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Employment Law Update | May 2023
Welcome to the latest edition of our employment law update.
As always please don’t hesitate to contact James Austin if you have any questions arising from the news items below.
In the News
Government proposals
The Government has announced that it intends to introduce legislation which will restrict non-compete restrictive covenant clauses to three months after termination of employment. It isn’t clear when the legislation will be introduced. There doesn’t appear to be any intention to change the position regarding notice periods or garden leave, so employers would still potentially be able to keep an employee from competing through those methods. There also doesn’t appear to be any intention to restrict the use of non-solicitation clauses or confidentiality clauses and the position is unclear on non-dealing clauses.
The Government has also stated that it intends to:
- change the law to allow rolled up holiday pay (although it’s rare for this to be penalised currently anyway);
- merge the EU entitlement to four weeks’ holiday per year with the UK entitlement to a further 1.6 weeks’ holiday to create one entitlement. This won’t change the fact that employees in the UK are entitled to a minimum of 5.6 weeks’ holiday each year but may impact how holiday pay is calculated resulting in things like commission and overtime once again being excluded. We’ll let you know once this becomes clearer;
- remove the requirement to record working hours;
- amend the TUPE regulations so employers can consult direct with the transferring staff (rather than trade union or elected employee representatives) when there are fewer than 50 employees in the business and fewer than 10 employees transferring.
We’ll let you know when/if a timetable is provided for when these changes will take effect.
Government appoints first ever 'Menopause Employment Champion'
Following its refusal to adopt many of the recommendations made by the Women and Equalities Committee (WEC) to help women experiencing menopause at work, the Government has shown commitment to the cause by introducing a national ‘Menopause Employment Champion’.
Since its initial response to the recommendations, in March 2023 the Government announced the appointment of Helen Tomlinson as the first ever ‘Menopause Employment Champion’.
Helen, who takes up the independent voluntary role alongside her role as Head of Talent (UK & Ireland) at The Adecco Group, brings 30 years’ experience in the recruitment and employability sector. It is anticipated that Helen will focus on encouraging employers to put in place menopause policies in aid of a more supportive environment to help women experiencing menopause to continue working.
Whilst the Government decided not to support a recommendations that menopause be recognised as a protected characteristic or that employers be under a duty to provide reasonable adjustments for menopausal employees, following Ms Tomlinson’s appointment, the Department for Work and Pensions Minister Mims Davies has said that “Menopause is a major driver of too many women leaving the workforce early, often when they are at the peak of their skills and experience with so much more still to contribute” and “Working positively with employers is vital to ensure they can recruit and retain women experiencing menopause and stop women perhaps considering giving up their employment due to the impact”.
If you need assistance in supporting an employee experiencing symptoms please don’t hesitate to contact us for advice.
In the Law
Government publishes guidance for employers on ethnicity pay reporting
Ethnicity pay reporting is one of the many ways an employer can use to build transparency and trust amongst employees and on 17th April 2023, the Government published guidance for employers on how to measure, report on and address any ethnicity pay differences within their workforce.
The guidance includes advice on:
- Collecting ethnicity pay data for employees
- How to consider data issues such as confidentiality, aggregating ethnic groups and the location of employees
- The recommended calculations and step by step instructions on how to do them
- Reporting the findings
- Further analysis that may be needed to understand the underlying causes of any disparities
- The importance of taking an evidence-based approach towards actions.
At present there are no plans to make ethnicity pay reporting mandatory.
Who gets tips, gratuities, and service charges?
The Employment (Allocation of Tips) Act 2023 has now been passed and is expected to benefit millions of workers in England and Wales.
The new legislation requires employers such as bars, pubs and restaurants to ensure that they pass on tips, gratuities, and service charges to workers and that they are allocated between them fairly and without any deductions, save for any deductions permitted under tax law.
Employers also have to have a written policy on how they deal with tips. Further details of what is required in the policy will be set out in a statutory code of practice which is yet to be published.
Employers will be required to keep records of tips that have been paid for 12 months.
Punishments for non-compliance include compensation of up to £5,000 per worker to reflect financial losses caused by non-payment, so there’s an incentive for employers to comply.
In the Courts
Case Law: Can an employer be liable for harassment by a third party?
KZ started employment with the The Nags Head Reading Ltd as a Bartender in October 2019 and was employed until August 2021.
On 31st December 2019, KZ was working as usual when at some point in the evening, a third party (i.e. not someone who worked for the employer) brushed past KZ touching her bottom, which happened again 10 minutes later. KZ believed this to have happened by accident, however later that evening, someone ‘grabbed’ her between the legs from behind to the “extent it hurt”. KZ believed it was the same third party as the previous two incidents, based on their proximity at the time, but was unable to confirm the exact identity of the person responsible.
A few days later, KZ was in the presence of the third party at her place of work when she was approached by them and grabbed by the shoulders. KZ asked the person to “get off” her and during this incident a Director of the Respondent was present, however nothing was done as the Director seemingly failed to appreciate the seriousness of the incident.
Various other incidents occurred between January and March 2020 such as the same third party cat-calling KZ; muttering sexist insults; and standing in KZ’s way to initiate conversation. However, the most significant incident was where the same third party was seen by KZ watching her through a hole in a toilet door at work, causing KZ to leave work. Whilst KZ did not report the incident herself, a colleague reported what had happened to the Director, who interpreted the conversation to mean that KZ hated the person in question.
KZ then attended a meeting with the employer to discuss the allegations. During this meeting, the employer explained that the person in question was a “giant toddler” and that their behaviour should not be taken the “wrong way”. KZ was asked what she wanted, and she expressed the need for a harassment policy and training in the workplace.
The employer undertook a brief investigation with the third party, who accepted that they may have accidentally bumped into KZ but denied other allegations.
It used to be the case that employers could be responsible for harassment carried out by third parties, but the relevant part of the Equality Act was repealed almost 10 years ago. Nonetheless, an employment tribunal held that the employer’s failure to prevent a recurrence of sexual harassment in this case amounted to harassment as defined by the Equality Act.
A claim for victimisation was also upheld based on “tetchy” interactions with the Director after the incidents were reported as the Director saw her as “problematic” and someone who was causing “problems and hassle”. The Employment Tribunal accepted that the protected acts were a considerable influence in how the Director treated KZ.
The outcome in this case highlights the need for employers to take allegations of harassment regardless of whether they employ the alleged harasser. This requirement will soon be increased as there are amendments planned to the Equality Act which will once again make employers liable for harassment of their employees by third parties (such as customers or clients) and introduce a specific duty on employers to take all reasonable steps to prevent the sexual harassment of their employees. We’ll let you know once a timeline is known.
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