Employment Law Top Ten of 2023

It’s been another eventful year. Significant and wide-ranging employment legislation has been passed on issues as varied as industrial action, flexible working and sexual harassment. We have also seen, for the second year running, a Supreme Court judgment about holiday pay. With the end of the year fast approaching, we take a look back at some of the most important new Employment legislation, cases and key topics from 2023.

This year’s countdown is brought to you in the form of some favourite songs, one even going as far back as 1942! Can you guess what it is? It’s hard to relax when reading all the complexities of this year’s countdown but some coffee and mince pies may help.

Don’t look back in anger

Handling disability issues in the workplace can be challenging especially where concerns about conduct or behaviour may be linked to the disability. Starting this year’s countdown at number ten is this high profile EAT decision involving Mr McQueen[1].

The EAT upheld an Employment Tribunal’s decision that an employee’s poor conduct and short temper were not something relating to his disabilities. Accordingly, the claim for discrimination arising from disability under section 15 of the Equality Act 2010 was unsuccessful.

Mr McQueen had dyslexia, symptoms of Asperger’s Syndrome, neurodiversity and left side hearing loss. It was accepted that these conditions amounted to disabilities within the meaning of the Act.

During his employment, Mr McQueen had difficult interactions with his co-workers and had what the Employment Tribunal described as a series of “meltdowns”. Between 2015 and 2017, he was examined by various medical experts including an occupational health adviser. The medical evidence was that Mr McQueen’s speech was altered in situations of stress, anxiety and conflict. He would raise his voice and adopt mannerisms suggestive of aggression, with inappropriate speech and tone.

Mr McQueen was disciplined on more than one occasion because of his behaviour and  interactions with colleagues. In June 2017, he was disciplined again and warned he could face dismissal as he already had a written warning and the current allegation could amount to serious misconduct. Mr McQueen brought a grievance which became protracted. He brought an Employment Tribunal claim in August 2018 and another in February 2019 claiming that he had been subject to unfavourable treatment because of something arising in consequence of disability.

The Employment Tribunal found that while the disabilities could cause Mr McQueen to behave in the manner described as a “meltdown”, on the occasions when that happened, his behaviour was not a consequence of these. He behaved that way because he had a short temper and resented being told what to do.

The EAT upheld that decision. It rejected Mr McQueen’s submission that the Employment Tribunal had adopted too strict a test of causation when considering the effects of his disabilities.

Although there only needs to be a loose connection between the “something arising out of a disability” and the “‘unfavourable treatment”‘ for there to be disability discrimination under section 15 of the Act there must still be a connection. That was not established in this case. 

Working 9 to 5

The traditional working pattern is now less common with many more people working flexibly, especially since the pandemic. Flexible working has wide-ranging business benefits such as improved productivity, increased job satisfaction and better staff engagement. At a time when many employers are struggling to recruit good quality, skilled candidates, offering flexible working may help to attract and retain the best people, giving those employers a competitive edge in a difficult job market. It features at number nine.

The Employment Relations (Flexible Working) Act 2023 received Royal Assent on 20 July 2023 and it makes significant changes to the statutory right to request flexible working. The Act (and new Regulations) are expected to come into force approximately a year after Royal Assent to give employers time to prepare for the changes.

It is important to remember that the statutory right to request flexible working is distinct from any other flexible working arrangements that an employer may have.

Currently, the right to request flexible working is available to employees if they have 26 weeks’ continuous employment and a request can be made once within any 12-month period. Employers can only reject a request for one of eight statutory business reasons such as the burden of additional costs, the inability to re-organise work among existing staff or a detrimental impact on quality or performance. The Act will:

• Allow employees to make two requests in each 12-month period.
• Remove the requirement on employees to make suggestions as to how their request would impact the employer.
• Require employers to consult before rejecting a request.
• Reduce the employer’s response period from three to two months.

There will be no change to the statutory business reasons for rejecting a request.

