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Find out what HR directors will need to prepare for in the coming months and beyond in the first edition of our bi-annual tracker.
There is no immediate substantive change to the employment law framework resulting from the UK’s departure from the European Union. We do not anticipate that any major EU derived legislation will be repealed in its entirety; but some aspects may be reformed over time. Decisions of the European Court of Justice remain applicable to EU derived employment law but specified UK appeal courts have the power to depart from that case law if it is “right to do so”.
Effective from the end of transition on 31 December 2020 – but real changes likely in the medium / longer term.
For now HR Teams should operate on the basis that EU derived rules and laws remain effective. No major changes are currently expected. However in the context of what is a developing relationship between the UK and the EU, it is a watching brief.
Employment law is one of the key areas of jurisdiction of the European Union. Some pre-existing domestic rights were reproduced at an EU level (such as maternity rights and equal pay); and some new rights were transposed into UK employment law as a consequence of our membership of the EU (for example, limits on working time and protections on the transfer of undertakings).
Employment law derived from the EU has been retained post-Brexit.
When the period of transition away from membership of the European Union ended on 31 December 2020, all EU derived employment law was retained, along with employment law decisions of the European Court of Justice.
A post-Brexit Trade and Co-operation Agreement (TCA) came into force on 1 January 2021. This contains “level playing field” provisions, including brief provision for workers’ rights. These provisions cover:
Under the provisions, the UK commits not to weaken or reduce workplace rights below the levels of protection in place at the end of the transition period. However, this only applies in so far as it affects trade or investment between the UK and the EU, meaning it does not act as an absolute commitment not to weaken workplace rights. It may be the government is deterred from weakening workplace rights as this could have trade implications under the TCA.
The UK government has made several statements about its commitment to workers’ rights post-Brexit, and has stated that it considers that the TUPE Regulations do not require reform. A review of workers’ rights, which would have looked at proposals such as ending the 48-hour maximum working week, was cancelled in January 2021.
Taking the above into account, there will be no immediate change to the employment law landscape following the end of the transition period.
Any forthcoming changes are likely to be phased in, as a medium priority for government, with little prospect of key areas of EU law (such as the TUPE Regulations and discrimination protections) being repealed in their entirety or significantly amended.
To the extent that there may be some divergence from EU employment law over time, we consider that the likely candidates for reform are:
Other than in relation to Immigration (see below), preparing a strategy for the impact of Brexit on workforce legislation is difficult: much will depend on the extent to which the government repeals or amends retained legislation.
However, you should consider:
“The ‘gold plating’ of EU employment regulations, such as TUPE, may well be retained in order to avoid further trade disputes under the TCA. That said, the early signs from post Brexit UK/EU relations suggest that nothing should be assumed.” - Stuart McBride
Changes were made to the UK Immigration Rules in late 2020. Free movement of people has now ended in relation to UK nationals, with those EU nationals resident in the UK at 31 December 2020 being able to apply for status under the EU Settlement Scheme. For EU staff who arrive in the UK for the first time from 1 January 2021, recruitment will be more complex and expensive.
1 January 2021 and ongoing.
Consider making communications to all staff encouraging those who are eligible to make a Settlement Scheme application before the scheme closes on 30 June 2021. It would also be wise to assess recruitment procedures and consider whether it would be worth applying for a Sponsor Licence to ensure continued access to global talent. If UK staff are being deployed to EU countries, you may wish to take advice in the destination country to ensure any necessary visa permissions are obtained.
EU Settlement Scheme
Under the terms of the UK withdrawal from the EU, free movement of people ended on 31 December 2020. To enable EU/EEA/Swiss nationals (‘EU nationals’) and certain non-EU national family members to maintain their right to reside in the UK post-Brexit, the home office introduced the EU Settlement Scheme (‘the Scheme’). A successful application to the Scheme enshrines residence and working rights in domestic UK law, which is necessary now that EU free movement has ended.
As a general rule, EU nationals who were resident in the UK by 11pm on 31 December 2020 are eligible to apply under the Scheme. Those who met the residence deadline will have until 30 June 2021 to make their Scheme applications.
