December 2023 (with the power to extend the revocation date to 23 June 2026) unless specific legislation is introduced to retain it.

What this means for UK employment law is unclear at the moment, but as employment rights relating to the transfer of undertakings (TUPE), annual leave and working time, discrimination and equal pay, and agency, part time and fixed term workers are derived from the EU, the potential for changes in these areas looms large.

We can only speculate at this stage, but there does not seem to be any current indication or suggestion of a radical overhaul of UK employment laws that have their origin in the EU. The UK has a strong track record of high employment standards, on occasion ‘gold-plating’ the minimum criteria required of it by the EU, and although the promised strengthening of rights through the Employment Bill are yet to materialise, the current political landscape is not conducive to a government looking to significantly reduce rights. In addition, trade unions and worker organisations would certainly be likely to vehemently challenge any proposed changes that are to the detriment of workers.Continue Reading What next for EU derived employment rights in the UK?

Speedread

From 1 October 2022, the requirement for employers to physically check their new hires’ right to work (RTW) documents will return unless they opt to use one of the new government ‘Identification Document Validation Providers’ (IDSP) to validate RTW evidence online.

Background

Prior to the pandemic, all RTW checks had to be carried out face-to-face.

As a temporary measure brought in during the pandemic, the Home Office allowed employers to carry out RTW checks over video call and to accept scanned documentation (as opposed to having face-to-face checks and then copying and retaining original documents, as was the pre-pandemic requirement). This temporary measure will end on 30 September 2022. 

Reminder of requirements

All UK employers must carry out certain RTW checks for new recruits (regardless of nationality) and also use reasonable steps to ensure their current employees have and maintain a RTW in the UK. While there is no standalone liability for employers who fail to correctly carry out RTW checks, failing to do so exposes employers to fines of up to £20,000 per breach in the event that they employ someone illegally (plus criminal liability, disqualification of directors, reputational damage, among other risks). Compliant RTW checks secure a statutory excuse to civil liability for the hiring of illegal workers. Continue Reading UK employers, are you ready for October? Change in Right to Work Check Requirements

As we start the summer holidays, the Supreme Court’s judgment on holiday pay is a timely reminder of the complexities of calculating holiday pay for certain workers.

Holiday pay has been a hot topic in UK employment law over recent years, with the latest Supreme Court decision in Harpur Trust v Brazel addressing the calculation of pay for workers who work irregular hours for part of the year on permanent contracts. Dismissing the appeal, the Supreme Court agreed with the earlier decisions that holiday pay should not be pro-rated, but instead calculated by looking at average earnings over the relevant reference period prior to leave being taken, even if it meant that the worker received proportionately more paid holiday than a full time worker.Continue Reading Holiday Pay: the latest instalment

The recent case of Dafiaghor-Olomu v Community Integrated Care [2022] EAT 84 is a good demonstration of the rough justice that is occasionally dispensed by the Employment Tribunal system.

It is well known that the amount of compensation that an employer can be ordered to pay for a straightforward unfair dismissal claim is subject to a statutory maximum amount of 52 weeks’ pay (commonly referred to as the “statutory cap”).  In Dafiaghor-Olomu v Community Integrated Care, Mrs Dafiaghor-Olomu won her unfair dismissal claim against her employer. At the remedies hearing, the tribunal awarded her £46,153.55 in compensation and the employer paid this amount in full. The claimant successfully appealed the outcome of the remedies hearing and her award was subsequently increased to £128,961.59 following a second remedies hearing. The claimant appealed again to the EAT in respect of the remedy.

The key question for the EAT to determine was how the statutory cap should be applied in this unusual scenario in light of the earlier payment of £46,153.55. In particular, the EAT had to decide whether:

  1. The employer should be given credit for the earlier payment of £46,153.55 before the statutory cap was applied leaving the employer with an outstanding balance to pay of £74,200 (the statutory cap at the time of dismissal); or
  2. The statutory cap should be applied to the total award first, and then the employer given credit for the earlier payment of £46,153.55, leaving the employer with an outstanding balance to pay of £28,046.45.

Continue Reading Unfair Dismissal Compensatory Awards – The Cost of Compliance

The outcome of Swiss Re Corporate Solutions v Sommer [2022] EAT 78, (which we reported in this month’s newsletter) provides an interesting illustration of the scope of the ‘without prejudice’ privilege rules in the context of settling an employment tribunal claim.

The ‘without prejudice’ rule (the “Rule”) allows parties to have a full and frank exchange of views about a dispute or litigation, and even to make concessions about weaknesses in their own case, when discussing settlement. The parties can do this safe in the knowledge that anything said or done will be “without prejudice” and therefore cannot be relied on and would not be disclosable if settlement is not achieved and the matter goes to court/tribunal. The courts recognise that without prejudice privilege is important for the efficient operation of the legal system, as it facilitates parties to resolving disputes outside of court/tribunal.

There are only a small number of narrow exceptions to this Rule and the Sommer case is a good illustration of that. One exception is that the Rule cannot be abused or weaponised as a disguise or excuse for “perjury, blackmail or other unambiguous impropriety”. Case law has established that this ‘unambiguous impropriety’ exception should be construed narrowly – it should only be applied in the clearest cases of abuse. In 2021 the Court of Appeal ruled it would only be lost in “truly exceptional” circumstances.Continue Reading Sailing close to the wind: ‘without prejudice’ and the thresholds of ‘unambiguous impropriety’

With train strikes scheduled for next week, and flight cancellations now a regular occurrence, UK workers seem set for a summer of travel disruption. This blog explores the implication for employers, particularly where workers may be stuck abroad, or otherwise unable to get to their place of work.

