Despite the very disappointing absence of the much-anticipated Employment Bill in the Queen’s Speech earlier this month, the Department for Business, Energy & Industrial Strategy (“BEIS”) has issued a statement highlighting the actions it says the Government has taken to date (many of which have taken years to come to fruition, and most of which employers were already aware of) “to support workers and build a high skilled, high productivity, high wage economy“. As employers rebuild their workforces in the face of the pandemic, and in the wake of an emerging “digital” age and high wage economy, the need for robust protection for workers is at a sky high.
In light of the same, is BEIS’ statement good enough? For many employers, employees, and workers who were long awaiting changes in the employment sphere, a mere statement rehashing measures the Government has already implemented (and in the cases of some, time and time regurgitated) feels like a cop out. Whilst BEIS’ statement does, somewhat, show employers and employees that they have not been forgotten – the lack of any change to substantiate that serves as a reminder that employment law and the protection of workers remains the bottom of the pile.
It continues to be a huge worry for many that the Employment Bill appears to have been dropped (no hide nor tail on when it is expected to be announced). The issues expected to be addressed by the Employment Bill have not fallen off the agenda for advisers, employers and workers alike. BEIS’ statement appears to be intended to tide employers over though it appears unlikely that further changes will come into force this year; the Bill may be delayed to next year. The TUC general secretary, Ms Frances O’Grady, said it appeared the Prime Minister had “turned his back on working people” and earlier in May TUC and the Recruitment and Employment Confederation (“REC”) submitted a joint letter flagging that the Employment Bill is needed to tackle wide-ranging and systemic issues in the labour market, urging the Government to avoid reneging on promises.
Though we play a waiting game on the Employment Bill, BEIS’ statement does flag that some advances have been made and our quick-fire summary below runs through the measures taken to date (and some which are still due to be completed), as highlighted by BEIS this month:
- Flexible working – consultation outcome awaited
There have been longstanding calls for the right to make a statutory request for flexible working to become a ‘day one’ right following a modernisation in the way we work. In 2022 and on the other side of the Coronavirus pandemic, hybrid working models have emerged as the norm. Many employers will view a ‘hybrid’ working model as extinguishing the need for employees’ flexible working requests to be approved – though employers should be clear that flexible working does not just mean working from home. Flexible working encompasses a range of working methods, such as part-time, compressed hours, staggered hours, job sharing, or phased working with the purpose of flexible working being for employees making such requests to be able to feel supported/work to the same degree as their colleagues.
The law currently: allemployees (not workers) have the right to make a statutory flexible working request, for any reason (not just parents and carers), so long as they have been continuously employed by the same employer for at least 26 weeks. Employees are currently only entitled to make one application per year – meaning it must be well timed. An employer currently has 3 months to consider any statutory flexible working request before needing to respond. Employers have a host of “business reasons” at their disposal to refuse an employee’s flexible working request. These eight reasons are wide-ranging, broad, and do not offer employees much protection if an employer is opposed to flexible working. The process is laborious for employees and employers can quite easily ensure their refusal fits in one of the eight reasons for refusal.
Proposed changes: in steps which are hoped to demystify much of the uncertainty surrounding flexible working, and the difficulties and delays faced by employees in making requests, a consultation was undertaken in 2021 which considered:
- Whether the right to request flexible working should be a day one right for employees – note, the proposal relates to the right to request flexible working from day one and not that there will be a default right to work flexibly from day one;
- Whether the “business reasons” employers can rely on to decline a request for flexible working remain valid – to balance interests fairly, it is worth noting there are circumstances whereby businesses in certain sectors will not be able to offer flexible working;
- Whether there should be a requirement on employers to suggest alternatives for flexible working if they intend to refuse a request – many employers do this already, though a requirement for the same may offer an employee greater protection in circumstances where their employer is not as fair; and
- Whether the one-statutory flexible working request per year limit should be scrapped.
The consultation closed on 1 December 2021. The Government’s response is hotly awaited.
- Fire and rehire – new statutory code to be released
Believe it or not, the practice of “firing” and “re-hiring” employees has been a long-available avenue for employers to explore. “Fire and re-hire” refers to the situation where an employer is unable to agree to a change in an employee’s contract of employment with the employee. This happens more often than not where an employer is looking to downgrade contractual terms, such as an employee’s salary, and said employee refuses to accept that change. The employer would then proceed to terminate the contract of the non-compliant employee (“fire”) and offer to immediately “re-hire” said employee on a new and modified contract of employment (usually, encompassing the proposed downgraded terms the employer previously tried to agree with the employee – so in the example provided, a lower salary package).
Whilst ACAS, who were asked by BEIS to prepare a report on this in 2021, deem “fire and re-hire” as an absolute last resort, a large number of employers do so at their own will, and at the peril of many employees. The most noteworthy example of this, in recent news, is the case of P&O Ferries – though, instead of “re-hiring” its original workforce on downgraded terms, the company sought to replace them with cheaper agency workers.
