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Employment Law General Update – December 2024

  • Employment,

  • 17th December 2024

Employment Law

This month sees an emphasis on Equality through a landmark equal pay agreement, a follow up to the Sexism in the City inquiry and a further inquiry into how paternity and shared parental leave in the workplace can actually work. Meanwhile, the CIPD has carried out research which finds our systems are currently failing to help young people prepare for working life. And lastly, a warning change to compensation levels where the statutory Code of Practice on Dismissal and Re-engagement should be involved and some changes to the tribunal procedures.

  • Equality: Equal pay deal reached for thousands of women in Birmingham
  • Equality: HM Treasury, PRA and FCA respond to Treasury Committee questions about Sexism in the City inquiry recommendations
  • Parental Leave: Women and Equalities Committee launches inquiry into paternity and shared parental leave
  • Workforce: CIPD research finds half of employers believe young people are not ‘job ready’
  • Tribunals: Failure to follow code of practice on dismissal and re-engagement has compensation consequences effective from 20 January 2025
  • Tribunal Procedure: Changes to Employment Tribunal Procedure Rules from 6 January 2025

Equality: Equal pay deal reached for thousands of women in Birmingham

The BBC reported on 10 December that Birmingham City Council has reached a settlement with 6,000 staff members, mostly women, to end a long-standing dispute over pay inequality, with settlement payouts to be made after years of negotiations.

Birmingham City Council has reached a settlement with thousands of women in relation to their long-standing equal pay claims. The agreement, reached with the Unison and GMB unions, will see 6,000 staff members receive settlement payouts, bringing an end to the litigation that has run for many years. The issue of equal pay has been a major challenge for the council, with a bill of £760 million initially estimated to settle the claims. However, after several years of negotiations, a confidential agreement has been reached, which will be formally approved by the council’s cabinet on 17 December 2024.

The dispute centred around claims that staff in female-dominated roles, such as teaching assistants, have historically been underpaid compared to those in male-dominated positions. The GMB union has said that the settlement is a “significant step towards pay justice”. The settlement will also be a significant step forward for the council, which is reported to have paid out almost £1.1 billion in equal pay claims since 2012.

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Equality: HM Treasury, PRA and FCA respond to Treasury Committee questions about Sexism in the City inquiry recommendations

The House of Commons Treasury Committee has published letters containing responses from HM Treasury, the PRA (Prudential Regulation Authority) and the FCA (Financial Conduct Authority) relating to progress made against the recommendations set out in its report following its “Sexism in the City” inquiry.

On 10 December 2024, the House of Commons Treasury Committee published the following letters relating to its “Sexism in the City” inquiry, which provide information on progress made against its recommendations:

  • FCA (dated 29 November 2024). The FCA has prioritised work on the link between non-financial misconduct (NFM) and its rulebook and intends to publish a final policy statement on NFM in early 2025. The FCA is working through the large volume of feedback that it received on proposals relating to data collection and target setting and intends to set out next steps jointly with the PRA in Q2 2025. It is exploring ways in which diversity and inclusion (D&I) reporting might be simplified and more joined up. In 2025, the FCA plans to strengthen its messaging to whistleblowers and better promote whistleblowing reporting channels. This will include providing clearer guidance for whistleblowers who are impacted by a non-disclosure agreement, but who wish to report to the FCA. The FCA also comments on how it uses whistleblowing data and the introduction of a new approach to final feedback to whistleblowers.
  • PRA (dated 2 December 2024). The PRA acknowledges that developments in government policy (such as proposals for gender equality action plans and the plan for broadened pay gap reporting) may have an impact on its reporting and target setting proposals. It also comments on the removal of the bonus cap, reiterating the PRA and FCA expectation that firms should take care to avoid adverse impacts on pay gaps. The PRA states it will seek to review the impact of the bonus cap policy and whether it has affected gender pay gaps when sufficient evidence is available.
  • HM Treasury (dated 9 December 2024). HM Treasury’s letter focuses on priorities for supporting the development of women in the financial services sector. It refers to the Women in Finance Charter, which will retain its focus on senior management.

The letters respond to requests for information sent by Dame Meg Hillier MP, Chair of the Treasury Committee.

