This month’s newsletter is a review of 2020’s biggest employment law issues and a look at what we should expect from the bright and glittery 2021.
Hot topics in 2021
Covid-19. Any hopes for a new year easing of pandemic-related restrictions in England were dashed as a third national lockdown was announced by the Prime Minister on 4 January 2021. The same day, the government issued Stay at Home guidance confirming that employers must take “every possible step” to facilitate remote working. Regulations placing the country into strengthened tier 4 restrictions came into force on 6 January 2021, including a legal requirement to work from home where possible. The Working Safely Guidelines for England have also been updated to reflect the lockdown. In addition, in his announcement, the Prime Minister told the clinically extremely vulnerable to expect new shielding letters and updates to the shielding guidance are awaited.
Following calls for extra support for working parents dealing with school closures enforced as part of the new lockdown, the government amended the Coronavirus Job Retention Scheme (CJRS) guidance to make it clear that those who are unable to work or are working reduced hours as a result of caring responsibilities arising from COVID-19 (including caring for children who are at home following the closure of schools or childcare facilities, or caring for a vulnerable individual in the household) are eligible for furlough.
On 6 January 2021, the Presidents of the Employment Tribunals in England and Wales and in Scotland sent messages to tribunal users confirming the arrangements for hearings during the new lockdown period. Elsewhere, the Institute for Fiscal Studies released a report setting out further analysis of the inequality of pandemic outcomes, the findings of which are perhaps brought into even sharper focus given that the government has already cautioned that the current restrictions may last until March. In May 2020, the government published ‘Our Plan to Rebuild: The UK Government’s COVID-19 recovery strategy’ setting out a phased recovery and roadmap to lifting restrictions. Before the third national lockdown began, the OECD forecast the UK’s economic recovery to be among the slowest in the world. Yet, with the fastest roll out of the new Covid-19 vaccines, they conclude there “would be a stronger rebound in UK economic performance in 2021 and 2022”.
Employment Bill 2019-20. In the Queen’s Speech on 19 December 2019, the government announced that it would introduce a new Employment Bill. The Bill will cover topics ranging from the establishment of a single enforcement body for the labour market to a requirement for employers to pass on all tips and service charges to workers. However, the progress of these developments has been delayed due to the COVID-19 pandemic, and the Employment Bill has not yet been brought forward.
Neonatal leave and pay. On 16 March 2020, the government responded to a consultation on neonatal care leave, proposing the introduction of statutory neonatal leave and pay for up to 12 weeks for parents of babies requiring neonatal care. The government will legislate to implement the new entitlements in the forthcoming Employment Bill.
Leave for unpaid carers. Also on 16 March 2020, BEIS opened a consultation seeking views on its proposal to give employees who are unpaid carers one week’s unpaid leave per year for the purposes of caring, with the aim of supporting those who struggle to manage providing long-term care to others with their own employment. The consultation closed on 3 August 2020 and the government response is awaited.
Off-payroll working rules. To address non-compliance with IR35 in the private sector, the government confirmed at the autumn 2018 Budget that the off-payroll working rules would be extended to the private sector from 6 April 2020. In response to the COVID-19 pandemic, implementation of this measure has been postponed to 6 April 2021.
An extension to the off-payroll working rules will mean that payments to workers supplied to large and medium-sized companies by personal service companies will be treated as payments of employment income and so subject to income tax and NICs. Responsibility for tax compliance therefore shifts from the personal service company to the client or intermediary.
Post-termination non-compete clauses. On 4 December 2020, BEIS opened a consultation on measures to reform post-termination non-compete clauses in employment contracts. The consultation, which closes on 26 February 2021, seeks views on proposals to require employers to continue paying compensation to employees for the duration of a post-termination non-compete clause, requiring employers to confirm in writing to employees the exact terms of a non-compete clause before their employment commences, introducing a statutory limit on the length of non-compete clauses, or banning the use of post-termination non-compete clauses altogether.
