Employment and immigration | UK Regulatory Outlook July 2023

What US and UK companies need to know as the Platform Workers Directive edges nearer

The basis of the potentially far-reaching Platform Workers Directive (PWD) was agreed at European Union ministerial level in June 2023. The legislation is likely to be adopted soon. It will apply to gig workers but will also affect UK and US-based companies using or supplying contract workers on a volume basis. 

It increasingly looks like the PWD will be adopted later this year following the agreement by EU ministers on the EU’s general approach for a proposed directive to improve working conditions for platform workers.

This proposals may affect the costs of staffing platforms – including taxi apps and potentially temp bank arrangements – and the broader costs of using gig workers or other volume-based resourcing of labour where recruitment or payment rate-setting processes are increasingly being automated (that automation being the factor which will trigger application of the PWD) 

Given the widespread automation of processes by most staffing companies, the PWD may in some cases affect the use and supply of contract workers and freelancers across the EU, including US and UK staffing companies that deploy contract workers into the EU. So, what now are the proposed directive's main features? Read our Insight for more.

High Court finds regulations permitting use of agency workers to cover strikes are unlawful

In July 2022, new regulations came into force, revoking regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations. This prevented an employment business from supplying an employer with temporary workers to perform duties normally performed by a worker who is on strike or taking industrial action, or the duties normally performed by any other worker who has been assigned to cover a striking worker.

The regulations have been subject to a challenge in the High Court on the basis that they were introduced without proper consultation and that they were in breach of regulation 11 of the European Convention on Human Rights which prevents unlawful interference with the rights of trade unions and their members.

The High Court ruled that the new regulations introduced in July 2022 were unlawful. This was on the grounds that the approach to their implementation was "so unfair as to be unlawful and irrational; [the minister] had relied on a previous consultation in 2015 but failed to consider the responses to that consultation or listen to the criticisms from third parties, including trade unions about the impact of the changes; instead the government had proceeded to implement them 'at exceptional speed". The regulations are therefore "quashed" from 10 August 2023 and the position reverts to that which existed before that date: an employer cannot engage agency staff to cover for striking workers, or to cover the work of an employee who is covering the duties of another employee taking part in a strike or other industrial action. 

Read more .

Harassment: Compromise reached on the Workers Protection (Amendment of Equality Act 2010) Bill

We previously reported on proposals to strengthen protection against workplace harassment in a private member's bill which has received government backing. In its original form, the bill sought to introduce legal protection against third party harassment, create a new obligation on employers to take "all reasonable steps" to prevent sexual harassment, and to make provision for a compensation uplift in sexual harassment cases where there has been a breach of the employer duty. 

Third party harassment

Clause 1 of the bill as first presented would see employers liable for harassment of their employees where an employee was harassed in the course of their employment by a third party (such as a customer or client) and the employer failed "to take all reasonable steps to prevent the third party from doing so". What is reasonable in the circumstances would depend on the size and resources of the employer. These new provisions would have extended beyond just sexual harassment to harassment based on other protected characteristics such as race or sexual orientation.

The scope of this new obligation raised a range of concerns including what was termed a "chilling" effect on the freedom of speech, with employers potentially finding themselves on the end of legal claims due to a member of staff simply overhearing offensive or insulting comments made by a third party in the course of their work. In an effort to address this, the government introduced amendments in the House of Lords providing that, in certain circumstances, an employer would not be liable if harassment resulted from an employee overhearing conversations at work in which opinions were expressed on “political, moral, religious or social” matters; although this exception would not apply in cases of sexual harassment.

However, in light of continuing concerns, the government now appears at the report stage in the House of Lords to have reached a "compromise" with peers to ensure the bill proceeds, which has resulted in the third party harassment provisions being removed; instead "the situation will remain as it has been since the repeal of the third-party harassment protections 2013".

New statutory obligation to prevent sexual harassment limited to "reasonable steps"

Clause 2 of the bill as originally presented set out the proposed new statutory duty for an employer to take "all reasonable steps" to prevent sexual harassment; responding to concerns from the House of Lords, the government has also indicated that this will be amended to simply refer to taking "reasonable steps". While this is a "lower bar", the government notes that it will still be a new duty and "as such, a duty to take reasonable steps is still an improvement for employees in respect of sexual harassment, compared to the status quo".

There are no proposed changes to the proposals that the duty would be enforced by the Equality and Human Rights Commission (EHRC) and employment tribunals would also be allowed to apply an uplift of 25% to employees' compensation in sexual harassment cases where the employer had failed to uphold the duty; "given that there is no cap on compensation awards in discrimination claims this could be significant". 

Bullying: the Bullying and Respect at Work Bill

A new private member's bill – the Bullying and Respect at Work Bill – has recently been presented to Parliament.