Although the right to request flexible working will become a day one right, this isn’t covered in the Act itself but is dealt with by separate legislation. In fact, the Flexible Working (Amendment) Regulations 2023 were laid before Parliament on 11 December 2023. The Regulations remove the service requirement and make the right to request a day one right. This change will apply to flexible working requests made on or after 6 April 2024.

Acas will be updating its Code of Practice on flexible working and has already published a draft for consultation. This seeks to encourage a more positive approach to flexible working, and “an emphasis on fostering an environment in which requests are not rejected by default without open-minded consideration and meaningful dialogue.”

This means that employers must not reject a request without first consulting the employee whether in person, remotely or on a telephone call. There should be a reasonable discussion and consideration of the request and alternative flexible working options should be explored. Note that Acas will also be updating its guidance on flexible working.

Everybody hurts

Long-term sickness is now the most common reason given by working-age people for economic inactivity, meaning people who are neither working nor looking for work. It is no surprise therefore that tackling this is a priority for the Government and this important topic appears at number eight.

Figures from February 2023 to April 2023 show that the number of people economically inactive, mainly due to long-term sickness, has increased by 580,000 people over the latest four years, now reaching 2.55 million.

Despite this, the Department for Work and Pensions (DWP) says that only 45% of workers in Great Britain have access to Occupational Health (OH) in their current jobs.

On 20 July 2023, the Government announced two public consultations focusing on OH:

• Occupational Health: Working Better published by the DWP aims to increase employer up-take of OH services with the aim of preventing employee sickness as much as possible and preventing job losses and economic inactivity.
• Tax incentives for Occupational Health published by HM Treasury and HMRC explores the role of tax incentives in boosting OH provision by employers.

The DWP says that there is a business, legal, and moral case for investing in OH. Preventing a single job loss can save employers £8,000 in recruitment costs and business output.

The DWP’s consultation covered a range of topics. These included a voluntary proposal of a national “health at work” standard and whether there should be a new legal duty on employers to provide OH access for their employees.

Both consultations closed on 12 October 2023 and the Government response to the DWP consultation was published on 22 November 2023. It will:

• Support businesses through a voluntary minimum framework for quality OH provision and explore new voluntary national workplace health and disability standards.
• Explore options for a potential new SME group purchasing framework supported by a digital marketplace.
• Develop a long-term strategic OH workforce approach to build a multi-disciplinary work and health workforce.

There has been no response yet to the HM Treasury and HMRC consultation.

As part of further reform, on 10 November 2023, the Government announced an inquiry into the effectiveness of Statutory Sick Pay to see if it could be reformed to support the recovery and return to work of claimants. Comments were required by 8 December 2023.

Let’s twist again

Against the ongoing backdrop of widespread industrial action, one of the most highly anticipated judgments of 2023 was whether or not Regulations from 2022[2] permitting agency workers to replace striking workers were lawful. Featuring at number seven the High Court held, on 13 July 2023, that the Regulations were unlawful.

What was the background to the litigation? Regulations from 2003[3] prohibited employment businesses from supplying workers to an employer to carry out the work of employees taking part in official industrial action.

In 2015, the Government had conducted a consultation exercise about repealing this provision but a year later decided not to go ahead. This was because of wider trade union reform and the fact that there was little demand from business organisations for repeal.

In June 2022 however, with high-profile ongoing industrial action in many sectors, the Government decided to repeal the provision once again but without further public consultation. The new Regulations came into effect on 21 July 2022. Judicial review proceedings were brought against the Government by 13 trade unions[4] on two grounds:

• First, that the Secretary of State failed to comply with his statutory duty to consult before making the 2022 Regulations.
• Second, that the Secretary of State breached his duty, under Article 11 of the European Convention on Human Rights (“ECHR”), to prevent unlawful interference with the rights of trade unions and their members.

