UK Employment Law Coffee Break: 'Get Britain Working', employee fault in awarding compensation and our August Pensions spotlight for HR

'Get Britain Working': Labour announces its blueprint for fundamental reform

We have previously reported on the government's commitment to its proposals in "Make Work Pay", with a number of measures to be included in a new Employment Bill and Equality (Race and Disability) Bill announced in the King's Speech.

The government is also pressing forward with its proposals around wider workforce issues, including the need to upskill the workforce to meet future challenges with the launch of Skills England and a "blueprint for fundamental reform" to stop "spiralling economic inactivity".

Tackling economic equality; a move from welfare to work

The government has reported that 2.8 million people are out of work due to ill health or disability and one in eight young people are not in education, employment or work. Its long term ambition is to reach an 80% employment rate, with better quality of work and higher earnings.

To tackle this Liz Kendall, the new work and pensions secretary, has confirmed that a new government white paper "Get Britain Working" will be published soon. It will seek to address the problems of "today, tomorrow and beyond" paying attention to "the wider issues – like health, skills, childcare and transport – that determine whether people get work, stay in work and get on in work".

The paper will build on the government's manifesto commitments with:

• a new national jobs and career service to help get people into work and on in their work. This service will be "focused on helping people get into work and get on at work, not only monitoring and managing benefit claims" - it will also "mobilise the potential for new technologies and AI to better help people who are looking for work, or wanting to develop their careers", as well as enhancing and improving support for employers;
• a new "joined-up" work, health and skills plans for the economically inactive, led by mayors and local areas; and
• a youth guarantee to "offer training, an apprenticeship, or help to find work" for all young people aged 18 to 21. 

What does this mean for employers?

This white paper forms part of a cross-government approach to help people into work, with businesses also benefiting from the launch of Skills England, plans to tackle NHS waiting lists and the proposals included in the government's "Make Work Pay" (many of which are expected to be included in the new Employment Bill).

The government's focus on economic inactivity reflects increasing concerns over the impact employers and individuals are facing with the cost of living, long-term sickness and mental health. In recognition of the task ahead, the government recognises that this is a multi-generational issue with concerns around "poor mental health" in young people, the fact that many will need to take time away from work "to study, bring up a family or care for a loved one" and the risk of older workers currently in employment "falling out" due to physical health conditions.

The government's proposals in Make Work Pay include proposals for reform to employment laws around, among other areas, carer's leave, flexible working, parental leave, a right to disconnect and predictable working conditions – all of which will underpin its efforts to get people back into and stay in work.

While businesses wait for the detail of the Employment Bill and the changes it will bring to employment contracts, policies and working arrangements, employers should be anticipating the needs of an increasingly diverse and multi-generational workforce to ensure a supportive, productive and inclusive work environment for all.  It will be critical to ensure that equal opportunities are promoted for all employees in terms of hiring, promotions, training and development and that managers and employees have access to conflict resolution to address any generational or cultural misunderstandings. As well as routes for individuals to provide feedback (for example through anonymous staff surveys), a top-down approach, supported by training for managers, will be important to demonstrate that all voices are heard.

It will also be important to implement management training to recognise where individual needs will need particular support, for example where an employee is neurodiverse or has a mental or physical health condition which may require reasonable adjustments.

Employers should also consider what wider initiatives might be provided that support the health and wellbeing of the workforce: encouraging healthy lifestyles and providing access to mental health resources and support, recognising that different generations may face different stressors, and customised benefits, including healthcare and childcare support, appealing to various age groups.

With the government proposing a default right to flexible working, such arrangements are likely to become increasingly prevalent, such as remote working options and part-time opportunities to cater to different life stages and personal commitment.

Getting more individuals back into and staying in work will bring many benefits, but it will also pose specific challenges for employers to ensure a workplace culture where employees of all ages and backgrounds are valued and considered, with opportunities for growth and development.