The application process is generally straightforward for most applicants, and has been considerably streamlined when compared to other immigration applications. The application is completed online and requires minimal supporting documents. Applicants will either be granted Settled Status if they have 5 years’ continuous residence or Pre-Settled Status (temporary residence) if residence has been for less than 5 years. It is possible to convert Pre-Settled Status into Settled Status at a later date, assuming continued compliance with Scheme rules.
Skilled Worker Visa
Following the end of free movement, if you wish to employ non-UK nationals who arrive in the UK after 1 January 2021 you may need obtain a Sponsor Licence in order to do so.
It is worth pointing out that sponsorship will not always be necessary, as there are some other visa permissions that confer the right to work without the need for sponsorship. Individuals who hold status under the Settlement Scheme are among the categories of individual who do not require sponsorship.
Before December 2020, the most common work visa for non-EU nationals was known as a Tier 2 (General) visa. The old system of Tier 2 (General) visas has now been replaced by the Skilled Worker visa. Key changes are as follows.
As well as Tier 2 (General) permissions, some businesses may have held Tier 2 (Intra Company Transfer) licences for the purpose of intra-group assignments and secondments. The Intra Company Transfer rules will remain largely unchanged, but this route will likely become less relevant due to the above noted changes under the new Skilled Worker visa. Employers with either a Tier 2 (General) or (ICT) licence would have had this automatically converted by the Home Office to accommodate the new system and terminology when the rules changed.
In respect of existing EU staff, whilst a Scheme application does not necessarily require input from an employer, it makes sense for employers to publicise the Scheme to staff using existing UK Government materials so that individuals know that they need to apply before the June 2021 deadline. Employers may also want to offer support by providing communal digital devices such a mobile phones or tablets for staff who do not have access to such devices at home.
If not carried out already, audits of existing right to work documentation should be undertaken to identify current employees who should be making Settlement Scheme applications. This could also potentially be achieved via use of self-service HR portals to have all employees confirm their nationality (as asking all staff to complete this task reduces discrimination risks). Although employers cannot force employees to make a Scheme application, it makes sense to encourage staff to do so in order to reduce the risk of business disruption.
When making EU hires between January and June 2021, employers must not ask individuals to prove that they hold status under the Settlement Scheme. Rather, they will be protected from Home Office civil penalties if right to work checks are carried out in accordance with current Home Office guidelines. It is highly likely that new guidance on right to work checks will be issued from July 2021, but the Home Office have confirmed that retrospective checks on EU staff currently employed by a business will not be required. Care should be taken during recruitment processes when addressing right to work issues, which should generally be discussed as late in the process as reasonably possible.
In terms of recruitment strategies, the biggest change is that much more stringent rules now apply to the recruitment of EU nationals who arrive in the UK from 1 January 2021 and who do not have status under the Settlement Scheme. Businesses who do not already have a Sponsor Licence should actively consider whether a Licence may be required to maintain access to a wide talent pool of non-UK applicants as we move further into 2021.
Employers should consider carrying out a talent mapping exercise to assess what pools of existing and future talent may be affected by these changes. In terms of future talent employers should carefully consider obtaining a sponsor licence to retain access to talent from outside of the UK, or potentially assess alternative untapped talent pools within the UK particularly in light of the anticipated rise in unemployment following the end of the Coronavirus Job Retention Scheme – Amy Collins, Solicitor
PR sensitive harassment and discrimination claims are likely to continue and increase, in the wake of the #MeToo and Black Lives Matter movement. Focus on equalities shifting from regulatory compliance to self-regulation, employer initiatives and shareholder pressure.
Separately, a new approach to tackling inequalities has been announced by the government and a review of the Human Rights Act 1998 is expected.
During 2021 and ongoing.
HRA 1998 review expected Summer 2021.
Active Board level engagement and leadership on promoting equalities and preventing unwanted conduct at work will be required.
Boards must keep up to date with the latest developments and visibly lead on the prevention of all types of discrimination and harassment, beyond individual protected characteristics and avoiding a ‘tick box’ approach.