In a comprehensive judgment, the High Court found that the Secretary of State for Business, Energy and Industrial Strategy, (Mr Kwasi Kwarteng) failed in his statutory duty to consult before making the 2022 Regulations. He had relied on the 2015 consultation as satisfying the duty to consult. However, there was no evidence that he had conscientiously considered that 2015 consultation and such consideration would have been necessary to discharge the statutory duty. In addition, circumstances had changed since 2015 and the Secretary of State could not have been sufficiently aware of the trade unions’ current views which he would have known about had there been consultation in 2022.

The High Court held that the 2022 Regulations were unlawful and quashed them with effect from 10 August 2023. It did not express a view about the second ground of the challenge having decided the case on the first ground.

Interestingly, the Government announced that it did not intend to appeal the judgment but that’s not the end of the matter! It has taken another route to try and implement the repeal. On 17 November 2023, it announced a new public consultation exercise and the consultation period ends on 13 January 2024. So, watch this space.

Changes

Menopause discrimination claims are often complex due to the number of protected characteristics that can be relevant. These are age, sex or, where an employee’s symptoms have a significant and long-term impact on their normal day-to-day activities, disability.

Appearing at number six is an interesting Employment Tribunal decision[5] relating to disability discrimination.

From 2019, Mrs Lynskey’s work as a telesales consultant was impacted by her menopausal symptoms of low mood, anxiety, poor self-esteem and an inability to concentrate. In March 2020, weekly coaching was introduced and she accepted a different role. Whilst this did not have the challenges of the sales role it did not include the sales-related bonus. Mrs Lynskey’s performance continued to be criticised and she did not receive a pay rise in January 2021.

After formal performance management proceedings were commenced, Mrs Lynskey was signed off work due to stress. An occupational health report stated she was likely to be “disabled” under the Equality Act 2010. After being told she would no longer receive any sick pay, Mrs Lynskey brought a grievance and resigned in May 2022.

She brought unsuccessful claims for constructive dismissal and sex and age discrimination and harassment. However, she succeeded in her claims that she had been discriminated against because of something arising in consequence of her disability (section 15 of the Equality Act 2010) and her employer’s failure to make reasonable adjustments.

There should have been an earlier referral to occupational health. Further, the requirement to meet the performance standards was a provision, criterion or practice (PCP) that put Mrs Lynskey at a substantial disadvantage compared to people who were not disabled (because she was at greater risk of disciplinary measures). Reasonable adjustments could have been made such as call time being reduced and the disciplinary process not pursued.

Mrs Lynskey was awarded £64,645, including £23,000 for injury to feelings and more than £30,000 for past and future loss of earnings.

Note that 2023 also saw the first report from the Government’s Menopause Employment Champion, Helen Tomlinson. Focussing on the hospitality, retail, care, manufacturing, and professional and technical sectors its four-point plan includes:

• A portal for employers within a sector to share best practice.
• A sector-based allyship programme for women.
• “Menopause-friendly employers” to act as advocates within a sector.
• A sector-based communications plan.

The Help to Grow website has support and guidance for employers and see our earlier article for details of the BSI’s standard on menstruation, menstrual health and menopause.

You’ve Got a Friend

A 2023 report by the Chartered Institute of Personnel and Development (CIPD) on health and wellbeing at work[6] found that employees’ sickness absence was at its highest level for a decade. Mental ill-health is the top cause of long-term absence and 76% of organisations reported some stress-related absence. Heavy workloads and management style were the most common reasons for stress.

Unsurprisingly, supporting employees’ mental health and wellbeing was a priority for many employers and the topic features at number five.

Employers have a duty of care towards their employees which means they must do all they reasonably can to support employees’ health, safety and wellbeing and treat mental and physical health as equally important.

An employee suffering from poor mental health could be “disabled” under the Equality Act 2010 if their condition has a “substantial adverse effect” that lasts, or is expected to last, at least 12 months and which affects their ability to do their normal day-to-day activities. Employers have a duty not to discriminate against the individual because of their disability and may also be under a duty to make reasonable adjustments. Even if an employee is suffering from mental health issues which may not be a disability, it is a good idea to consider adjustments and to provide support.

