News & Updates
WJM Employment Bulletin: September/October 2023
- Workers (Predictable Terms and Conditions) Act 2023
- Employment (Allocation of Tips) Act 2023
- Protection from Redundancy (Pregnancy and Family Leave) Act 2023
- Strikers (Minimum Service Levels) Act 2023
- Carer’s Leave Act 2023
- Supreme Court Decision
There have been a number of new pieces of employment legislation receiving Royal Assent over the past few months. This briefing note intends to give an overview of each and explain the impact they will have in relation to employers and their employees.
If you have any questions about any of the topics covered, or would like to discuss anything with our Employment team, please call Liam Entwistle on 0141 248 3434 or email email@example.com
Workers (Predictable Terms and Conditions) Act 2023
The Workers (Predictable Terms and Conditions) Act 2023 was passed on the 18 September, aiming to address the issue of 'one-sided flexibility' in the UK labour market. This refers to situations where workers aren't guaranteed work but are expected to be available at short notice. The Act focuses on the contracts of atypical workers like agency workers, short fixed-term contracts, and zero-hours contracts.
Workers now have the right to request a more predictable working pattern when there's a lack of predictability in either their work hours, days or times. This change is modelled after the flexible working regime but won't be a 'day one right,' meaning it won't be applicable immediately.
The right extends to all workers and employees with a minimum service requirement, expected to be around 26 weeks. Continuous employment isn't necessarily required, but workers must have been employed by the same employer in the month before the minimum service period.
Workers can make up to two applications in a year, specifying the change of hours that they want and the proposed date the change should take place. They must also include in their application that they are requesting a statutory predictable working application and this application must be in WRITING.
The Act doesn't define 'predictability,' but it presumes that fixed-term contracts of 12 months or less lack predictability. Those on such contracts can request an extension or permanent status.
Employers have the right to refuse requests based on specific grounds, including additional costs, impact on customer demand, recruitment, business aspects, work sufficiency, and planned structural changes. Effective conversations between workers and employers are encouraged in case of rejection.
Failing to handle requests properly or rejecting them based on incorrect facts may lead to claims. Protection against unfair dismissal and protection from detriment is provided to employees and workers making such requests. There's also a risk of indirect discrimination claims if requests from certain groups are routinely rejected and this is something employers should be wary of when making their decisions.
The Advisory, Conciliation and Arbitration Service (ACAS) plans to release a code of practice for guidance, and a public consultation is expected soon. The Act is set to come into force in September 2024 to give employers time to prepare for the changes.
Employment (Allocation of Tips) Act 2023
On 31 July, 2023, certain parts of the Employment (Allocation of Tips) Act 2023 came into effect through the Employment (Allocation of Tips) Act 2023 (Commencement No 1) Regulations 2023. This move aimed to facilitate the development of a new official code of conduct, focusing on fostering fairness and transparency when it comes to distributing qualifying tips, gratuities, and service charges.
The main provisions of the Act are predicted to come into force in 2024, which will legally bind employers to give all tips, gratuities and service charges directly to the workers without taking deductions. Additionally, if there’s any sharing of tips among workers, it has to be done fairly, and the payment should happen by the end of the next month after receiving the tips from customers. It’s about making sure the money meant for the staff goes to them in full and in a timely manner.
The enforcement of these provisions is where the Act may fall short. Although the Act itself is simple enough to read and understand, it has not had as much media attention as some of the other Acts that have recently received Royal Assent (Strikers (Minimum Service Levels) Act 2023). Ministers intend to offset this by including a clause that states that employers must have a written policy regarding tips which must be made readily available to the employees.
This shift towards fairness and transparency in tip allocation is a commendable stride, particularly in the hospitality sector where the distribution process can be both intricate and obscure. Acknowledging the importance of tips in the income of workers, these changes not only ensure that employees receive their due share but also establish a higher standard for ethical employment practices.
Protection from Redundancy (Pregnancy and Family Leave) Act 2023
This Act came into force on the 24 July, 2023 and will allow the Government to increase the protections pregnant workers and new parents have when they return to work.