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Parental Leave: Women and Equalities Committee launches inquiry into paternity and shared parental leave

The House of Commons Women and Equalities Committee launched an inquiry to examine options for reform of paternity and shared parental leave, and is conducting a call for evidence which lasts until 31 January 2025.

The Women and Equalities Committee (WEC), a Commons Select Committee, launched the inquiry into paternity rights and shared parental leave (SPL) on 6 December. The WEC believes that unequal division of childcaring responsibilities is a key driver of wider gender inequality and the gender pay gap. It wishes to examine options for reform of SPL and paternity leave with the aim of identifying the most effective ways of incentivising more equal sharing of childcare and wider domestic responsibilities between mothers and their partners.

The UK Parliament reports that: “MPs on the cross-party committee, chaired by Labour MP Sarah Owen, are seeking views on the schemes, via WEC’s inquiry page and through a survey, to help inform their work ahead of the Government’s proposed review of the parental leave system. The call for evidence forms part of WEC’s umbrella inquiry into Equality at work.

The Government has set out measures in the Employment Rights Bill to enhance family-friendly rights at work but has stopped short of fundamental changes to maternity, paternity, and shared parental leave and pay.

Instead, it has acknowledged that ‘the current parental leave system does not support working parents’ and has committed to conduct a ‘full review’ as the first stage of longer-term reform. Unequal division of childcaring responsibilities is a key driver of wider gender inequality and the gender pay gap.”

The WEC is conducting a call for evidence which lasts until 31 January 2025. Submissions are specifically requested on any of the following matters:

  • The extent to which SPL has given parents choice and flexibility in how they share parenting responsibilities.
  • The longer-term equality impacts and labour market impacts of SPL, particularly for women.
  • Reasons for low take-up of SPL and possible solutions.
  • Addressing inequalities in SPL take-up (including inequalities related to ethnicity, income, education and occupational status).
  • Alternatives to the current “maternal transfer” model of SPL.
  • Lessons from other countries.

A government evaluation of SPL in 2023 revealed very low uptake. A more recent analysis by campaign group The Dad Shift has highlighted that SPL uptake is heavily skewed against lower earning families.

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Workforce: CIPD research finds half of employers believe young people are not ‘job ready’

Reported by People Management on 4 December 2024, apparently half (52 per cent) of UK employers say young people entering the workforce are generally not ‘job ready’, citing significant gaps in workplace skills and social adaptability, according to a new study from the CIPD. The Changing face of the youth labour market report also revealed that just over a quarter of employers (28 per cent) that hired a young person aged 16-24 in the past year felt they were well prepared for the demands of the workplace. Among the most significant challenges identified by employers were behavioural issues, with 71 per cent stating young people often did not know how to behave in professional settings. Similarly, 64 per cent of employers said young workers “lack important social skills”, while a third (34 per cent) identified communication difficulties as a key barrier to success.

Employers also noted differences in managing young workers compared to previous generations, with more than half (56 per cent) saying young workers were harder to manage. This generational shift has heightened the need for policies and initiatives to better prepare young people for the realities of working life.

The report highlighted a dramatic decline in opportunities for young people to combine earning and learning, which has significantly impacted their readiness for work. Despite government efforts to promote apprenticeships, just 6 per cent of 16 to 24 year olds are currently participating in one – a figure that has not changed in 20 years. In 2024, only 20 per cent of 16 to 17 year olds were combining earning and learning, down from 42 per cent in 1997, while, for 18 to 24 year olds, the figure dropped to 34 per cent from 40 per cent over the same period. Furthermore, the number of 16 to 24 year olds who had never held a job, excluding seasonal or holiday work, has risen by nearly a third over the past two decades.

To address these issues, the CIPD is calling on the government to introduce an apprenticeship guarantee for all 16 to 24 year olds. This initiative, which is supported by nearly 90 per cent of employers according to previous CIPD research, aims to create more vocational routes into employment while helping young people build crucial workplace skills such as communication, teamwork and problem solving.

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Tribunals: Failure to follow code of practice on dismissal and re-engagement has compensation consequences effective from 20 January 2025

The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 (SI 1272/2024) has been made and is due to come into force on 20 January 2025. Section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA 1992) gives an employment tribunal power to increase or reduce any award it makes by up to 25% for any unreasonable failure to comply with the provisions of a relevant statutory code of practice in respect of any of the heads of claims listed in Schedule A2 to TULRCA 1992. The Order, which was published in draft in October 2024, amends Schedule A2 to add section 189 of TULRCA 1992 to take account of the statutory Code of Practice on Dismissal and Re-engagement (Code).

