Employment and immigration | UK Regulatory Outlook November 2023

TUPE, Working Time records and holiday pay

The government, on 9 November, published its response to its recent consultation looking at retained EU employment law reforms, which focused on proposals to "simplify" certain aspects of the Working Time Regulations 1998 (WTR) and the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE); together with its separate consultation on holiday entitlement for irregular and part-year workers following the Supreme Court's decision in Harpur v Brazel.

The response to the consultations confirms the following legislative changes:

• Record-keeping. Employers will only need to keep adequate records to demonstrate compliance with the WTR.
   
• Annual leave entitlement. The government will not introduce a single annual leave entitlement but instead "two distinct pots" and "two existing rates of holiday pay" will be retained; workers will continue to receive four weeks holiday at their normal rate of pay and 1.6 weeks at their basic rate of pay. The meaning of "normal remuneration" will be defined in legislation (see below).
   
• Irregular and part-year workers (including some agency workers). An accrual method will be introduced in legislation to calculate entitlement at 12.07% of hours worked in a pay period in the first year of employment and beyond. The government will also introduce rolled-up holiday pay for these workers.
   
• TUPE consultation. Legislation will allow small businesses (with fewer than 50 employees) that undertake a transfer of any size and businesses of any size that undertake a transfer of fewer than 10 employees, to consult their employees directly where there are no existing employee representatives in place. Where employee representatives are in place, an employer would still be required to consult with them.

These changes are reflected in the draft Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (Employment Rights Regulations) statutory instrument recently laid before Parliament.

The Employment Rights Regulations also provide what types of payments are to be included when determining the amount of a week's pay for WTR purposes and restate retained EU case law permitting elements of carry-over of statutory annual leave where a worker has been unable to take it due to being on maternity or family-related leave or sick leave and where an employer has failed to inform a worker of their right to paid annual leave or has failed to enable them to take it.

The Employment Rights Regulations are due to take effect on 1 January 2024 with provisions relating to irregular and part-year workers stated to apply to leave years beginning on or after 1 April 2024.

Restatement of equality laws

The draft Equality Act 2010 (Amendment) Regulations 2023 (Equality Regulations) have also been laid before Parliament and set out legislative reforms to ensure that "key rights and principles in equality law are safeguarded and enshrined in domestic legislation".

The principles reproduced by the Equality Regulations that will apply from 1 January 2024 are:

• That special treatment can be afforded to women in connection with pregnancy, childbirth or maternity.
   
• That less favourable treatment on grounds of breastfeeding constitutes direct discrimination on grounds of sex, and that this applies in the workplace as in other settings covered by the 2010 Act.
   
• That women are protected from unfavourable treatment after they return from maternity leave where that treatment is in connection with the pregnancy or a pregnancy-related illness occurring before their return.
   
• That women are protected against pregnancy and maternity discrimination in the workplace where they have an entitlement to maternity leave which is equivalent to compulsory, ordinary or additional maternity leave under the Maternity and Parental Leave etc. Regulations 1999.
   
• That a claimant without a relevant protected characteristic, who suffers a disadvantage arising from a discriminatory provision, criterion or practice together with persons with the protected characteristic may bring a claim of indirect discrimination.
   
• That employers and equivalent for other work categories may be liable for conduct equivalent to direct discrimination if a discriminatory statement is made regarding recruitment, even when there is not an active recruitment process underway.
   
• That an employee is able to draw a comparison for the purposes of equal-pay claims with another employee where their terms are attributable to a single body responsible for setting or continuing the pay inequality and which can restore equal treatment, or where their terms are governed by the same collective agreement.
   
• That the definition of disability must be understood as specifically covering a person’s ability to participate in working life on an equal basis with other workers.

The explanatory notes to the Equality Regulations state that there is "no change to the overall effect of the law as a consequence of these regulations"; as such, no new guidance is currently planned but current guidance will be kept under review.

Supreme Court provides clarification on 'Bear Scotland' rule in unlawful deduction of wages claims

We also now have the Supreme Court decision in the Agnew case which looked, among other things, at the decision of the Employment Appeal Tribunal in the Bear Scotland decision that a series of unlawful underpayments would end where a gap between two unlawful underpayments exceeded three months.

The Supreme Court found the Employment Appeal Tribunal was in error in reaching this conclusion: to give proper effect to the unlawful deduction of wages provisions, an unlawful deduction of wages claim is "not necessarily confined" to the act or failure which occurred in the three months prior to the claim being brought where it is shown to be the latest in a series of deductions "all of which are relevantly connected with each other… they are all comprised in one series, which for this purpose is 'in time'". While the claim before the Supreme Court considered holiday pay, the decision will have applicability to other alleged unlawful deductions.

Employers in England and Wales do, however, still benefit from the "two-year backstop" introduced in 2015, essentially limiting unlawful deduction claims from extending back more than two years.

For more, see our fuller Insight.

Statutory minimum wage rates

The government confirmed in the Autumn Statement that it is increasing the statutory national minimum and living wage rates from April 2024 in line with recommendations from the Low Pay Commission. From that date, the statutory national living wage will also apply to workers aged 21 and over (at present it only applies to those aged 23 and over).

The new statutory minimum rates from 1 April 2024 will be as follows:

• 21 and over - £11.44 (increase of £1.02);
   
• 18 to 20 - £8.60 (increase of £1.11);
   
• 16 to 17 and apprentices - £6.40 (increase of £1.12).

The accommodation offset will increase to £9.99 per day.

Read more on what the Autumn Statement 2023 means for employers here.

Consultation on hiring staff to cover industrial action

Following the High Court decision earlier this year quashing statutory regulations which repealed regulation 7 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003, which prevent employment businesses from supplying agency workers to cover striking workers, the government has now launched a consultation which again looks at repealing the regulation.

Under the government's proposals, employment businesses would be permitted to supply agency workers to hirers to cover strikes in any sector; "It would be a permissive measure. Employment businesses would be permitted, but not required to supply agency workers to their hirers to cover strikes. Similarly, agency workers would be free as they are now to turn down any assignment they are offered". 

The government considers that regulation 7 "is a significant interference in the operations of private companies and other employers. It also prevents work seekers being offered certain assignments that they may otherwise wish to take" and that this interference "is unnecessary and disproportionate". 

The consultation closes on 13 January 2024.

Code of practice on 'reasonable steps' under Strikes (Minimum Service Levels) Act 2023

The government has published a response to its consultation on updating the Code of Practice trade unions will be required to take into account to encourage compliance with work notices issued under the Strikes (Minimum Service Levels) Act 2023.

The Act amends the Trade Union and Labour Relations (Consolidation) Act 1992 to allow minimum service levels to be applied in certain sectors including health, transport and education; regulations will specify the minimum service level which applies to important public services within relevant sectors.

The updated Code of Practice will now be laid before Parliament for approval and is expected to come into force in mid-December.

Revised rehabilitation periods

The Rehabilitation of Offenders Act 1974 was amended from 28 October 2023 to reduce the length of time for which some criminal records need to be declared and after which time they will be deemed spent. Government guidance setting out the new periods has been updated to reflect the changes.

Immigration spotlight 

There are major developments and changes under way in the world of UK immigration as the last months of 2023 approach. In the latest edition of their newsletter, our immigration team looked at the significant issues employers are now facing following the recent increase in fees. While the implemented increases are not huge, the forthcoming changes will bring a dramatic increase to the cost of hiring overseas talents. Since publishing the newsletter, the government has announced that the increase to the health surcharge will come into force from 16 January 2024.