HomeInsightsWorked Up, your monthly employment law lowdown – December 2022

Welcome to the final Worked Up of 2022!

What a year it’s been! With prime ministers swapping more often than the royal guard, a new monarch in power and a record-breaking heatwave, 2022 has undoubtedly been a year of change and uncertainty. With 2023 just around the corner, here’s hoping that we see some of the strength and stability that was promised all the way back in the 2017 general election.

While some of us might be willing to do a bushtucker trial or two to escape the colder weather, others sadly aren’t feeling the heat as energy prices soar and inflation continues to rise. Perhaps in an effort to avoid the controversy that came with September’s mini budget, the Government’s latest Autumn Statement was less ground-breaking than its predecessor. There were (perhaps fortunately) no major surprises in the statement for employers, though employers should bear in mind the usual increases to the national minimum wage and national living wage next April, together with the typical annual increases to the caps on weekly pay for the purposes of redundancy payment calculations which are also due to be announced soon…

In other news, a global survey by software company Sage found that 73% of HR leaders think the long-standing title of “Human Resources” is outdated. Alternative titles floated by HR professionals in response to the survey include “People and Culture” and “People Function” – we like “Protectors of the Employment Peace” (or PEP for short) ourselves, but what do you think? Let us know your thoughts in our poll.

In this month’s edition, we cover why employers shouldn’t worry too much about former employees who don’t even attempt to mitigate their loss, consider whether intention has any bearing on employment status, discuss what employers could do to help employees struggling with the cost of living and explain concessions to the Immigration Rules and why they might be more popular with some businesses than others. We also report on some ‘hot off the press’ upcoming changes to laws related to flexible working requests.

If you would like to discuss any of the below updates, please do get in touch. Alternatively, if you would like to receive these updates directly to your inbox, please subscribe here.

Hilco Capital Ltd v Denise Harrington: [2022] EAT 156

The Employment Appeal Tribunal (“EAT”) upheld the appeal of employer Hilco Capital Limited, reiterating that claimants must have evidence to support their reasons for not seeking new work to mitigate their losses.

An employment tribunal found Ms Harrington had been unfairly dismissed for whistleblowing. At the remedy hearing, around three years after her dismissal, Ms Harrington admitted that she had not applied for any jobs following her termination. She claimed it would have been futile to do so, as any potential employer would not have hired her due to the stigma of being a whistleblower and so she intended to wait until the tribunal findings were public to apply for roles. In general, employment tribunals reduce the compensatory award given to a claimant who unreasonably fails to mitigate their losses (such as by looking for a new job after their employment is terminated). However, the tribunal, in this instance, held that Ms Harrington had not acted unreasonably and awarded her £151,026 in total compensation.

Hilco Capital Limited appealed this decision to the Employment Appeal Tribunal, which ultimately found against Ms Harrington. The fact of Ms Harrington’s whistleblowing had not been in the public domain prior to the tribunal’s decision on liability, so there was no evidence to suggest that any employer she applied to would have been aware of it and therefore able to victimise her. Further, as Ms Harrington had not even applied for jobs, let alone interviewed for them, there was no evidence of any actual experience either. The EAT held that the decision therefore went against the established principle that there must be evidence of stigma in order for stigma damages to be awarded and referred the compensation matter back to the tribunal for a fresh assessment.

This decision hopefully provides some comfort to employers, who won’t be on the hook for costs where a former employee has unreasonably failed to mitigate their loss.

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Mr Lee Richards v 1) Waterfield Homes Ltd 2) Unity Build and Repairs Ltd: [2022] EAT 148

In another appeal, the EAT held that the parties’ intention as to how an individual might be engaged isn’t necessarily determinative of employment status.

The tribunal had initially found that Mr Richards, a carpenter, was self-employed, having been engaged by the respondent company using the CIS tax scheme under which contractors “knew they would be treated as self-employed”. However, despite the judgment alluding to a variety of other factors which suggested that the “relationship was close to an employment one”, the tribunal didn’t make any findings regarding these factors. Mr Richards appealed on several grounds, the main one being that the Employment Tribunal erred in law in treating the question of tax status as determinative.

The EAT upheld Mr Richards’ appeal, finding that Mr Richards worked standard hours from Monday to Friday and solely for the Respondent – factors which pointed towards an employer/employee relationship. Further, the EAT found that the only factor not pointing to employment status was the parties’ tax arrangements under the CIS scheme, which pointed to the parties’ apparent intention for the relationship to be one of self-employment. As such, the EAT determined that the case was not finely balanced, whereby the parties’ apparent intention could be used as a “tipping point” to determine status. Accordingly, the EAT held that Mr Richards was an employee and referred the case back to the tribunal for a substantive hearing.

This decision is an example of tribunals looking at all the factors of the working relationship and that the parties’ stated intention, while persuasive, is by no means conclusive. The EAT’s judgment is a reminder that, even if there is an agreed intention that an individual is being engaged as a self-employed contractor, employers should ensure the reality of the working relationship reflects this intention to avoid creating a potential status risk.

