ON THE HORIZON: Employment Law

Neonatal Leave and Pay – From April 2025 the Neonatal Care (Leave and Pay) Act 2023 will provide parents with a right to 12 weeks’ leave and pay when their baby requires neonatal care. This new right will be in addition to existing parental leave entitlements.

Flexible Working – changes to flexible working laws are expected to take effect mid-2024. The primary changes include: a day one right to flexible working (removing the current need for 6 months’ service before a request is made); an increase in the number of flexible working requests that can be made in a 12 month period from 1 to 2; a requirement for employers to respond to requests within 2 months (instead of 3); a removal of the requirement for the employee to explain the effect their request may have on the employer; and a requirement for the employer to consult with the employee before a request is rejected. A new ACAS Code of Practice on handling flexible working requests is also expected. Employers should be preparing for these changes by reviewing their internal policies and practices.

Non-compete clauses – the UK Government has confirmed plans to limit the length of non-compete clauses (i.e., restrictive covenants preventing employees from working with competitors after termination of their employment) to three months. We do not yet know when this change will be in force or how it will apply to restrictions which are contained in documents other than an employment contract (for example in a shareholders’ agreement). Equally, we do not know what the new laws will mean for existing non-compete restrictions and whether they will automatically be limited to three months (irrespective of what the contract says).

Obligations to protect employees from harassment – The Worker Protection (Amendment of Equality Act 2010) Bill originally would have made employers liable for the harassment of employees by third parties. However, after scrutiny over the potential impact on free speech and the increase it would cause in the regulatory burden on employers, the House of Lords has removed this part of the Bill. The Bill has been further watered down so that employers will be required to take “reasonable steps”, rather than “all reasonable steps”, to protect employees from sexual harassment in the course of employment. The watered down bill is likely to take effect in 2024.

Financial Conduct Authority consults on diversity and non-financial misconduct – The FCA has launched a consultation covering its proposals for improving diversity and inclusion in the financial sector. These include a mandatory requirement for firms to have a D&I strategy in place with targets, data reporting and disclosure obligations. Their proposals also focus on clarifying expectations relating to non-financial misconduct with the Conduct Rules being revised to explicitly cover bulling, harassment and similar behaviour, coupled with guidance as to when behaviour will be out of the scope of the rules as it relates to a person’s private or personal life. Bullying and similar behaviour in the workplace would also become relevant to fit and proper assessments. These proposals go some way towards addressing the current grey area of when non-financial misconduct is relevant and reportable for FCA regulated employers.

Holiday pay – the Supreme Court has confirmed that employees can claim historic unpaid holiday pay (and other wages) even where there is a gap of more than three months between underpayments. In the relevant case this opened the door to back pay from as early as November 1998. Whether the judgment will have wider ramifications is yet to be seen, but in Great Britain at least employees are already limited and may only claim 2 years’ worth of underpayments.

Carer’s leave – With effect from next year employees will have a right to time off work to provide or arrange care for a dependant with a long-term care need. Carer’s leave will be an employee’s right from day one of their employment and the dismissal of an employee in connection with their carer’s leave will be automatically unfair. The regulations which will underpin this new right are unlikely to be in force before April 2024, so the practical implications remain to be seen.

Protection from redundancy – the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 is expected to come in to force next year. It will give those who have returned from maternity or adoption leave in the previous 6 months priority status for redeployment opportunities in a redundancy situation.  Additional protection will also be given to Shared Parental Leave returners, though the specifics are not yet clear.

EU laws to be removed – specific EU laws will be removed from the UK statute book at the end of 2023. Many worker protections will remain, but we expect to see changes in the calculation of holiday pay (to simplify current rules) and possibly to change the consultation rules where a business transfers under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Use of agency workers during strikes – Last year, the government reversed a restriction preventing the use of agency workers to cover the duties of striking workers. However, a group of 13 trade unions successfully challenged the lawfulness of the Government’s decision and the reversal was overturned meaning that, once again, agency workers cannot be used to cover for striking workers.

Equal Pay – The Equality Act 2010 provides that men and woman should receive equal pay for equal work which includes work which is of “equal value”. Recently Next’s in-store staff (predominately woman) were found to be carrying out work of “equal value” to warehouse staff, entitling them to equal pay unless Next can establish that there is a non-discriminatory “material factor” which explains the difference in pay.

New law on tips – new laws to ensure that tips are distributed fairly amongst staff and paid without deductions will come in to force next year. These are aimed at tackling practices whereby the employer retains all or part of tips paid by card rather than passing them on to employees.