The Act introduces changes that will impact the existing law regarding employment protections during and after maternity leave, adoption leave, and shared parental leave. While secondary legislation is required for full implementation, the Act suggests several provisions:
1. Protected Pregnancy Period: The Act may set a protected period for pregnancy, possibly extending beyond the end of pregnancy. During this period, employers may be required to offer alternative employment.
2. Consequences of Non-Compliance: Failure to comply with the Act's provisions may result in the dismissal being treated as unfair.
3. Extension of Redundancy Protections: Amendments to the Employment Rights Act 1996 extend redundancy protections to cover the period during or after maternity leave, adoption leave, and shared parental leave.
There's a proposal to extend the protected period of pregnancy from the date of employee notification to six months after their return from maternity leave, pending confirmation through secondary legislation.
In terms of existing law, employers are already obligated to allow employees to return to the same or a similar role after maternity, paternity, or shared parental leave. The Employment Rights Act 1996 requires employers to consider alternatives to redundancy and offer suitable alternative roles during maternity, adoption, or shared parental leave.
Section 10 of the Maternity and Parental Leave Regulations 1999, combined with section 99 of the Employment Rights Act 1996, gives employees on maternity leave priority, making a dismissal automatically unfair.
The key change introduced by the Act emphasizes that employers must exercise extra care and ensure suitable alternative roles are offered to employees on or returning from these leave periods if such roles are available.
However, the exact timeframes for the implementation of these changes have not been provided by the government, leaving room for further updates on when these enhanced protections from redundancy will take effect.
Strikers (Minimum Service Levels) Act 2023
This (rather controversial) piece of legislation received Royal Assent on the 20 July, 2023. It grants the Business Secretary additional powers to establish regulations outlining minimum service levels for various public services, including health, fire and rescue, education, and transport. However, this is contingent upon a statutory duty to consult with stakeholders. The enactment of this law is a response to persistent salary disputes within the UK public sector and railway network. It's important to note that the necessity for detailed regulations implies that it's not an immediate resolution but rather a step towards addressing ongoing issues.
The potential effects of the Act hinge on the specifics outlined in upcoming regulations. This legislation empowers the government to limit the influence of trade unions in orchestrating widespread disruption to public services through legal industrial action. It’s crucial to understand, though, that the Act doesn’t impede unions from advocating for industrial action that falls short of an outright strike. This includes measures like overtime bans, which are still having a tangible impact on the railway network, especially in England.
Carer’s Leave Act 2023
The Carer’s Leave Act 2023 received Royal Assent on the 24 May, 2023. Currently, unpaid carers who are employed often rely on various types of leave, such as parental or annual leave, to manage their caregiving responsibilities. Employees have the right to unpaid time off for emergencies and specific situations involving dependants, but this is limited and cannot be used for situations known in advance such as planned medical appointments.
The new Carer's Leave Act 2023 introduces a significant change, granting employees the entitlement to one week of unpaid leave annually for providing or arranging care. This can be utilized for caring for a spouse, civil partner, child, parent, someone in the same household, or a person who relies on the employee for care. The person being cared for must have a long-term care need, which includes long-term illness or injury, a disability as defined in the Equality Act 2010, or care related to old age.
This leave is available from the first day of employment and can be taken flexibly in blocks of five days or in individual or half-days to suit the carer's responsibilities. Employees need to self-certify their eligibility, and no evidence is required.
Carers taking this leave will have protections against dismissal or detriment, similar to other family-related leave. The effective date of this new entitlement is yet to be determined but is expected to be no earlier than April 2024.
Employers can go beyond the statutory minimum and offer more than one week of leave or even provide paid leave to support carers in the workforce. Recognizing the needs of working carers can contribute to a more supportive workplace, as highlighted in a 2020 CIPD report. The report suggests various recommendations for employers, such as formally recognizing working carers, developing carer-friendly policies, and providing paid carers' leave.
To support the implementation of carer's leave, employers may consider putting in place procedures for self-certification and creating a clear policy outlining the right and processes for exercising it. This proactive approach can contribute to a more supportive and inclusive workplace for employees with caring responsibilities.