Issues related to removing the barriers faced by employees at work have moved to the top of the HR and legal agenda over the last few years, whether fuelled by social media campaigns such as #MeToo or the events in America in 2020 which sparked the Black Lives Matter movement.
Businesses have been taking a pro-active approach to tackling the lack of diversity at work. Many organisations have signed up to initiatives such as the Business in the Community Race at Work Charter and businesses have supported the government’s proposal to introduce ethnicity pay gap reporting.
Investors and shareholders have been putting pressure on companies to improve diversity of senior leadership.
Senior management cannot afford to ignore equalities issues, not just because it’s ‘the right thing to do’; but also because of the financial and reputational risks associated with a failure to engage in preventing harassment and discrimination.
Organisations which fail to take “reasonable steps” to prevent discrimination or harassment at work will find it difficult to defend claims made against employees. And any employment tribunal findings in relation to such claims are now searchable online.
We expect that the current trend towards employers and business organisations developing their own diversity initiatives will continue into 2021, with employers stepping in where government fails to legislate.
There are few reforms to discrimination/harassment legislation timetabled for 2021, but pressure on employers to actively promote equalities is likely to come from other sources. For example, investor pressure on companies to improve diversity is set to continue. Social media campaigns which have successfully spotlighted inequalities in relation to race and gender may well move to focus on other protected characteristics.
Following on from a 2020 judgment which found that non-binary and gender fluid employees are covered by Equality Act 2010, complex gender identities are likely to become a more prominent issue in 2021 and beyond.
A new governmental approach to promoting equality has been announced. Liz Truss, the Minister for Women and Equalities, has announced that the government’s focus will move away from the “protected characteristics” approach under the Equality Act 2010 and will instead consider a wider range of issues, such as social and geographic inequality. A government review of the Human Rights Act 1998 is due to complete in Summer 2021; but it is not known, as yet, what changes (if any) will result (note that the Human Rights Act 1998 implements obligations under the European Convention on Human Rights, which is entirely separate from, and unaffected by, the UK’s departure from the European Union).
Several equalities developments were expected in 2020. For example, it was anticipated that:
It is not yet clear what, if anything, the government’s new approach to equalities will mean for these reforms.
Notwithstanding this, our view is that employers should expect two main areas of focus on equalities:
A positive equalities culture will minimise the risk of a harassment claim arising and maximise your prospects of successfully defending any claims which arise.
You must be able to demonstrate regular and detailed diversity and inclusion training and show that disciplinary action is taken against employees who are found to have breached your policies.
Visible and active Board level HR support on your dignity at work / equality and diversity policies and practices is essential.
Tracking and reporting equalities data will also be important. In particular, tracking ethnicity pay data will mean that you will be ahead of the curve if (as expected) this becomes mandatory.
For firms which are subject to the Senior Managers and Certification Regime (SMCR), the Financial Conduct Authority (FCA) has confirmed that it sees sexual misconduct as relevant to the ‘fit and proper’ assessment of individuals under the SMCR. This could encompass tolerance of a culture of sexual harassment and other behavioural misconduct. And the FCA’s focus on equalities as a regulatory matter is likely to increase: it is currently planning to add a sixth question, on diversity and inclusion, to the existing five conduct questions.
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“We anticipate that senior leadership will be expected to provide visible support and ensure momentum is maintained in the drive to promote equality of opportunity at work, not only in respect of the nine ‘protected characteristics’ under the Equality Act 2010, but also more broadly, in relation to socio-economic barriers.” Esther Smith, Partner.
Following on from the Taylor Review published in 2017 and the resulting Good Work Plan, further reforms to employment status are expected but not until after a Law Commission Review. The right to request a “more stable contract” of employment is proposed in the shorter term.
Changes to post-termination restrictions in employment contracts may be on the horizon.
Employment status reform TBC but within 5 years.
Proposals for reform of post-termination restrictions (if any) expected by the end of 2021.
Keep developments under review and be mindful that the traditional categories of ‘worker / self-employed contractor / employee’ are likely to be eroded. Significant workforce redesign may be required in response to any reform of existing structures.