The bill supports:

• A statutory definition of bullying at work;
• A new distinct claim of workplace bullying to be considered by an employment tribunal:
• A Respect at Work Code setting minimum standards for positive and respectful work environments; and
• Powers for the EHRC to investigate workplaces and organisations where there is evidence of a culture of bullying or multiple incidents.

In setting out these proposals, the bill attempts to fill what has been seen as a lacuna in the current legislation. There is currently no statutory definition of bullying and an employee who considers that a complaint of bullying has been inadequately resolved by their employer can only bring claims in the Employment Tribunal where a protected characteristic is involved (enabling a claim under the Equality Act 2010 for discrimination and harassment) or where their circumstances are such that they consider they have no option but to resign, at which point they can claim constructive unfair dismissal (where they have two years' service) or wrongful dismissal.

As well as the difficulties in establishing that a resignation should be treated as a dismissal by the employer for legal purposes, such a move obviously comes with significant personal and financial repercussions for an individual.

The bill does not currently have government backing and the current speculation is that it is unlikely to proceed given the limits on parliamentary time. However, it highlights

Paternity leave reform

The last Regulatory Outlook highlighted the legislation which has now been passed to provide specific statutory leave for carers and for those whose baby requires specialist neo-natal care. We are currently awaiting implementing regulations to provide further details on these new rights and a commencement date.

The government has now announced as part of its response to its ''Good Work Plan: Proposals to support families'' (published in 2019) that it will introduce in ''due course'' changes to paternity leave. This will enable paternity leave to be taken as either two consecutive weeks of leave or two separate blocks of one week of leave at any point within 52 weeks after birth. The notification requirements will also change and while entitlement to take paternity leave must still be given by the 15th week before the expected week of childbirth (unless this is not reasonably practicable), only 28 days' notice will be required of the date that an individual intends to take a period of paternity leave.

While the government has not indicated any timescale for the introduction of these changes, they are unlikely to require detailed regulations and it may be that we see them implemented sooner rather than later. When these changes do become law, employers will need to update paternity policies accordingly. The government has confirmed that no changes are proposed to the existing statutory regimes for shared parental leave and unpaid parental leave.

Flexible working

The Employment Relations (Flexible Working) Act 2023 has now received Royal Assent and makes the following changes to the existing statutory right to request flexible working:

• Employees are permitted to make two statutory flexible working requests in any 12 month period;
• An employee no longer needs to set out in their statutory request what effect they think their request will have and how this could be dealt with;
• An employer must have "consulted" with the employee before refusing a statutory request;
• An employer must deal with a statutory flexible working request within two months of receipt unless an extension is agreed with the employee. This two month period includes consulting with the employee, informing the employee of the decision and any appeal which is permitted.

The Act does not remove the requirement for an employee to have at least 26 weeks' continuous service before they are eligible to make a statutory request; although the government has indicated that it intends to legislate for this through regulations which are awaited.

Acas has also published a consultation on proposed amendments to its Code of Practice on Flexible Working reflecting the above changes and "significant shifts in the ways of working" . The proposed revisions encourage employers to take a positive approach to flexible working so that requests are not rejected by default without due consideration and an open dialogue about what may be workable.

It also includes information on: who should be allowed to accompany an employee at meetings to discuss a request; the need for transparency about reasons for rejecting a request; and making it clear that employers should "proactively offer" an appeal where a request has been rejected (although this is not a legal requirement). The consultation closes on 6 September 2023.

EU's Pay Transparency Directive

The EU's Pay Transparency Directive came into force on 7 June 2023 and Member States have three years to implement it into domestic law.

The key features of the directive include:

• gender pay gap reporting measures with enhanced enforcement mechanisms;
• undertaking a pay audit where a gender pay gap report shows a gap of 5% or more which cannot be justified (with a requirement to remedy the difference within six months of the report);
• increased pay transparency for current and prospective employees with a ban on asking the latter about pay history; and
• sanctions of non-compliance including compensation for employees, fines and a reverse burden of proof.

Although this will only technically effect EU employers and non-EU employers operating in Member States, it is likely to have influence across non-EU countries as employees' expectations are going to increase in relation to pay transparency and pay gaps. Employers operating across both EU and non-EU jurisdictions will have to consider whether to adopt these new practices across all their jurisdictions, and they may need to consider following the new EU standards to remain competitive in attracting and retaining talent. The directive is similar to the existing requirements in the UK but there are additional elements which are not currently present under UK law, so whether the UK will adopt these additional elements is yet to be known.

UK government announces increase in immigration charges

The government has announced that immigration and nationality fees are to be increased, along with the immigration health surcharge. These changes will have a significant effect on the budget assessments for UK employers employing foreign nationals. Read more.

Our latest immigration update

Our latest immigration round-up looks at changes in immigration rules on the international scene (including the UK, Belgium, Germany, Spain, Sweden and Australia) and considers changes for both students and workers, useful statistics from the recently released transparency data, and a policy dilemma for the Home Office this summer.