Extending ban on exclusivity clauses. On 4 December 2020, BEIS opened another consultation on measures to extend the ban on exclusivity clauses in employment contracts to cover those earning under the Lower Earnings Limit, currently £120 a week. This would prevent employers from contractually restricting low earning employees from working for other employers. This consultation, which was opened in response to the impact of the COVID-19 pandemic on low earners, also closes on 26 February 2021.
Human Rights Act 1998. On 7 December 2020, the government announced the launch of an independent review of the Human Rights Act 1998 (HRA 1998) and whether it requires reform. The government has emphasised that it is committed to the European Convention on Human Rights (ECHR) and the review is limited to examining the HRA 1998’s structural framework, rather than the rights it provides for. The review, which will be undertaken by a panel headed by Sir Peter Gross (a former Court of Appeal judge), is expected to report its findings in summer 2021.
Payments on termination of employment. From 6 April 2021, the government’s changes to the current formula for post-employment notice pay (PENP) will come into effect. The aim of the amendments is to avoid unfair outcomes if an employee’s pay period is defined in months, but the contractual notice period is expressed in weeks. Introduced through draft legislation, the changes will also ensure that non-residents who receive PENP are taxed fairly. Legislation will be introduced in the Finance Bill 2020-21 to make such amendments.
Points-based immigration system. On 22 October 2020, the government published a Statement of Changes to the Immigration Rules HC813, setting out the full details of the new UK immigration system. Most of the changes took effect at 9.00 am on 1 December 2020, constituting a substantial overhaul of the existing Immigration Rules and providing the foundation for the UK’s new immigration system which will apply to all newly arriving non-British and Irish citizens from 1 January 2021.
2021 – Potential developments to look out for
Non-disclosure agreements. In July 2019, the government published its proposals to prevent the misuse of confidentiality clauses or non-disclosure agreements (NDAs) in the settlement of workplace harassment or discrimination complaints. The government reiterated that confidentiality clauses can serve a legitimate purpose in both employment contracts and settlement agreements but confirmed its intention to bring forward new legislation “when Parliamentary time allows“.
The government has also stated that new requirements will be introduced for the limitations of a confidentiality clause to be clear to those signing them, as well as for mandatory independent legal advice on a settlement agreement to include the limitations of any confidentiality clause. Clauses that do not follow these new rules will be void.
Alongside these changes, the government committed to working with the EHRC, ACAS and the SRA to introduce improved guidance regarding the law and good practice. The EHRC published its wide-ranging good practice guidance in October 2019 and ACAS published new guidance on the use of NDAs in February 2020.
Sexual harassment. On 11 July 2019, the government launched a consultation on measures to address sexual harassment in the workplace. The consultation includes proposals such as introducing a mandatory duty on employers to prevent harassment in the workplace and increasing the time limit for bringing a discrimination claim from three to six months. The Equality and Human Rights Commission (EHRC) statutory code of practice on preventing sexual harassment in the workplace is also awaited.
Ethnicity pay reporting. In 2018, the government launched a series of measures to tackle barriers facing ethnic minorities in the workplace, including a consultation on the introduction of mandatory ethnicity pay reporting, based on the model of mandatory gender pay gap reporting. A response to this consultation is still awaited. However, on 19 December 2020 the BBC reported that it had seen a document indicating there had been 321 responses, with many expressing support for compulsory ethnicity pay gap reporting for organisations with more than 250 staff.
Modern Slavery Act 2015. On 22 September 2020, the UK government published a response to its transparency in supply chains consultation and made various proposals aimed at improving the reporting process. Key proposals include extending the reporting requirement in section 54 of the Modern Slavery Act 2015 to include public bodies, legislating for the content of slavery and human trafficking statements and introducing a new statutory single reporting deadline. No timetable was provided for the implementation of the proposals, with plans for legislative changes being made when parliamentary time allows.