Over the course of 2021, the landmark Supreme Court decision on worker status, Uber v Aslam may have an impact on how employers use atypical working models. The Supreme Court found that Uber were not (as Uber contended) self-employed contractors; but they were ‘workers’, entitled to receive the National Minimum Wage and paid holiday.
The importance of this judgment is not limited to Uber or technology businesses in the ‘gig economy’. It is relevant to all businesses. We therefore expect to see employment tribunals (and, by extension, employers) reassessing their models of engaging staff, with an increased focus on the economic substance of the relationship rather than the written contractual position.
Legislative proposals for reform of employment status tests have been promised by the government but not yet produced. We understand that the government feels that a Law Commission report is required. Therefore, we are not expecting any concrete proposals on reform of employment status within the next five years.
Additional reform related to atypical / flexible contracts is expected.
A new Employment Bill will contain a right to request a more predictable contract. This Bill is expected to be introduced in 2021.
Flexible working as the default position, unless an employer has a good reason not to offer flexible working, will be subject to consultation. This reform will also be contained in the Employment Bill.
New legislation is expected which will extend the length of the gap in employment necessary to break continuity from one week to four weeks. The timescale for this change is not yet known.
In the short term, employers can expect more marginal changes to the conventional demarcations between staffing categories, with the April 2020 extension of the right to a written statement of employment particulars to include workers going some way towards eroding the distinction between ‘employee’ and ‘worker’.
Over the longer term, it may be that the traditional categories of ‘worker / employee / self-employed contractor’ erode or become blurred. For organisations whose workforce profiles include significant numbers of atypical workers, this may lead to increased cost and risk. Much will depend on the shape of any legislative reforms and whether the government decides to extend protections and rights.
Further ahead, we may see changes to post-termination non-compete clauses. The government is currently seeking views on whether these clauses should be:
(1) banned entirely; or
(2) whether new restrictions on these clauses should be introduced, such as requiring that ex-employees are paid for the duration of the restriction or whether they should have a statutory maximum duration.
It is very unlikely that post-termination non-compete clauses will be banned. The government will likely publish the outcome of its consultation during 2021.
Be mindful of the potential risk and cost implications of the misclassification of employment status. You must ensure that your contractual documentation reflects the reality of the working relationship between you and your workforce.
The introduction of flexible working as the default position for all roles is likely to have a significant impact. It would be prudent to start considering how you will audit and assess roles’ suitability for flexible working and objective reasons for any refusals to offer flexible working.
Keep a watching brief on the outcome of the government’s consultation on non-compete clauses.
“A legal framework which was drawn up before working through an online App could even have been imagined is struggling to cope with ways of working which are now commonplace. It is likely that reform is needed to remedy the situation. But so far, the government has failed to remedy one of the key problems identified by the Good Work Report: the confusion around employment status for contingent workers.” - Stuart McBride.
Employers should anticipate a continued and increased requirement to gather and publish workforce data and information about working practices.
During 2021 and ongoing.
Given that transparency obligations are expected to increase, it is prudent to consider the extent to which your employment practices and equalities data will withstand public scrutiny.
Mandatory publication of data and workforce practices has, for some time, been used as a tool by government to encourage compliance and promote good practice. For example, large employers are required to publish details of steps they have taken to prevent ‘modern slavery’ in their supply chain and must also publish gender pay analytics.
In a similar vein, the government has started publishing lists of employers who have claimed grants under the Coronavirus Job Retention Scheme (‘furlough’).
Furthermore, evidence suggests that that data gathering and analysis is a key driver in promoting equalities at work – an issue which we expect to stay at the top of the agenda this year.
In the wake of the Coronavirus pandemic, the Equality and Human Rights Commission has suspended enforcement of the gender pay gap reporting deadlines for the 2020-2021 reporting year to 5 October 2021. Further ahead, expansion of gender pay reporting requirements is expected. The government has committed to undertaking a review of gender pay gap reporting in 2022, and this may well include expanding the scope of reporting obligations to cover smaller employers. It could also include more detailed reporting requirements for employers already in scope.
The introduction of ethnicity pay gap reporting is widely anticipated. The exact timescales are unknown but some organisations have begun reporting their own ethnicity pay gaps on a voluntary basis already. We understand that the government’s consultation on ethnicity pay gap reporting attracted a large number of responses which expressed support for compulsory reporting for large employers.