Supreme Court Decision
Chief Constable of the Police Service of Northern Ireland v Agnew
According to the Working Time Regulations 1998 (WTR), workers are entitled to 5.6 weeks of paid holiday. This comprises of 4 weeks holiday, also known as “Euro Leave” mandated by the European Working Time Directive and an additional 1.6 weeks under domestic law. For employees with regular hours the payment structure is defined. They should receive their ‘normal pay’ for the 4 weeks of Euro leave, which includes elements like regular overtime and commission. The remaining 1.6 weeks are typically compensated at basic pay.
Claims being brought against an employer in regards to holiday pay can either be brought under the Working Time Regulations or the Employment Rights Act. For the Working Time Regulations however, claims must be brought within three months of the payment deduction or termination of employment.
The claimants, a group of police officers and civilian staff working for the police service of Northern Ireland, filled complaints about not receiving proper holiday pay since 1998. During their annual leave, they were paid only their basic salary, neglecting regular overtime and specific allowances. Their argument was that they should have been entitled to their ‘normal pay’, including these additional earnings, throughout the four week of annual Euro leave.
Although the employer admitted to the underpayment, the Supreme Court was tasked with deciding how far back these holiday pay claims could extend. The case of Bear Scotland v Fulton 2016 UKEAT/0010/16/JW decided that deductions could only be linked if there was a gap of three months or less between each deduction. The key issue for the Supreme Court here then was whether the underpayments formed a continuous series of deductions and, if there was a gap exceeding three months, whether it would break the continuity of these underpayments.
The Supreme Court dismissed the appeal, deciding that even if there was a gap of more than three months between deductions they could still be considered linked. This decision overrules Bear Scotland v Fulton and gives employees the right to claim backdated holiday pay over several years. The question as to whether deductions are linked is now a factual one. Tribunals should now take into consideration the frequency of the deductions, the similarities and differences between each deduction, the size and impact of the deductions, how the deductions came to be made and applied and what links the deductions together as well as all other relevant circumstances (Chief Constable of the Police Service of Northern Ireland v Agnew  UKSC 33 para 127).
To put this into the context of the Agnew decision, the deductions were linked by a common fault by the employer by paying only the basic pay to its employees. Furthermore, the link will not be broken even if the employer pays the correct amount of holiday pay on occasions, for example if there was no overtime or allowances applicable in a certain period (Chief Constable of the Police Service of Northern Ireland v Agnew para 130 (iv)).
The Supreme Court also held that there is no distinction between the different types of leave. When a worker takes time off, whether it's the 4-week EU-mandated leave, the additional 1.6 weeks under domestic law, or any other contractual leave, they all come together as one total entitlement.
Now, when figuring out the daily rate of normal pay during leave, it's not right to simply divide the number of working days in the leave period (say, 20 days for a 4-week leave) by the total number of calendar days in the year. Determining what counts as normal pay, maintaining fair remuneration, and selecting the reference period for calculating normal pay are unique to each case and should be sorted out with evidence. It's about tailoring the approach based on the specific circumstances.
When it was made clear that employees with normal hours are entitled to not just ‘basic pay’ but their ‘normal pay’ many employers changed their holiday calculations. There are however, a number of employers who have not done so or are currently in litigation proceedings. This Supreme Court decision will have potentially significant repercussion on these parties.
The ruling changes the game by removing the automatic barrier to claims for a series of underpaid holidays if there are gaps of more than three months. Establishing a series of deductions based on common faults will now be simpler and each instance of underpaid holiday can be considered part of a series as long as there is a relevant “link” as previously discussed.
In Great Britain, domestic rules restrict claims for underpayment of holiday deductions to two years' back pay. This limitation applies specifically to claims issued on or after 1 July, 2015. This provision sets a boundary on how far back employees can go when making claims for holiday pay underpayment, aiming to provide clarity and manage the timeframe for such claims. In Northern Ireland however, there's no such provision, potentially exposing employers to claims dating back to 1998 or the employee's start date.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at October 2023. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.