Flight cancellations

After two years of restricted travel due to the pandemic, summer 2022 finally provides an opportunity for well overdue holidays, yet with scores of flights being cancelled daily, not everyone will get away as planned, or return when they are meant to. Notwithstanding an argument that flight cancellations or being stuck abroad is not an exceptional circumstance in present times, workers will inevitably feel like it is something outside of their control, and employers are generally advised to act pragmatically.

For those stranded abroad after a cancelled flight home, getting back to work may prove problematic (unless they have booked extra annual leave as a contingency). Those who are able to work, albeit abroad due to a cancelled flight, should be paid in the normal way – working remotely is commonplace in a post-pandemic world, and provides a practical short-term solution where the circumstances permit. However, this approach assumes that a worker has the means to continue working. Although some diligent or senior employees may have taken their work phone and laptop with them so that they can work even if they are out of the country, requiring or expecting all workers (to the extent that the option is available) to do so is not particularly conducive or consistent with the idea that annual leave is a period of rest and relaxation. 

Unless a contract or policy states otherwise (which is unlikely), workers stuck abroad who cannot work remotely, or have no means to do so, have no entitlement to be paid for their absence once their annual leave comes to an end. However, assuming employees are making all reasonable efforts to get back to the UK as soon as they can, and being empathetic to the anxiety and administrative burden that workers will be facing in making alternative arrangements, employers could consider treating it in the same way as they would an ‘emergency’ situation, so if this is paid for a set number of days in other circumstances, to do so here too. Alternative possibilities are to require the days to be taken as paid annual leave, or otherwise as authorised unpaid absence. Options should be discussed in conjunction with the affected employee to find a mutually convenient solution depending on their specific circumstances, although employers also need to be mindful of treating workers consistently.Continue Reading Strikes and cancellations: The impact of travel chaos on employers

The Queen’s Speech at the State Opening of Parliament sets out the UK government’s legislative agenda for the year ahead. This year’s speech took place on 10 May, and in addition to the Queen’s absence, there was notable absence of any employment law reform.

In particular, the long-awaited Employment Bill, which was included in the Queen’s Speech in December 2019, was not one of the new Bills announced. Its omission was not unexpected, having been excluded from the legislative agenda during 2020 and 2021 too, but it is perhaps now even clearer that employment law is not a priority for the current government.

When first announced, the Employment Bill was expected to contain a plethora of new or enhanced rights including: carer’s leave; neonatal pay and leave; enhanced redundancy protection during pregnancy and maternity; an ability to retain tips; making flexible working the default; and increased contract predictability for workers. It was also expected to legislate to create a new single enforcement body. Continue Reading Queen’s Speech 2022: What next for UK Employment Law?

Covid-19 related reluctance or refusal to attend the workplace is nothing new, but as we enter a new phase of the pandemic, ‘Living with Covid’, developing case law will be of interest to employers who require or expect workers to attend the workplace on a full or hybrid basis. This blog considers the current guidance on workplace attendance, the recent Employment Appeal Tribunal’s (EAT) decision in Rodgers v Leeds Laser Cutting (a case looking at whether an employee had protection against unfair dismissal when refusing to attend work due to Covid related concerns), and some practical considerations for employers.

The UK government’s ‘Living with Covid’ plan came to full fruition in England on 1 April 2022, with remaining Covid-specific guidance now largely obsolete, and replaced with general public health guidance. This essentially treats Covid like other respiratory illnesses for individuals and business to manage, leaving employers with discretion on how to manage ongoing Covid risks in the workplace, and individuals encouraged to exercise personal responsibility. 

Employers are no longer required to consider Covid specifically in their risk assessments, nor have specific Covid mitigation measures in place, although they must continue to comply with their general health and safety obligations. Similarly, ‘work from home if you can’ guidance has been removed, although individuals with symptoms of a respiratory infection (including Covid), and who have a high temperature or do not feel well enough to work, or anyone with a positive Covid test, are advised to try and stay at home, working from home if possible, and to avoid others. Individuals who cannot work from home are advised to discuss options with their employer. Continue Reading Covid-19 related refusal to attend the workplace

Despite resolving to close an exploited loophole on ferry worker pay, the government has stopped short of an amendment to UK national minimum wage legislation.

In October 2020, legislative changes extended the minimum wage to most seafarers working on ships in UK waters, regardless of where a ship was registered, but those working on ferries (other than between UK ports) were not included, leaving scope for operators to hire crew on international routes on hourly rates below the UK minimums. In the absence of reasonable minimum wages, ferry operators can gain a competitive advantage by driving down wage levels.

Recent events have drawn attention to this practice, and in an announcement this week, the Transport Secretary set out the government’s plan to address some of the pay issues in response to this.

While recognising that a minimum floor is needed to prevent the competitive driving down of wages, and to ensure appropriate and fair levels of pay for ferry workers, the reality of pay arrangements across international borders is not straightforward.
Continue Reading Ferry workers’ pay is still at sea