The effect of the order is that, if a successful claim is brought under section 189 of TULRCA 1992 for a protective award, an employment tribunal can increase or reduce any award by up to 25% if a party has unreasonably failed to comply with the Code or another applicable code of practice.

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Tribunal Procedure: Changes to Employment Tribunal Procedure Rules from 6 January 2025

On 6 December 2024, the Employment Tribunal Procedure Rules 2024 (SI 2024/1155) (‘ETPR’) and the Employment Tribunals (Procedure Rules) (Consequential Amendments) Regulations 2024 (SI 2024/1156) (‘Amendment Regulations’) were laid before Parliament. The Amendment Regulations will remove the current ET Rules from Schedule 1 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (SI 2013/1237) (‘ET Regulations’) and bring the ETPR into force in their place on 6 January 2025.

The ETPR introduce two new rules to give the tribunal greater flexibility to delegate functions of a judicial nature to legal officers (rule 7), and expressly give the Presidents of the tribunals the power to prescribe claim and response forms by Practice Directions, instead of the Secretary of State (rule 9). Amendments have also been made to the following rules:

  • Rule 42 (replacing current rule 42): clarifying when the tribunal will consider written representations.
  • Rule 49 (replacing current rule 50): confirming that the tribunal may order the redaction of personal details, including addresses, from the claim and response forms and other documents.
  • Rule 58 (replacing current rule 60): clarifying that decisions made by legal officers without a hearing should identify the legal officer who made the decision.
  • Rules 59 and 60 (replacing current rules 61 and 62): replacing the requirement for the written records and written reasons of tribunal decisions to be signed by an employment judge with a requirement that they be approved by the presiding member.
  • Rule 98 (replacing current rule 99): allowing the Vice President, in addition to the President, in Scotland to be able to consent to the transfer of a case to Scotland.

The rules relating to fees in the current ET Rules have not been replicated in the ETPR. The national security rules of procedure and the equal value rules of procedure, currently contained within schedules 2 and 3 of the ET Regulations, are replicated as schedule 1 and 2 to the ETPR respectively.

The Courts and Tribunals Judiciary have produced a table comparing the ET Rules and ETPR, see: Comparison Table: The Employment Tribunal Procedure Rules 2024

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Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com

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The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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Mandatory Payrolling of Benefits from April 2026

  • Paul Webb,

  • 13th February 2024

Tax

The reporting of benefits in kind (BiK) has transformed over the past few years.  Gone are the days of paper based P11Ds, having been replaced by online reporting and the option of ‘payrolling’ BiKs through payroll systems.

On 16 January 2024, the government announced a package of measures to support its ambition to simplify and modernise the tax system, using the efficiencies of digital service to drive public sector productivity and to make the tax system simpler and fairer.

One of the measures announced was that the government will mandate the reporting and paying of Income Tax and Class 1A National Insurance Contributions (NICs) on benefits in kind, via payroll software from April 2026.

How it currently works

Currently, employers have two ways of reporting their BiKs:

  1. To report via P11D submission to HMRC, annually, before the deadline of 6 July following the tax year in which the employee received the benefit. Payment of Class 1A employer national insurance contributions (NICs) must be paid before 22 July (if paying electronically).  Using the information reported on the P11D, the employee pays the associated income tax through self-assessment, or it is collected by way of an adjustment to the employee’s tax code in the tax year after the benefits or expenses are received.

  1. To payroll benefits, allowing benefits to be reported in real time through pay as you earn (PAYE), meaning no mid-year changes to tax codes as tax is deducted throughout the year. Class 1A employer NICs still need to be reported on P11D(b) by 6 July after the end of the tax year.

One of the drawbacks of the traditional, or legacy, P11D submission is that an employee could wait over a year before seeing any tax related benefits they’re receiving being deducted from their pay.  Any change to an employee’s tax code being made so long after the benefit has been received often causes confusion.

