Employment law update: laws on the horizon – November 2023

UK employment law is an ever-changing landscape. Whilst this brings about opportunities for organisations and their staff to beneficially adapt and grow, it can also make it difficult for them to keep up to date with the frequent changes.

Several Acts have received Royal Assent recently and case law developments are emerging frequently, all of which has the potential to change employment law as we know it.

We summarise some of these Acts and developments below, for the purposes of providing our readers with a head-start on important employment law changes.

Flexible working

The Employment Relations (Flexible Working) Act 2023 received Royal Assent on 20 July 2023. The Act brings several changes intended to make flexible working requests easier and more accessible to employees, some of which include:

• An employee will be able to make two requests in a twelve-month period
• An employee will not be required to set out the impact of their changing work pattern on the employer
• An employer must respond to a request within two months – currently three months
• An employer will have to consult with an employee before rejecting a request.

It is also anticipated that the government will introduce the right to request flexible working as a “day one right” via secondary legislation.

ACAS will also be replacing the existing 2014 code, introducing a new statutory code of practice on flexible working that provides guidance and recommendations to employers. It is anticipated that these changes will be implemented in July 2024. Therefore, employers should begin to review their flexible working policies and procedures in readiness for ensuring compliance with the new legislation.

Paternity rights

The government has published its “Good Work Plan” consultation which proposes changes to existing paternity leave legislation. It is intended that the changes will provide greater flexibility and encourage fathers to take paternity leave.

The government intends to make statutory paternity leave more flexible for employees by making the following changes:

• Enabling statutory paternity leave to be taken in two separate one-week blocks – currently only one block of either one week or two weeks leave may be taken
• Leave entitlement will be able to be taken during the first year following the birth or adoption of their child instead of within the first eight weeks
• Notifying employers of intention to take leave will be changed, in that the father or partner will only be required to give four weeks’ notice before each period of leave, although an employee will still be required to generally notify the employer of their intention to take statutory paternity leave 15 weeks prior to the expected week of childbirth or placement of adoption.

The government has advised these changes will be introduced in “due course” but has not provided a timeframe. Employers should be mindful of these upcoming changes and be prepared to amend their paternity policies and procedures accordingly.

Non-compete clauses

Typically, post-termination restrictions are imposed by an employer to restrict an employee for a period of time following the termination of their employment. An employer is only permitted to impose such restrictions to the extent that doing so is deemed reasonably necessary to protect the legitimate interests of the business.

In the government paper “Smarter regulation to grow the economy,” the government has announced its intention to restrict the term of a non-compete clause within employment contracts to three months. Under current legislation, a non-compete clause can legally impose a restriction of longer than three months and potentially even beyond 12 months.

The government appears motivated to limit non-compete restrictions to encourage competition and growth of the economy. However, despite this motivation, the proposed changes may result in employers seeking to prevent employees from engaging in competitive activity in other ways, by, for example, placing more reliance on confidentiality, notice period and garden leave provisions.

The government has advised that legislation to implement the three month limit on non-compete restrictions will be actioned “when Parliamentary time allows.”  Whilst there is therefore currently no timeframe, employers may wish to consider updating their employment contracts, particularly for senior employees or those employees who pose a particular risk, to provide more robust provisions to protect the needs of their business in advance of this change coming into force.

The right to predictable working patterns

The Worker (Predictable Terms and Conditions) Act 2023 received Royal Assent on 19 September 2023. It is anticipated the act will come into force in autumn 2024. The act will give certain workers, employees and agency workers a statutory right to a predictable working pattern.

The government’s intention is to “redress the imbalance of power between employers and workers in atypical work…” and enable workers to have more control over their working patterns.

It is anticipated the qualifying period for eligibility to make a request will be 26 weeks’ service and a worker will be able to make up to two applications for a more predictable working pattern in a 12-month period. In addition, the regulations will set out the remedies available if an employer is in breach of the new law, which is likely to be similar to the flexible working regime where a specific number of weeks’ pay is awarded.

Similar to a flexible working request, an employer will have six statutory grounds to refuse a request which include insufficient work during a proposed period or an inability to meet customer demand.

ACAS is currently at the consultation stage of preparing a new statutory code of practice to provide guidance on how requests should be made, handled and considered by an employer, which is due to end on 17 January 2024. ACAS is likely to recommend that employers have appropriate policies and procedures in place to handle and consider requests for predictable working patterns.

Case law developments

Virgin Active Ltd v Hughes

The Employment Appeal Tribunal (EAT) explored the purpose and role of comparators when considering if discrimination had taken place.

The EAT emphasised that the circumstances between the claimant and the comparator must be examined. Where there are considerable differences between the claimant and a comparator, the less likely it is that difference of treatment suggests discrimination has occurred.

The EAT held the Employment Tribunal (ET) had erred in its findings on race discrimination and has remitted the race discrimination claim back to the ET.

Steel v Spencer Road LLP

The High Court held that a bonus clawback did not amount to a restraint of trade or a penalty clause. An employee, S, received a discretionary bonus of £187,500 in January 2022, but subsequently resigned in February 2022. His contract stated that his yearly discretionary bonus would have to be paid back if he gave or was served notice within a certain period of being paid the bonus. S’ employer served him with a statutory demand to return the bonus, which he sought to dispute arguing that it was an unreasonable restraint of trade. While the High Court acknowledged that the contractual provisions were a disincentive to S resigning, that did not mean that they were a restraint of trade.