Many employers choose to be proactive in prioritising mental wellbeing not only to comply with their legal duties but to support their staff and it is helpful to:

• Find out what employees want and need by for example, using staff surveys.
• Create a culture where open conversations are encouraged.
• Keep communication lines open for everyone, maintain contact so that the employee is not out of sight and out of mind and that they feel supported.
• Signpost the resources available. This could be with posters in the office, via the intranet or discussing them at team meetings or the induction process.
• Have trained mental health first aiders.
• Put in place HR policies such as a Stress at Work policy or Employee Wellbeing policy. Publicise these and make sure they are easily accessible.
• Look out for signs of poor mental health at work such as increased sickness absence, being late to work or poor working relationships with colleagues. These signs can be more difficult to spot with remote working.
• Publicise the details of any Employee Assistance Programme are confirm what assistance is provided. With the festive season approaching and ongoing cost of living crisis many employees’ mental health may be affected by financial concerns.

Walk Away

What do McDonald’s, the Metropolitan Police, the CBI and the Red Arrows have in common? They are just some of the organisations that suffered reputational damage in 2023 after allegations of sexual harassment were made and concerns were raised about their workplace culture.

Appearing in our 2022 Employment Top Ten at number seven, it’s disappointing that sexual harassment has been an even more high-profile issue this year, coming in at number four.

It’s clear that allegations of sexual harassment occur across all types of organisations and sectors and the scale of it is worrying. In 2021, a YouGov survey revealed that around 80% of women aged 18-24 had experienced sexual harassment. In May 2023, a TUC survey of more than 1,000 women found that 60% of women have experienced sexual harassment, bullying or verbal abuse at work and 40% have experienced at least three incidents of it.

It is very important to bear in mind that it is not only women who experience sexual harassment.

Many victims don’t report it for fear of not being believed, or because they are worried about damaging their working relationships or career prospects. Under-reporting by men is a particular concern.

Sexual harassment is defined in the Equality Act 2010 as unwanted conduct of a sexual nature which has the purpose or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for the individual. This conduct includes sexual comments, suggestive looks, sexual advances and unwelcome physical contact.

Many employers have harassment policies and procedures which often state that the employer takes a zero-tolerance approach to harassment. Despite this, concerns are often raised about how poorly complaints have been handled, which was the case with McDonald’s for example.

Perhaps things will improve next year when a new duty on employers to prevent sexual harassment is introduced[7]. This is expected to come into force in October 2024. It will require employers to take “reasonable steps” to prevent sexual harassment of their employees in the course of their employment. If they breach that duty, they could face an uplift of up to 25% in the compensation awarded by the Employment Tribunal as well enforcement action by the Equality and Human Rights Commission (ECHR).

Happy Holiday

A Supreme Court judgment about holiday pay is inevitably going to feature high on our list for 2023. Where the decision affects over 3,300 police officers and 364 civilian employees and the cost to the employer of the historic holiday pay claims is around £30 million, it is no surprise that the Agnew[8] case comes in at number three. In any other year, it might have been number one!

The claims were brought against the Police Service of Northern Ireland (“PSNI”) for underpaid holiday pay. The claimants were only paid their basic pay as holiday pay instead of normal pay which included overtime. The PSNI accepted that the claimants were underpaid when they took their holidays. The issue was how far back could their claims go?

The claimants were seeking arrears of holiday pay back to when the Working Time Regulations were introduced, on 23 November 1998. After the claimants’ success in the Northern Ireland Industrial Tribunal (“IT”) in 2018, the PSNI appealed unsuccessfully to the Court of Appeal (“NICA”). In 2019, it held that a three-month gap in unlawful deductions will not necessarily break a series of deductions (overturning a 2014 EAT decision[9]). The PSNI appealed to the Supreme Court.

The claims were brought under the Employments Rights (Northern Ireland) Order 1996 (“ERO”) and the Working Time Regulations (Northern Ireland) 2016 and 2018 (the Regulations). Both provide a way for bringing a claim relating to underpaid holiday pay.