Conduct contributing to an employee's dismissal will not always result in a reduction in compensation

The Employment Rights Act 1996 provides that "where [a] tribunal finds that [a] dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding." Therefore, in many cases where an employee's conduct has contributed to their dismissal, a reduction in any compensation awarded by a tribunal will be made.

In this case, the Employment Appeal Tribunal (EAT) considered the situation where employees were dismissed as a result of breaches of the employer's social media policy resulting from posts made by the employees.

The Employment Tribunal found that, in this particular situation, the social media posts were a pretext and that the true reason why each of employees was dismissed was for having made protected disclosures. For each employee, it found that there had been a social media post that amounted to culpable or blameworthy conduct and that this conduct had caused or contributed to the dismissal, but that in the circumstances of these cases, it was not just and equitable to make any reduction to the claimants' compensatory awards on account of such conduct.

The employer appealed, arguing that there was contributory conduct and that the tribunal  was therefore obliged to make some reduction to the compensatory awards.

The EAT dismissed the employer's appeal and found that, "though some reduction to the compensatory award will, in most usual cases, follow from a finding of contributory conduct, it is not the law that there must necessarily be some reduction in every such case.  The tribunal did not err in deciding not to make any such reduction on the facts of this case".

This makes it clear that there is no legal requirement for a tribunal to make a deduction to any compensation where an employee has contributed to their own dismissal (although in many cases, a deduction will be appropriate).

Where there is evidence that an employer is using an employee's conduct as the ostensible reason for dismissal, but behind this, the genuine factor is something else (for example: redundancy, whistleblowing, discrimination), a tribunal will not be compelled to make a proportionate deduction in compensation to account for the employee's contributory fault.

HR pensions August spotlight: Why it's important to check before making changes

When an employer wants to make changes to a trust-based pension scheme, there are a number of points it needs to consider. This month has seen developments relating to two of these: powers of amendment and dismiss and re-engage (or "fire and re-hire").

It is crucial to understand what changes are, and are not, permitted by the scheme power of amendment. All trust-based pension schemes have a power of amendment. This will say who can make amendments (for example, the employer with the agreement of the scheme trustees), what formalities must be followed (for example, amendments must be made by deed), and whether there are any restrictions on the changes that can be made to the scheme or to the benefits it provides.

Most schemes have at least one restriction and there are a number of different types. One of the most common kinds is a restriction designed to protect members' benefits. For example, there might be wording to prevent or restrict the ability to make any amendment that would affect the benefits members have already built up. There might be wording that goes further and prevents or restricts the ability to make any amendment which would affect the benefits members have already built up, and/or any benefits they might earn in the future.  

Earlier this month, the Court of Appeal considered the effect of wording which restricted the employer's ability to make any amendment affecting the "interests" of active members. It decided that the restriction applied to any amendment that would affect benefits already built up and/or any benefits that members might earn in the future.

In that case, the employer was applying to court to check the impact of the restriction before suggesting any change. In most cases it will not be necessary to apply to court. However, it is important that employers take legal advice on what the power of amendment for their scheme requires and permits. Misunderstanding, or missing part of, a power of amendment can lead to serious problems.

Legal advice will also be helpful if the scheme power of amendment is worded in a way which means it will not be possible for the employer to use it to make the change it wants to. The lawyers will be able to confirm whether there is another rule or power that will allow the employer to make the change by a different route.

In some cases businesses might, as a last resort, need to consider dismissing active (employed) pension scheme members and then re-engaging them. Examples might be if their contracts of employment contain pensions wording that you need to change but they will not agree to a change, or if the only way the business can bring active membership of a scheme to an end is to terminate someone's employment. This brings us to the second development this month, reported in this edition: the need to comply with the new statutory code of practice on dismiss and re-engage (fire and re-hire) which came into force on 18 July and the new government's plans to further strengthen requirements in this area.

These are not the only matters that employers need to consider, for example there are consultation obligations. As a general point, we recommend that employers who are considering making changes to a trust-based pension scheme take pensions legal advice at an early stage.

If you would like to discuss any of these points, please contact Claire Rankin or your usual Osborne Clarke contact.