Proposed changes: following the furore surrounding the decision by P&O Ferries, the spotlight was placed on the Government to respond to long-awaited calls to legislate against “fire and re-hire”. They have done so (at least, somewhat).
A new statutory code of practice on “fire and re-hire” was announced in March 2022 to clamp down on employers who “fire and re-hire” without undertaking meaningful consultations with their employees. The intention behind the code is to deter employers who use threats of “fire and re-hire” as a tool for negotiation.
The code will not be legally binding and acts as a guidance only, so does little to fan the flames of employers who routinely “fire and re-hire”, though it does potentially offer employees at the brunt of such decisions an uplift in compensation (of up to 25%) if they can show that their employer unreasonably failed to comply with the code.
The new code is yet to be released. We will follow-up on this once it has.
- Extended ban on exclusivity clauses – legislation to be placed before parliament in 2022
The Government have also announced that it will extend the ban on exclusivity clauses to contracts where a worker’s weekly income falls below the lower earnings limit (currently £123 per week). The intention behind this is to afford workers, and in particular, lower earning workers, the flexibility to maintain more than one job.
Exclusivity clauses are provisions, commonly found in zero-hours contracts, which restrict a worker from working for another employer or agency. To be clear, the Government’s extension on a ban of these clauses relates only to those lower-earning workers and contracts where the guaranteed weekly income is or below £123 per week.
As well as supporting lower earning workers, by allowing them more flexibility, control, and in some instances, to diversify their skillsets, employers will also reap the benefit of this decision. The pool of talent applying for roles will increase too – as workers who were previously prevented from applying for jobs, due to exclusivity clauses, now have the freedom to. It also helps sectors, such as retail, refill their workforce following national blows during the Coronavirus pandemic.
Whilst the ban is limited to lower-earning workers (and therefore not all those under exclusivity clauses will benefit from the change in legislation), the reforms open the barriers for younger, disadvantaged workers, or gig economy workers to diversify their skillsets and increase their income in the face of well-publicised hikes in gas and energy prices.
Legislation is anticipated this year, and it is hoped no delay is seen.
- Equal pay for agency workers – closing the “loophole”
The Government have ended the longstanding loophole which previously gave employers and companies free reign to pay agency workers less than permanent staff.
Agency workers engaged for more than 12 weeks by an employer must receive the same rights, basic pay, and benefits package as a permanent employee employed in the same role (see the Agency Worker Regulations 2010).
The “loophole” or exception to this is the Swedish Derogation. The Swedish Derogation describes the scenario where a worker is employed directly by the agency, rather than the end-company. When workers are then hired out to end-companies, their rights do not need to be commensurate to other employees of that end-company as they are employed by the agency. If an agency worker is employed by the employer directly, they get the same terms as employees after 12 weeks. If an agency worker is employed by an agency, they would not get the same terms after 12 weeks. These workers were paid less to do the same job, simply because of the agency. In practice, and while in force, the Derogation saw hordes of agency workers being employed on cheaper rates, despite them performing the exact same role. Whilst a more cost-effective tact, especially for SMEs, the Swedish Derogation left employers exposed to serious risks of equal pay or discrimination claims, particularly where agency workers being paid less also had a protected characteristic. The Employment Tribunals have shown a reluctance to accept the Swedish Derogation as a valid or reasonable justification for inequal or discriminatory treatment.
Changes in place: the Swedish Derogation rule was scrapped effective 6 April 2020, meaning all agency workers (regardless of whether they are employed directly or via an agency) now benefit from the same employment rights as permanent employees performing the same role as them, once said agency worker has accumulated 12 weeks’ service.
This was a long-awaited and welcome change, in allowing for equal treatment and clamping down on agency businesses who sought to unfairly engage agency workers, to avoid having to provide pay parity.
Agency workers are also, now, entitled to a statement of rights setting out their leave/pay entitlements, from day one. Again, a welcome protection for workers.
What is apparent from the above measures is that the Government have disappointingly (and once again) skirted around their opportunity to make real progressions in respect of workers’ rights. Whilst it is hoped that the Employment Bill will follow this year and meaningful change is afoot, we would not be surprised if we receive another similarly veiled statement to BEIS’ recent one to tide us over later this year, and the Employment Bill is delayed to next year. Whether employers and practitioners remain as patient then, is another story – though one thing is for certain – we will not forget the Employment Bill or lose sight of the need for meaningful, and proper change anytime soon!
If you are an employer looking advice on any of the proposals referred to in this article or have any other related queries, or if you are an employee or worker seeking clarity on your legal rights and what the above measures may mean for you, please do not hesitate to contact our specialist employment team: firstname.lastname@example.org
Please note, all information in this article is correct as at the time of writing. Please always consult the latest government guidance or legislation as that will be decisive.