A claim brought under the Regulations can only extend back three months from the date of the claim unless the Tribunal is satisfied that it was not reasonably practicable for the claim to be presented within that time. However, the option under the ERO is more favourable to a claimant. It includes a provision relating to a “series of deductions” whereby the three months’ limitation period applies from the last deduction/payment received.

Both the IT and the NICA held that the EU principle of equivalence should be applied. As the remedy for breach of EU law rights under the ERO was more beneficial than that under the Regulations, it was read into the Regulations to allow the IT and NICA to consider the underpayments as being part of a series.

The Supreme Court agreed with this approach. Whether a claim is to be considered as a series of deductions is essentially a matter of fact; consideration of the circumstances and the deductions’ similarities, frequency, size, reason and impact is needed.

It held that neither a gap of three months between unlawful deductions nor a lawful payment of holiday pay would break a series of such deductions. This was because each unlawful underpayment was factually linked to its predecessor by “the common fault or unifying or central vice” that the holiday pay had been calculated by reference to basic pay rather than normal pay. That had been the case consistently from 23 November 1998.

The impact of the judgment is lessened for employers in England, Wales and Scotland, where legislation[10] imposes a statutory two-year backstop for holiday pay claims. This does not apply to Northern Ireland however where employers risk considerable financial exposure if they have not calculated holiday pay correctly.

The Never Ending Story

Our number one topic from 2022, Retained EU Law, drops one place this year to number two but it was very close to being number one again!

The Retained EU Law (Revocation and Reform) Bill was published on 22 September 2022 (and received Royal Assent on 29 June 2023).

The purpose of the Bill was to end the status of retained EU law from 31 December 2023 (the sunset clause). On 10 May 2023, in a significant change, the Government announced that the controversial sunset clause would be removed from the Bill. It then published a policy paper about regulatory reform shortly followed by the consultation paper Retained EU Employment Law.

There was a separate consultation exercise earlier this year (12 January 2023 to 9 March 2023) about the calculation of holiday entitlement for part-year and irregular hours workers. This followed the 2022 Supreme Court judgment in Harpur Trust v Brazel.

The Government response to both consultations was published on 8 November 2023 and for more details see our article. Briefly, some of the key changes are:

• There will be no change to working time record keeping requirements and employers will not need to record each worker’s daily working hours but to keep records which are adequate to show compliance with the Regulations.
• Employers will have more flexibility in TUPE scenarios to consult directly with employees.
• Rolled-up holiday pay will be introduced for irregular hours and part-year workers.
• For part-year and irregular hour workers, the Government will introduce an accrual method for calculating holiday entitlement at 12.07% of hours worked in a pay period in the first year of employment and beyond.

On 8 November 2023, the Government published the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023. These will come into force on 1 January 2024 and we will cover these in our Looking Ahead to 2024 briefing, which will be sent next month.

Another development to be aware of is the publication on 14 November 2023 of the draft Equality Act 2010 (Amendment Regulations) 2023 which are expected to come into effect on 1 January 2024. The Regulations reproduce the effects of retained EU law relating to several aspects of the Equality Act 2010 that provide current rights and protections and which would otherwise have been lost by the end of this year.

The Locomotion

Ongoing industrial action and the legislative measures to tackle it has been a constant feature of 2023. Due to the scale and implications of the legislation and the controversy it has generated this topic comes in at number one.

It was almost a year ago (10 January 2023) that the Government published draft legislation[11] to ensure that public services deliver minimum service levels during industrial action. The relevant services are health, fire and rescue, education, transport, nuclear decommissioning and border security.

Employers can issue a written “work notice” requiring certain employees to work and to refrain from strike action. Trade unions’ immunity from legal proceedings is removed if they fail to take reasonable steps to comply with the work notice. Significantly, automatic protection from unfair dismissal is lost for an employee who participates in strike action but who is named in the work notice.