Conversely, the payrolling of benefits allows for the tax on BiKs to be collected in real-time via the employee’s pay, reducing the confusion for the employee, however the system is currently not fool-proof and currently employer-provided living accommodation, and interest free/low interest (beneficial) loans cannot be payrolled.

What should employers consider now?

  • Less flexibility – employers will no longer have the option to payroll only certain BiKs or employees, with all benefits requiring to be reported.  This could have a direct cashflow impact on the employee.
  • Data management – employers will need to be able to easily access the reportable monthly data so they can provide it to the payroll department ahead of payroll processing cut-off dates. 
  • Increased PAYE risk – compulsory reporting of benefits increases the risk of monthly non-compliance and tax driven penalties.
  • Employee impact – the employee might experience a cashflow impact in 2026/27 when the mandatory payrolling of BiKs and PAYE code adjustments for the prior year overlap.
  • Employee communication – upcoming changes to the BiKs reporting system will need to be communicated to employees.
  • Payroll impact – can your current payroll software/outsources payroll provider cope with the change?  Will there be an increase in fees?
  • Process impact – it has yet to be determined how beneficial loans and employee-related accommodation benefits will be reported.  What will the impact be for leavers, if processed before payroll cut off?

Next steps

HMRC has confirmed that government ministers will not be putting the change out to public consultation, but instead will be liaise with key stakeholders such as the Chartered Institute of Payroll Professionals (CIPP), to discuss the forthcoming change at length, ahead of implementation come April 2026. 

CIPP are seeking to address the following key issues:

  • Ensuring calculation methods for employer-provided living accommodation and beneficial loans are updated and can be processed via payroll software.
  • Ensuring working sheets are available for employers and agents to help with calculating values to be used.
  • Being mindful of the changes required for payroll systems, and the time taken for software companies to implement the changes.
  • Pushing for real-time payments of Class 1A employer NICs, to eliminate the need for the P11D(b).

Let’s Talk

If you would like any further information on the changes and how they might affect you or your business, please do not hesitate to contact your usual Dixcart UK contact or enquire at hello@dixcartuk.com

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The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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Employment Law Case Update – January 2024

  • Anne-Marie Pavitt,

  • 26th January 2024

Employment Law

We welcome you back into the land of employment law cases with a few of cases from the back end of 2023. Learn how the ACAS Code plays a crucial role in handling whistleblowing cases, and its implications for compensation uplifts and the limitations of contractual terms. We take a look at how future discrimination claims can be waived when done correctly in a settlement agreement, and evaluate how timings should be considered when looking at constructive dismissal cases, particularly where the claimant has a long employment history and there have been efforts at negotiation.

Whistleblowing: Using the ACAS Code for grievances and compensation uplifts, and whether contractual terms can limit losses

In SPI Spirits (UK) Ltd & Anor v Zabelin [2023] EAT 147, the claimant was the Group Chief Investment Officer for the first respondent company (SPI Spirits). He agreed a 30% pay cut from April to June 2020 because of the effects of the coronavirus (COVID-19) pandemic on the business. When the first respondent said that the pay cut was being extended to at least 1 September 2020 the claimant raised, in an email of 4 June 2020 and at a meeting on 5 June 2020, various issues including alleging that the pandemic was being used as an excuse to cut pay and that employees were being intimidated. On 8 June 2020 the claimant had a telephone discussion with the second respondent (Shefler), the majority shareholder in the group, who suggested that the claimant should resign if he didn’t agree to proposed changes to bonuses. When the claimant queried why he should resign the second respondent dismissed him. The claimant brought claims including of automatic unfair dismissal and detriment on the grounds of having made whistleblowing protected disclosures (including regarding (a) the claimant’s pay; (b) the claimant’s 2020 bonus; (c) staff welfare; and (d) coronavirus pretence).

The outcome of the case was that the EAT confirmed that a grievance must be in writing for the ACAS Code on Disciplinary and Grievance Procedures to apply but, once that has occurred, if new grievances arise they do not each have to be put in writing for the Code to be engaged, unless there is a ‘material change’ in the nature or scope of the complaint or redress sought such that fairness requires it. In addition, the uplift to compensation for an employer’s failure to follow the ACAS Code also applies to awards made against individuals if the relevant individual was responsible for the failure. Finally, contractual terms limiting loss will not be upheld if they produce an outcome which would have the same effect as disapplying or limiting a statutory provision, according to the EAT.