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It’s the festive treat you’ve all been waiting for – the government’s response to last year’s flexible working consultation is in! While the response doesn’t contain any draft legislation it does outline a number of intended updates, many of which make the process more onerous for employers. Potentially the most impactful of these updates is that employees will have the right to request flexible working from day one of their employment, rather than requiring 26 weeks’ continuous service as they do now. Employees will also be allowed to make two requests in a 12-month period instead of just one, to reflect the fact that circumstances may change within that timeframe, and employers will have two months (and not three) to respond to such requests.

While there will be no change to the eight reasons for which an employer can refuse a flexible working request, employers will have a new duty to discuss alternatives to the request – however, it’s currently unclear whether this will be a statutory duty or informal guidance. Meanwhile, employees will no longer have to set out a business case on how their flexible working might impact the employer – rather, employers should engage with them jointly to discuss such issues.

It sounds a lot to take on, although it may not change too much as most flexible working requests are informal these days and thankfully many employers are coming around to the idea of different ways of working. Also, as no draft legislation is lined up yet, the changes aren’t exactly imminent. Having said that, the government has announced support for a Private Member’s Bill allowing employees to make two requests in 12 months and reducing employers’ decision times to 2 months, so it’s possible those particular changes will be coming in sooner rather than later.

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With inflation at a 30-year high, mortgage and rent costs growing and (according to advisory and solutions company WTW) one-third of employees now living paycheck to paycheck, people across the UK are feeling the cost-of-living crisis now more than ever. As the crisis looms heavy over many, employment benefits are becoming an ever more critical factor for employee retention. In a recent survey from the Blackhawk Network, three-quarters of workers reported that they are considering new employment to find better financial support and 85% believe that they would be more loyal to employers who support them during the crisis.

So, how can employers help employees deal with this crisis?

Well for those who are not able to increase salaries there are various employee benefits which can be administered efficiently and relatively cheaply. For example, some employers may provide interest-free loans for transport or the option of selling-back annual leave. Others may take a more administrative approach and look to pay staff expenses quickly to avoid employees being out of pocket, assist with facilitating carpools to help employees manage rising transport costs or organise financial awareness courses. Other options include providing support for those who may need it most by offering subsidies for childcare or considering additional flexible working options.

Whatever route employers want to explore, this issue is unlikely to go away even after the cost-of-living crisis (hopefully) draws to a close. With calls from the UN Special Rapporteur to add “povertyism” to anti-discrimination law and an increased focus on obtaining data on employees’ socio-economic background, it’s a distinct possibility that poverty will be the next focal point for UK employees to consider and address. While a one-size fits all approach is unlikely to be appropriate for employers and their employees, employers should consider what benefits it can reasonably offer during this trying time.

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An aspect of UK immigration law which might drift under the radar for many is that of concessions operated outside the Immigration Rules. The Immigration Rules govern the vast majority of routes to live and work in the UK; however, there are various concessionary policies that exist.

Two examples relate to the maritime industry. The first is the “Offshore wind workers Immigration Rules concession 2017”, and the second is “Offshore well boat workers: Immigration Rules concession 2022”. In both cases, these concessions permit work within UK territorial waters without needing to engage the normal methods of securing a work visa, such as the “Skilled Worker” route. An Offshore Wind Worker is an individual joining a vessel engaged in the construction and maintenance of offshore wind projects. A Well Boat Worker is an individual joining a fishing vessel with a well or tank to store and transport live fish. In this case, the boats are used by salmon farms to transport products, and the work takes place within territorial waters.

Concessions carry a degree of controversy since, by their nature, they offer an advantageous route to engage migrant workers in the UK to a select few organisations. In the case of the Offshore Wind Workers concession, this has been repeatedly subject (since 2017) to a yearly deadline, by which time it was said the concession would end. Yet the government has repeatedly extended the concession. The most recent extension came in October this year, just days before the concession was due to end. The concession has now been extended to April.

The precise reasons for the repeated extensions are not known, but fundamentally they will relate to an inability of the organisations involved to secure crew from the UK workforce or using one of the main visa routes. Obstacles to utilising a skilled worker visa might include the relatively onerous financial burden placed on employers and the English language requirement. Yet recent news reports suggest there may be some discontent at the use of the concession by some organisations.

Concessionary policies also do not find favour, understandably, with other types of business which are suffering labour shortages but aren’t in the lucky position of a bespoke concession to assist them. By their nature concessions are unfair since they operate outside the general rules applied to all and lack transparency. It is not clear what persuades the government to act in some cases but not others. Perhaps next year will herald the end of the approach. Arguably, the government’s ability to take a pragmatic temporary approach is helpful in some cases to deal with unforeseen and complex factors not catered for within the Immigration Rules. Still, when such concessions become permanent fixtures of the system, then legitimate questions arise.

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