Unsurprisingly, the proposals are very controversial. Even so, the Strikes (Minimum Service Levels) Act 2023 came into force on 20 July 2023. Since then, it has hardly been out of the headlines. It is important to remember however that separate Regulations need to be passed before minimum service levels are implemented for a relevant service.

So where are we now?

On 7 November 2023, following a consultation exercise, the Government published three sets of draft regulations[12] to provide minimum service levels during strikes for passenger rail services, ambulance services and border security. Those Regulations have now been passed.

• The Regulations in relation to passenger railway services came into force on 8 December 2023. The minimum service level will be the equivalent of 40% of the operator’s timetabled services during the strike. Comprehensive non-statutory guidance has been published to accompany the Regulations.
• In relation to ambulance services, the Regulations also came into force on 8 December 2023 but apply to England only (as health services are devolved). The Government estimates that around 80% of resources will be needed to establish the minimum service level on typical shift.
• As for border security, the Regulations came into force on 12 December 2023.

In another important development, the Code of Practice on the “reasonable steps” to be taken by trade unions came into force on 8 December 2023. Note that on 16 November 2023, the Government published guidance for employers, trade unions and workers on the issuing of work notices.

The controversy about the legislation continues.

Six metro mayors, including those of London, Greater Manchester and Liverpool and eight council leaders across the country issued a joint statement expressing their opposition to the legislation which they say “place severe and unacceptable restrictions on the fundamental right of a worker to take industrial action to defend their pay and conditions”.

The Scottish and Welsh Governments have said they would do everything possible to avoid work notices being used in their jurisdictions. On 6 December 2023, the TUC said that unions “won’t rest” until the legislation is repealed.  

In relation to the other relevant services:

• The Government has not yet responded to a closed consultation for fire and rescue services.
• On 19 September 2023, a consultation covering urgent and emergency hospital services was commenced and that ended on 14 November 2023.
• On 28 November 2023, a consultation covering education was commenced and that ends on 30 January 2024. Education is a devolved matter and the Government is liaising with the Scottish and Welsh Governments. It is seeking views on whether an education minimum service level should apply across Great Britain or whether there should be different Regulations for England, Scotland and Wales.

There is still some way to go before Regulations are in place for all of the relevant services. Legal challenges are inevitable and if elected, a new Labour Government is unlikely to proceed with the legislation in any event.

Our 2023 Top Ten countdown shows the wide-ranging challenges faced by employers and their HR teams in keeping up to date with employment law developments. But having read this end of year review, it’s now time to relax before we update you about the myriad changes we can expect in 2024!

In our first Employment webinar of 2024, we will be looking at the upcoming changes to holiday entitlement and pay. Full details will be included in our invitation which will be sent shortly.

[1] McQueen v The General Optical Council EAT March 2023

[2] Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022

[3] Conduct of Employment Agencies and Employment Businesses Regulations 2003

[4] ASLEF and others, Unison and the National Association for Schoolmasters/Union of Women Teachers v the Secretary of State for Business and Trade High Court July 2023

[5] Lynskey v Direct Line Insurance Services Ltd Employment Tribunal August 2023

[6] Chartered Institute of Personnel and Development (CIPD) and Simplyhealth Health and Wellbeing at Work September 2023

[7] The Worker Protection (Amendment of Equality Act 2010) Act 2023

[8] Chief Constable of the Police Service of Northern Ireland and another v Agnew and others (Northern Ireland) Supreme Court October 2023

[9] Bear Scotland v Fulton EAT 2014

[10] The Deduction from Wages (Limitation) Regulations 2014

[11] The Strikes (Minimum Service Levels) Bill 2023

[12] The Strikes (Minimum Service Levels: Border Security) Regulations 2023. The Strikes (Minimum Service Levels: Passenger Railway Services) Regulations 2023. The Strikes (Minimum Service Levels: NHS Ambulance Services and the NHS Patient Transport Service) Regulations 2023.