Extending redundancy protection for women and new parents. On 8 July 2020, the Pregnancy and Maternity (Redundancy Protection) Bill 2019-21 was reintroduced to Parliament. The second reading of this Private Members’ Bill will take place on 26 March 2021. If passed, the Bill will prohibit redundancy during pregnancy and maternity leave and for six months after the end of the pregnancy or maternity leave, except in specified circumstances. This follows the government’s statement on 22 July 2019 that it would expand redundancy protection in response to a BEIS consultation on the matter. The government initially expressed an intention to extend the period of redundancy protection for pregnant women and new parents in the Employment Bill 2019-20, but this Bill has not been brought forward as expected.
Whistleblowing directive. On 26 November 2019, the EU Whistleblowing Directive ((EU) 2019/1937) was published in the Official Journal. It came into force 20 days later and member states will have until 17 December 2021 to transpose the Directive into national law. As a result of Britain’s exit from the European Union, and despite the level playing field conditions in the trade agreement, the UK will not be required to legislate in response to this Directive, although it may choose to do so. In addition, the Directive may still influence policy, for example, for pan-European organisations who wish to maintain one whistleblower protection regime across all jurisdictions. The EU Whistleblowing Directive goes further than the current domestic law in some respects; for example, employers would be required to give feedback to whistleblowers and protect a wider range of whistleblowers, including self-employed contractors and shareholders.
Employment law hearing structures. On 29 April 2020, the Law Commission published its report on employment law hearing structures, following the consultation that closed on 31 January 2019. The report sets out 23 recommendations for reforms to both the powers and jurisdiction of employment tribunals. The relevant minister was expected to provide an interim response within six months of publication of the report (by the end of October 2020) and a full response within a year, but owing to COVID-19 this has been delayed.
In early February 2021, the Court of Appeal will hear Rihan v Ernst & Young Global Ltd and others, a case that will consider the High Court’s ruling that there exists a duty to take reasonable steps to prevent employees (and quasi-employees) from suffering financial loss by reason of a failure to perform an audit ethically and without professional misconduct (the “audit duty“).
On 18 March 2021 the Supreme Court will hear the appeal in Royal Mail Group Ltd v Efobi, considering whether an employment tribunal was entitled to conclude that a claimant in a race discrimination claim had not discharged the initial evidential burden of proof on him, as required by section 136 of the Equality Act 2010.
Following this, on 18 May 2021, the Supreme Court will hear the appeal in Kostal UK v Dunkley, considering the Court of Appeal’s decision that a one-off direct offer to employees concerning pay, bypassing stalled collective bargaining, did not constitute an unlawful inducement within the meaning of section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
On 22 June 2021, the appeal in Flowers and others v East of England Ambulance Trust, a case in which the Supreme Court is set to decide whether holiday pay under the Working Time Directive (2003/88/EC) (WTD) must include regular voluntary overtime, will be heard. This could be an opportunity for the Supreme Court to depart from retained EU law under powers set out in section 6 of the European Union (Withdrawal) Act 2018.
On 23 and 24 June 2021, the Supreme Court will hear the appeal in Chief Constable of the Police Service of Northern Ireland and another v Agnew and others. This decision of the Northern Ireland Court of Appeal (NICA) led to a divergence between Great Britain and Northern Ireland over the approach to historical holiday pay claims. The NICA took a different view from that established by the EAT in Bear Scotland Ltd v Fulton and other cases  IRLR 15 on the significance of a break in a “series of deductions” where a period of more than three months has elapsed between the deductions. Although not binding in Great Britain, the NICA held in Agnew that a series of unlawful deductions from holiday pay would not be interrupted by gaps of more than three months. A Supreme Court ruling on this point, which would be binding throughout the UK, could therefore be of great importance for future holiday pay claims.
On 9 November 2021, the Supreme Court is set to hear the appeal in Harpur Trust v Brazel. It will consider whether an employment tribunal was wrong to find that “part-year workers” (those working only part of the year, such as teachers employed during school terms) should have their annual leave entitlement capped at 12.07% of annualised hours.
