April 2024 sees changes to various statutory rates and limits as set out below:

National Minimum Wage

NB: exemption for live in domestic workers removed from 1^st April 2024 also.

Statutory payments

*Statutory Maternity Pay is payable at 90% of normal earnings for the first six weeks in most cases

Employment Tribunal compensation

*Compensatory award will be capped at 52 weeks’ gross pay if less than these figures (subject to no award for re-instatement or re-engagement being made)

**Per worker

Earlier this year we reported on a provision in the EU Law (Revocation and Reform) Bill (otherwise known as the “sunset clause”), which would have resulted in EU laws being automatically repealed at the end of 2023 unless specific laws were passed to keep the relevant piece of legislation in force.  As much UK employment law is derived from EU law, this would have created huge uncertainty for employers. However, the government has recently announced the removal of the “sunset clause” and published the list of EU legislation intended to be revoked on 31 December 2023.  This means that vast swathes of UK employment law which would have automatically disappeared will remain, unless the government expressly decides a particular law should be removed.  As a result we expect the uncertainty for employers to be greatly reduced.

In addition to the above announcement, on 10 May 2023 the government set out some new proposed reforms to UK Employment law. They include:

• Merging the basic EU right to 4 weeks holiday per year with the UK right to an additional 1.6 weeks, meaning the same rules will apply to all 5.6 weeks’ holidays.  This change may bring simplified rules for calculating statutory holiday pay (such as whether to include overtime, bonuses, and other payments), although this remains to be confirmed.

• Permitting ‘Rolled-up’ holiday pay, meaning that employers could pay seasonal or casual workers for their holiday entitlement on an ongoing basis (e.g. including an element of holiday pay within their hourly rate), rather than ensuring that they take periods of paid leave.

• Amending the TUPE regulations, to allow businesses with fewer than 50 employees, and where there are fewer than 10 individuals transferring, to consult directly with the employees rather than employee representatives.

• Limiting ‘non-compete’ clauses in employment contracts to a maximum period of three months. This is not expected to affect other types of post-termination restrictions, or prevent employers from restricting activities during notice, or garden leave.

• Relaxing obligations to keep Working Time records.

Whilst these are just proposals at the moment, they could mean good news is on the horizon for some employers, particularly those grappling with calculation of holiday pay and TUPE consultations for smaller employers. It is important to remember that these are not implemented yet, and the picture may change. If you would like advice on the law in these areas at present, please speak with your usual contact or get in touch using our form here.

The rate of change in employment law exceeds any other area of law and 2023 promises to be no exception.

We set out below some expected changes to employment law and some other areas to watch out for in 2023:

• National minimum wage – the main rate (for those aged 23 or over) will increase from £9.50 to £10.42 per hour on 1^st April 2023. Rates for younger workers and apprentices will also increase on the same date.

• Statutory parental leave payments – statutory maternity, paternity, adoption, parental bereavement and shared parental leave pay will increase from £156.66 to £172.48 per week with effect from 6^th April 2023 (NB: statutory maternity pay is 90% of pay for the first six weeks in most cases).

• Statutory sick pay – will increase on 6^th April from £99.35 to £109.40 per week.

• Changes to the flexible working regime – the right to request flexible working will become a ‘day one’ right, and employees can make up to two requests in a 12 month period. The decision period will be reduced from 3 to 2 months, and there will be no obligation on an employee to state how they believe the change will impact the employer.

• Changes to the law regarding sexual harassment – there will be a proactive duty on employers to prevent sexual harassment and employers will be made liable for harassment by third parties.

• Extension of protection in redundancy situations for expectant mothers during pregnancy and parents who return from maternity, adoption and shared parental leave. Employees who benefit from this extended protection will have priority for suitable alternative employment over other employees.

• Introduction of 5 days’ unpaid carers’ leave.

• Changes to the law on holiday pay for part-year workers – following on from the case of Harpur Trust v Brazel (please see our review of last year’s case law for further details about this) the government has announced its intention to change the law so holiday pay for part-year workers is calculated only by refence to periods worked.

• An extra bank holiday on Monday 8^th May to mark King Charles III’s coronation.

No dates have been announced for the implementation of the changes at points 4 to 8 above, and the government is currently consulting regarding holiday pay changes with this consultation not due to conclude until March.

And last but certainly not least…the EU Law (Revocation and Reform) Bill provides that certain EU laws will be automatically repealed at the end of 2023 unless laws are passed to retain the relevant piece of legislation.  Much UK employment law is derived from EU law, including the Working Time Regulations and TUPE, and the automatic repeal of such legislation would create huge uncertainty for employers.  However, the Bill has attracted widespread criticism and it contains a provision which allows the date for automatic repeal to be extended until 23^rd June 2026.  Whilst predicting what will happen in Westminster is a dangerous game, at present it feels unlikely that legislation such as TUPE and the Working Time regulations will have disappeared by the end of the year.

And there are a number of important cases which will be heard in the higher courts this year – we’ll keep you informed of the decisions in those cases throughout the year..

2022 was another busy year for employment law, and there was the usual stream of decided cases with implications for employers.  We’ve reviewed over 200 such cases from last year and we’ve set out below which we think are the most significant, together with a very short summary of the key take away point(s) from the case.

