Employment update | Top three in 3 minutes | 13 November 2019

1. Introducing new employment terms: What can employers do?

Challenging market conditions –whether increasing digital transformation, changing consumer demands or the shifting political landscape – require businesses to evolve and adapt. One consequence may be the need to change employees terms and conditions of employment. Managing the workforce implications of such changes will be critical. There is no legal right permitting an employer to change employment terms out of operational necessity but an employer can offer those new terms to an employee in the hope that they will be accepted, which many do. But what if the terms are rejected? An employer is left with an unattractive option of dismissing the employee on their current terms and offering to re-engage them on the new terms. Aside from the impact this has on employee relations, an employer may also be vulnerable to claims of unfair dismissal, discrimination and breach of the implied term of trust and confidence. And where the circumstances are such that potentially 20 or more employees at the same establishment might be dismissed should they reject the terms, collective consultation obligations kick in.

Recent press coverage has highlighted these wider challenges that employers face. For one employer, the introduction of new terms providing "the flexibility we need to make sure we can respond to our customers' changing demands", together with an enhanced remuneration package has not been sufficient to offset some workers' concerns over changes to their roles, hours, shifts and the removal of some benefits, including paid breaks. While almost 120,000 employees have reportedly moved onto the new terms – reflecting the business's remarks that it "tried hard" in a "robust, fair and extensive" consultation – it has faced media coverage over the concerns of the few hundred employees who rejected the terms, including a social medial campaign calling on customers to boycott stores.

Action

When seeking to introduce new terms and conditions which will have a significant impact on employees, businesses must not only adhere to the legal requirements but also keep a close eye on the bigger picture – the impact on employee relations and individual workers (who may be at risk of losing long term benefits or concerned about how new terms will impact on their personal commitments, such as childcare responsibilities), and also suppliers and customers. While some employers find it useful to include a clause in their employment contracts reserving the right to make reasonable changes when minor amendments are proposed, such provisions are not readily accepted by employment tribunals. Legal advice should be taken before relying on such a provision and the employer must ensure its actions are at all times reasonable. Employers must also be alert to any changes arising as part of a collective agreement and the special rules which apply where the changes relate to the transfer of a business or a service provision change. 

2. All change in April 2020: Is your business ready?

Eyes are inevitably fixed on the General Election that, depending on the political outcome, could bring significant developments in employment law. However, amid the noise of political party promises, employers should make preparations for the changes coming into force in April next year such as reforms to IR35 rules in the private sector and a requirement for employers to pay National Insurance on termination payments above £30,000. They also include a number of proposals arising from Theresa May's government's Good Work Plan, including:

• Statutory statement of particulars (the s1 statement): New rules extend the right to receive this statement to all workers, not just employees, and, while employers currently have up to two months to comply, it will become a "day one" right. Additional particulars are also required to be included, such as details on an individual's entitlement to paid leave and training.
• Holiday reference period: The reference period for calculating holiday pay under the statutory formula will increase from 12 weeks to 52 weeks.
• Information and consultation agreements: Provision that the threshold for requesting an information and consultation agreement is reduced from 10% to 2% of the workforce (although there must still be a minimum of 15 employees making the request).
• Agency workers: The Swedish derogation – which provides an exemption to the requirement that agency workers should be given parity with their permanent colleagues on certain pay and benefit terms after 12 weeks – will be abolished. Agency workers will also have a right to be provided with a statement of information including the type of contract on which they are engaged, the minimum expected rate of pay and how they will be paid and by whom.

Action

It remains critical that employers continue preparing for IR35. While we are still waiting for the final legislation to be passed, the expectation remains that these changes will come into force in April next year. Please contact your usual OC contact or our specialist Workforce Solutions team for advice on how the IR35 reforms will impact your current working practices and the steps that you need to take to prepare and protect your business from the consequent liabilities. We are holding seminars in both London (5 February) and Bristol (12 February) focusing on the implications of these changes for employers and crucial actions to take. If you would like to receive an invitation to this event, please let us or your usual OC Contact know.

Employers should not overlook the other April reforms and in preparation should take steps to:

• audit current terms of employment/engagement and amend as appropriate to reflect the new s1 requirements. In light of recent case law on restrictive covenants and the government's proposals around the use of non-disclosure agreements in employment contracts, employers should consider this an opportunity to audit their terms more generally.
• ensure that the new reference period is reflected in their holiday pay calculations. Holiday pay remains a concern for many employers and in light of recent case law (particularly around voluntary overtime) and again employers may want to take the opportunity to check that their holiday pay practices reflect recent developments.
• consider what impact the removal of the Swedish derogation will have on off-payroll costs.

New regulations were also expected providing parents with two weeks' unpaid leave on the loss of a child under 18 or on a stillbirth after 24 weeks of pregnancy. No date has yet been announced for the introduction of these new rights, but this is something employers may want to get ahead of, considering how they manage these situations against the proposed legal developments. 

3. Covert monitoring: No breach of human rights to catch serious misconduct but caution still required

The European Court of Human Rights Grand Chamber (EHRC) has allowed an appeal finding that there was no breach of an individual's human rights of respect to their private life and the right to a fair trial, when a retailer placed covert CCTV cameras by its check-outs and used the footage to identify two employees stealing items from the shop and assisting others to do so. Although the employees were not notified that the cameras were being used, the EHRC found the covert monitoring was justified. The measures the employer took in conducting surveillance for only a short period of time, here 10 days, limiting it to the check-outs in the public area and showing the footage to only a small number of people, was proportionate given the employer's reasonable suspicion that employees were committing serious misconduct, causing it significant loss.

Action

In the UK, the Information Commissioner's Office has published guidance emphasising that it will be rare for covert monitoring of employees to be justified and it should be authorised by senior manager. It should only be carried out in exceptional circumstances, for example, as part of a specific investigation into suspected criminal activity and where openness would be likely to prejudice the prevention or detection of crime or malpractice or the apprehension or prosecution of offenders. Before undertaking covert monitoring, employers must always take legal advice and proceed with caution, weighing up carefully the intrusion on employees' private lives against business needs and setting out clearly their reasoning. Indeed, employers must remain alert to their GDPR obligations; conducting appropriate impact assessments and taking care in the processing of personal data. Any covert monitoring that is felt appropriate should always be for a short a period as possible and impact as few individuals as possible. Employers should ensure that their policy on monitoring reflects GDPR requirements. 

We have a specialist GDPR team advising employers. If you would like to find out more, please contact Olivia Sinfield or your usual OC contact.

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