Judgments are currently awaited in the following cases:
- Royal Mencap Society v Tomlinson-Blake, was heard in the Supreme Court on 12 and 13 February 2020. The Court of Appeal held that workers on sleep-in shifts, employed to carry out duties if required, were only entitled to the National Minimum Wage for hours in which they were required to be awake for the purposes of working, not for the whole shift.
- Asda v Brierley, was heard in the Court of Appeal on 13 and 14 July 2020. The court considered whether workers in retail stores were employed under comparable terms and conditions to those working in separate distribution depots for the purposes of equal pay claims under the Equality Act 2010 and the Equal Pay Act 1970.
- Uber BV and others v Aslam and others, was heard on 21 and 22 July 2020. In this case, the Supreme Court considered whether the Court of Appeal’s majority finding that Uber drivers are workers for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998, should be upheld.
The hearing date for Anwar v Advocate General, due to be heard by the Supreme Court, is also awaited. The court will decide whether it is possible to bring ancillary proceedings in the Court of Session or sheriff court for diligence on the dependence (equivalent to a freezing order in England and Wales) of a parallel employment tribunal claim.
Finally, a date for the Court of Appeal hearing in Steer v Stormshore Ltd is also awaited. The court will decide whether the absence of an interim relief remedy in discrimination cases is unlawful under Articles 6, 8, 14, and Protocol 1 of the European Convention on Human Rights, after the EAT was unable to decide the issue as it has no power to grant a declaration of incompatibility with section 3 of the Human Rights Act 1998.
The UK left the EU at 11.00 pm (UK time) on 31 January 2020. The terms of transition, as set out in the UK-EU withdrawal agreement and as implemented into UK law, postponed many substantive legal changes until the end of the UK-EU transition period at 11.00 pm (UK time) on 31 December 2020. During the transition period, the UK was treated for most purposes as if it were still an EU member state, and most EU law (including as amended or supplemented) continued to apply to the UK.
Following the end of the transition period, the remaining withdrawal agreement provisions have come into operation and the legal changes associated with the UK’s withdrawal from the EU and the European Atomic Energy Community (Euratom), and from the EU’s international agreements, have taken effect. The extent of legal change after the end of the transition period varies between legal areas and sectors (and also between different sets of facts and circumstances), and depends on matters such as: whether the UK-EU withdrawal agreement contains relevant provisions; whether the underlying UK or EU law was saved or converted into retained EU law at the end of the transition period; what UK primary or secondary legislation has been made to implement post-transition UK policy changes in areas where policy was previously set at EU level, and to establish new UK bodies to undertake functions that are no longer exercised by EU institutions; if the UK’s international agreements, treaties and conventions with non-EU organisations and other countries (international agreements) provide continuity or introduce change; whether the area is addressed by unilateral measures taken independently by the UK or the EU to mitigate post-transition disruption; and whether the area is addressed by the future relationship agreements (FRAs).
Despite the UK’s withdrawal from the EU and the end of the transition period, some EU legislation and policy in 2021 will be relevant to the UK, whether via UK-EU agreements or through the EU’s global regulatory reach (known as the Brussels effect). The Court of Justice of the European Union (CJEU) and the European Commission continue to have limited post-transition involvement in UK-related matters under the terms of the withdrawal agreement.
In 2021, the UK Parliament will continue to scrutinise EU-related areas that have implications for the UK, although some of its scrutiny mechanisms will change. We can expect to see more Brexit-related legislation in 2021, including Brexit-related statutory instruments. We could also see some interesting UK court cases, as the courts navigate the complexities of interpreting retained EU law.
The joint UK-EU committee will meet again in 2021. The joint committee is responsible for the implementation and application of the withdrawal agreement, and can amend some aspects of the withdrawal agreement. Joint committee decisions are binding and have the same legal effect as the withdrawal agreement. We might also see the first use of the withdrawal agreement dispute settlement mechanism in 2021, should disputes arise between the UK and the EU about the interpretation and application of the withdrawal agreement.
If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: email@example.com