Contracts of Employment

There were two key decisions highlighting the importance of careful drafting when it comes to employment contracts, and other documentation such as bonus and benefit schemes.

Mast Group v Chalmers – An account manager for a medical supplies business received a letter stating she would receive a bonus of 5% of sales achieved in her territory in the year from 1st October 2019 to 30th September 2020.  Sales pre-pandemic were typically around £250,000 per quarter.  After the pandemic began the employee secured an order for a large number of Covid testing kits, resulting in sales of almost £4million in one quarter!  The employer resisted paying the full 5% bonus, arguing that it shouldn’t include sales of products that did not exist at the time the bonus letter was drawn up.  However, this argument failed – nothing in the wording of the bonus letter supported this interpretation – and the court awarded the employee a bonus of over £245,000.

Amdocs Systems Group v Langton – Mr Langton, who had been employed for many years, had an income protection benefit in the case of long-term sickness. The original documents included reference to an “escalator” of 5% per year.  At that time, the employer had insurance cover which would pay out the full benefit including the escalator.  A few years later the employer changed its insurance policy to one which didn’t include provision for an escalator.  Mr Langton began long term sick leave, and the employer argued that it was not liable to pay the escalator because of the change to its insurance policy, but they lost. If the intention had been to limit the employer’s liability only to what they could recover under the insurance policy then, the court said, that should have been explicitly stated.

Holiday pay

Despite the fact the Working Time Regulations came into force in 1998, the Courts are still working through some of the issues.  Two key cases in 2022 were:

Smith v Pimlico Plumbers – Although carry over of holiday leave is usually not allowed, the Court of Appeal held that a worker who had taken unpaid leave was allowed to carry over his entitlement for the entire period of his employment.  In this case the employer wrongly believed the worker was self-employed and so not entitled to paid holiday.  The worker is claiming around £74,000 in unpaid holiday pay.

Harper-Trust v Brazel – the Supreme Court ruled that part-year (NB part-year is not necessarily the same as part-time) workers were entitled to have their holiday entitlement calculated on the basis of 5.6 weeks leave for each year the contract existed, irrespective of how many weeks were actually worked each year.  This meant a part-year worker who only worked some of the year but whose contract continued throughout the whole year actually received more generous holiday entitlement (when compared to their usual pay) than workers who worked all year.  (NB – the government has just launched a consultation looking at reversing the effects of this decision.)

Discrimination

Burke v Turning Point Scotland – an employee who had long-Covid was found to meet the definition of disability in the Equality Act (NB – two medical reports which indicated he was not disabled were not accepted, demonstrating how the definition of disability is ultimately decided by the Tribunals).

Forstater v CGD Europe – an employee’s belief that sex is immutable and should not be conflated with gender-identity was a protected philosophical belief.  The manner in which the employee had manifested this belief on social media was found to be reasonable – even though it offended some – and so the decision not to renew the employee’s contract because she had expressed such views was unlawful.

Keown v Staines Road Surgery – a failure to allow a disabled employee at high risk from Covid-19 due to her disability to work from home amounted to a failure to make reasonable adjustments.

Termination of Employment

Hope v British Medical Association – an employee who had raised numerous vexatious grievance which he then refused to progress or withdraw was fairly dismissed.

Mogane v Bradford Teaching Hospitals – where an employer adopted selection criteria which effectively meant the employee selected for redundancy was in a pool of one, using this criteria without prior consultation meant the dismissal was unfair.

Marangakis v Iceland Food – an employee who successfully appealed her dismissal was automatically re-instated – even though she made it clear during the appeal process she didn’t want to return to work for the employer.  But if an appeal is successful, reinstatement is automatic and the dismissal ‘vanishes’, whether the employee wants it to or not!

Settlement agreements

Bathgate v Technip – in a clear divergence from existing case law, the Employment Appeal Tribunal held that a settlement agreement can only validly compromise claims which are known to the parties at the time they entered into the agreement.  Any unknown or future claims cannot be settled, even if the parties intend to settle such claims.  (NB – there is now conflicting case law on this point and this decision may yet be considered by higher courts.  However, it is likely to be some time and probably years before this happens).

Arvunescu v Quick Release (Automotive) Ltd – a well drafted COT3 agreement was sufficient to waive unknown future claims.  This was because of the wording used in the COT3 agreement – not every COT3 agreement will settle any unknown future claims.  It will depend upon the drafting.

It is difficult to see a logical distinction between the protection afforded to employers when a COT3 agreement rather than a settlement agreement is used.  Employers should consider settling potential claims via a COT3 agreement – although for reasons beyond this article, attempting to achieve a settlement via a COT3 agreement may not always be the best course of action.  In relation to settlement agreements, we recommend that employers who are using an old ‘template’ should have these reviewed.

Restrictive covenants

Planon v Gilligan – even if a restrictive covenant is reasonable, a Court may refuse an injunction if it would cause some hardship to the defendant.  In cases involving non-compete restrictions (which prevent an employee working for a competitor for a particular period of time) there is a real risk of such hardship.

It’s a boring but true mantra that each case turns on its own facts, so please don’t place too much weight on the outcomes in the above cases.  It is the underlying principles which are important.

There were plenty of legal developments in 2022 to keep employment lawyers busy, and 2023 is already shaping up to be a year of significant change to employment law.  We’ll keep you posted!