Top 5 recent workplace developments – May 2022

This is our selection of recent developments which we think will impact on HR practice.

1. Horizon scanning: The Queen’s Speech 2022

The Queen’s Speech 2022 did not contain any announcement about the Employment Bill.

The Queen’s Speech did not include an Employment Bill despite the government first having announced in December 2019 that it would bring forward a new Employment Bill to ‘protect and enhance workers’ rights.

The reforms expected in a new Employment Bill include:

• making flexible working the default
• extending redundancy protection for pregnant employees and for up to 6 months after return from maternity leave
• right to 12 weeks’ paid neonatal leave for parents whose babies spend time in neonatal care units
• working carers’ right to 5 days’ unpaid leave each year
• right for workers with variable hours to request a more predictable contract after 26 weeks' service
• a single labour market enforcement agency

Practical point

It seems that there will not be any progress with the Employment Bill this year, although it’s possible it will be implemented next year.

The Queen’s Speech did however include the announcement that a new Modern Slavery Bill will seek to strengthen the protection and support for victims of human trafficking and modern slavery, increasing the accountability of companies. Other proposed legislation includes a new Data Reform Bill which aims to create a UK data protection framework that reduces burdens on businesses.

2. IR35: Off-payroll working

The Court of Appeal considered a case involving a radio presenter who was engaged under arrangements which HMRC considered were caught by the IR35 rules.

IR35 refers to the legislation which seeks to prevent the avoidance of income tax and NICs through the use of a personal service company and other intermediaries (PSC). If IR35 applies, the PSC is liable to pay income tax and NICs in respect of the deemed earnings under the arrangements. Broadly, IR35 applies where an individual provides personal services for a client through a PSC, and if the arrangements had been made directly between the individual and the client, they would have been regarded as an employee of the client.

This case related to tax years when Atholl House was the PSC of Kaye Adams who performed services for the BBC (for BBC Scotland) and other media organisations, which included appearing on ITV’s Loose Women and writing for various newspapers and magazines. The issue was whether, if the services supplied by Ms Adams to the BBC had been supplied under contracts directly between her and the BBC, she would have been regarded as an employee for income tax and NICs purposes, in which case the IR35 rules applied.

The Upper Tribunal decided that while mutuality of obligation and the requisite control were present to suggest employment, other factors, notably that Ms Adams worked as a freelancer to organisations other than the BBC over a number of years, pointed away from employment - and accordingly, IR35 did not apply.

The Court of Appeal found that when determining whether the hypothetical contract between Ms Adams and BBC Scotland would be one of employment, the Tribunal had placed undue emphasis on her freelance career and hadn’t put sufficient weight on the specific terms of the hypothetical contract with BBC Scotland. Rejecting the argument that there is a presumption of employment once mutuality of obligation and the requisite degree of control are established, the Court held that it’s necessary to consider whether or not there are other relevant factors supporting an underlying employment relationship.

The case will now be sent back to the Tribunal to be determined afresh.

Practical point

This is the first time the Court of Appeal has dealt with appeals concerning the application of IR35.

It’s important for businesses to show that they have taken reasonable care in arriving at IR35 status determinations, so that they have discharged their obligations even if HMRC ultimately take a different view. 

HMRC v Atholl House Productions Ltd

3. Unfair dismissal: Redundancy

The EAT ruled that a tribunal was wrong to strike out an unfair dismissal claim by an employee who volunteered for redundancy.

HC-One Oval Ltd announced it was reducing the number of employees carrying out reception and administrative work. After Ms White, a part-time receptionist, was provisionally selected for redundancy, she requested voluntary redundancy which was accepted.

Ms White subsequently brought a claim for unfair dismissal in which she alleged that the redundancy process wasn’t genuine because a full-time receptionist, who had no childcare responsibilities, was recruited just before the redundancy process began and the two part-time receptionists were then dismissed. HC-One argued she had been fairly dismissed for redundancy at her own request and her claim should therefore that be struck out because it had no reasonable prospect of success.

The tribunal struck out the claim. However, the EAT found that the tribunal should still have considered whether the reason for redundancy and the process were fair. This case will now be sent back to the tribunal, to be considered by a different judge.

Practical point

Requesting voluntary redundancy does not necessarily preclude employees from bringing a successful unfair dismissal claim. In these cases, the tribunal will consider whether the redundancy process and reason for redundancy were fair.

White_v_HC-One_Oval_Ltd

4. Changing employment terms: new Statutory Code

The government has announced a new Statutory Code to protect employees from “fire and rehire” tactics to change employment terms.

“Fire and rehire” tactics means the practice of facilitating a change of employment terms by dismissing employees and then immediately re-engaging them on new terms. Increased public concern over these tactics during the Covid-19 pandemic led to demands for the government to change the law to give employees greater protection.

Although the government regards these tactics as unacceptable, it resisted demands for legislative change. Instead, in December 2021, ACAS published best practice guidance to help employers explore all other options before considering fire and rehire to change employee contracts, and to emphasise the importance of informing and consulting employees and their representatives. An employer’s failure to follow the guidance might increase an employee’s chances of winning an unfair dismissal claim - but beyond that, the guidance has no real teeth.

The new Statutory Code will set out how businesses can hold “fair, transparent, and meaningful” consultation when changing employment terms. It will also include practical steps that employers should follow.

Practical point

The introduction of a Statutory Code will not change the current law as such, but it will have more bite than the current guidance. With the Code, there will be a mechanism for tribunals to increase the compensation payable to employees where employers unreasonably fail to observe their statutory obligations to dismiss fairly and to consult and inform employee representatives.

The Code will be introduced "when parliamentary time allows".

For further information, see our more detailed update: Government announces new statutory code to protect employees from “fire and rehire” tactics to change

5. Mental health and wellbeing

The government has launched a consultation on mental health and wellbeing outcomes, seeking ideas on how employers can support and protect their employees’ mental health.

The Department for Health and Social Care has published a discussion paper and call for evidence on improving mental health and wellbeing, which includes the development of a ten-year plan to reduce the prevalence, incidence and recurrence of mental ill-health.

The discussion paper suggests employers should be compassionate - protecting and promoting positive mental wellbeing in the workplace by understanding and meeting employees’ physical and mental needs. The paper identifies both the need for a clear role for employers to prevent the onset of mental health conditions and mental ill-health, and a wider implementation of workplace interventions to support mental health.

Practical point

Responses to the consultation will be collected through an online survey until 5 July 2022.