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Equality Act: Unknown future claims can be waived in a settlement agreement if sufficiently particularised

In Bathgate v Technip Singapore PTE [2023] CSIH 48 the Inner House of the Court of Session held that the various protections for the employee built into section 147 of the Equality Act 2010 do not exclude the settlement of future claims so long as the types of claim are clearly identified and the objective meaning of the words used encompassed settlement of the relevant claim. Section 147 of the Equality Act 2010 allows claims for discrimination to be settled using a settlement agreement provided that the settlement agreement relates to the ‘particular complaint’.  Accordingly, a settlement agreement can relate to a future complaint if there is sufficient description of it in the claims waived.

There has been significant uncertainty for some time about whether or not future claims an employee might acquire against their employer but which have not yet arisen could, with the correct wording, be effectively waived as part of a settlement agreement. This decision by the Inner House of the Court of Session (the Scottish equivalent to the Court of Appeal) comes unequivocally to the conclusion that future claims can be waived in a settlement agreement so long as they are sufficiently identified in accordance with the requirements in Hinton v University of East London [2005] EWA Civ 532.

Whilst employers would be wise to consider including future claims in settlement agreements, those representing individuals may try to exclude future claims. However, it should be noted that the decision in this case may not necessarily be followed in England. While decisions from the Inner House of the Court of Session are often considered by employment tribunals and the Employment Appeal Tribunal (EAT) in England, they are not strictly binding, so caution should be exercised.

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Constructive Dismissal: Was resignation too slow to have been ‘the last straw’?

In Leaney v Loughborough University [2023] EAT 155, the claimant had been a university lecturer and warden of a halls of residence with over 40 years’ service at the University. A student had made a complaint against him in 2018, which he disputed and had led to disciplinary action and in turn a grievance being raised by the claimant. He subsequently resigned as warden in December 2019, and asked several times for a grievance appeal to be held. They told him several times to draw a line under the matter but the claimant persisted. On 29 June 2020, he was told that the university could not look at the issue any further. There followed a period of negotiation between solicitors but due to be back at work that autumn, the claimant was so anxious he was signed off sick by his GP on 10 September 2020, and then resigned with notice on 28 September 2020, thereafter claiming constructive unfair dismissal, alleging a cumulative breach of the implied duty of trust and confidence.

The claimant claimed the notification he had received on 29 June 2020 was the ‘last straw’. The tribunal held that he had affirmed the contract of employment during the three months between 29 June, and his resignation on 28 September 2020 because he should have tendered his resignation prior to this.

The EAT disagreed with the tribunal’s approach and remitted the issue of affirmation for reconsideration, holding:

  • that the tribunal’s focus should not necessarily be on how much time has passed when considering whether affirmation has taken place, but should take into account all the surrounding facts and circumstances should be weighed.
  • where there has been a period of delay then length of service should be taken into account in deciding whether the contract has been affirmed but it is fact sensitive. It is understandable that an employee with long service may take longer to consider their position (without necessarily having affirmed) before removing themselves from a secure job, but the surrounding context is vital and should be applied on an case-by-case basis.
  • a period of negotiation before resignation is relevant. Negotiations could be an employee’s attempt to give the employer the opportunity to ‘put things right’ before resigning and therefore such a delay may not necessarily amount to affirmation of the contract.

His claim was dismissed on the basis that, between the date of the last matter that could potentially be relied upon as a last straw, and the date of resignation, he had affirmed the contract. Having regard to the facts found, and the matters relied upon by the claimant as relevant to the question of whether there had been affirmation, the tribunal erred in its approach to affirmation. The EAT found the tribunal had focused incorrectly on things that did not happen (the Claimant did not delay his resignation because of student exams and did not state that he was working under protest), which, if they had happened, might have pointed away from affirmation. Instead, they should have honed in on what conduct there had been which might have amounted to affirmation. The EAT therefore remitted the matter to the same tribunal for fresh consideration of that issue, in light of the facts found, and, as necessary, the further issues to which the complaint gave rise.

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Further Information:

If you would like any additional information, please contact Anne-Marie Pavitt or Sophie Banks on: hello@dixcartuk.com

Back

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.

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