The government has proposed that it should be mandatory for large employers to publish their family friendly policies on their websites. The result of the consultation on this proposal is awaited. No draft legislation has yet been published.
Finally, modern slavery reporting obligations will be extended. The government’s response to its consultation on the remit of the Modern Slavery Act 2015 proposes to extend reporting obligation to include public bodies, and proposes to legislate for the contents of modern slavery statements; transposing ‘best practice’ recommendations into law. The government has not provided a timetable for implementing these proposals; instead it states that these changes will be introduced “when parliamentary time allows".
The focus on openness and transparency is here to stay and set to expand in future: it has been shown to be a key driver in improving equalities in the workplace, so employers can expect this to be a continued and increasing focus – not only in terms of regulatory requirements, but also societal expectations.
Therefore, when considering any workforce strategic or operational matters which could impact on fairness, equalities or pay, consider that these may need to withstand public scrutiny, if they are not already covered by an existing reporting obligation.
“The pandemic has meant that the introduction of new reporting requirements for businesses has been delayed; but with many employers now taking the lead in voluntarily publishing equalities metrics, peer pressure may have a similar impact.” - Stuart McBride.
As far it is possible to make predictions about the unpredictable, employers will need to consider a range of issues as restrictions (hopefully) ease as we move through the Spring and into the Summer.
Spring/Summer 2021 and ongoing.
Employers will need to consider the impact of the closure of the Coronavirus Job Retention Scheme and managing a range of issues related to the vaccination of staff. An important consideration will be the longer term impact of the seismic changes to working life which have been triggered by the pandemic, in terms of the redesign of working arrangements and work spaces. The possibility that ‘Long Covid’ could be classed as a disability should be considered.
Dealing with the disruption arising from the pandemic has presented unparalleled challenges for huge numbers of people involved in workforce management. From dealing with seismic changes to working arrangements almost overnight, to underpinning staff wages via a previously unheard of ‘furlough’ scheme, through to managing the safe return of employees to the workplace in the face of ever changing government advice – the complexities of the last 12 months cannot be understated.
With the vaccine programme now well under way, many people are cautiously optimistic that a more normal working life may resume by the end of Summer 2021 in the UK, if not internationally. This does not, however, mean that we anticipate the workforce impact of the pandemic will disappear or that there will not be further challenges to consider.
Where relevant, employers will need to prepare for the phasing out and closure of the Coronavirus Job Retention Scheme (CJRS) in September 2021, with employer contributions towards pay for unworked hours being introduced from July onwards. Once the CJRS is permanently withdrawn, there will be an inevitable impact on the sustainability of staffing costs, given the financial impact of any post-Covid economic downturn.
In terms of post-pandemic working arrangements more generally, we do not expect the clock to turn back to February 2020, even once the whole population has been vaccinated. Whilst some workers will be keen to return to their pre-pandemic working pattern, many (most surveys suggest the majority) will want to retain some element of more flexible and / or remote working on a permanent basis. Many employers who have found remote working beneficial will seek to make that a part of their long-term workforce and real estate strategy.
Alongside changing societal and business attitudes to remote working resulting from the pandemic, the government has committed to making flexible working the default position, unless an employer has a good reason for a role not to be flexible. This was announced in the Queen’s Speech in December 2019. A consultation is awaited, and then legislation will be required, so we are not expecting this requirement to become law before the end of 2021.
Finally, as claims linked to the pandemic start to be heard in employment tribunals, there is possibility that we could see claimants arguing that ‘Long Covid’ should be classed as a disability.
Whilst it is impossible to list – or even to anticipate – all considerations which will come into play in the context of the pandemic and its aftermath, the following will be on the list of many HR leaders:
“There are perhaps more questions than answers on the legal issues to consider as we enter the next normal. But it seems fairly certain that businesses which embrace the acceleration of change triggered by the pandemic will ultimately benefit from what started out as a crisis.” - Stuart McBride.
Contributor: Sarah Maddock.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.
05 May 2021