Employment Eye February 2023

Welcome to our latest round up of employment law developments and what they mean for employers.

Dismissal and Re-engagement

Last month, the Government published a draft Code of Practice on Dismissal and Re-engagement (the “Code”). Once implemented, the Code will mean that employers will have to follow a more robust process when seeking to change employment terms and conditions. In particular, dismissal and re-engagement will still be possible, but only as a last resort.

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Flexible Working Reforms: becoming the default

If the Coronavirus pandemic has taught us one thing, it’s that the ways in which we approach our working lives have evolved. Here we explore the legislative changes being proposed following the government’s response to its consultation on reforms to the flexible working regime, and what this means for the future of the workforce.

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Industrial Action and Key Considerations for the Public Sector

Industrial action (and in particular strikes) has been a key consideration for public sector employers both at the end of last year and beginning of this year.

As well as employers having to re-familiarise themselves with the complex existing law in this area, we have also seen changes to the law as well as further proposed changes.

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Dismissal and Re-engagement

Last month, the Government published a draft Code of Practice on Dismissal and Re-engagement (the “Code”). Once implemented, the Code will mean that employers will have to follow a more robust process when seeking to change employment terms and conditions. In particular, dismissal and re-engagement will still be possible, but only as a last resort.

What is “dismissal and re-engagement”?

Dismissal and re-engagement, also known as “fire and rehire”, is when an employer implements changes to employment terms and conditions by dismissing an employee and then seeking to re-engage them on new (usually less favourable) terms.

This practice has come under particular scrutiny in the past year, following the dismissal of approximately 800 members of staff without consultation by P&O Ferries in early 2022. It was this which prompted the Government to announce its intention to publish the Code and to instruct Acas to publish guidance on the topic.

Acas published “Making changes to employment contracts - employer responsibilities” late last year. The advice highlights the  damage that dismissal and re-engagement can cause to staff morale, trust, productivity and working relations, as well as potentially leading to industrial action. The advice notes that, during the COVID-19 pandemic in particular, threats of dismissal were used to apply pressure to staff to agree to less favourable terms and conditions. 

The Government published the Code on 24 January 2023. The aim of the Code is to “crack down on unscrupulous employers that use controversial dismissal tactics”, and to ensure that dismissal is a last resort.

Consultation

At the same time as publishing the Code, the Government launched a consultation, seeking views on the Code.

The consultation can be found here and is open until 28 April 2023.

The Code

The Code will apply where the employer:

• considers that it wants to make changes to its employees' contracts of employment; and
• envisages that, if the employees do not agree to those changes, it might dismiss them, and either offer them re-employment on those new terms, or engage new employees or workers to perform the relevant roles on the new terms.

The Code will not apply where the reason for any potential dismissal is redundancy.

It also sets out the step-by-step process which employers should follow in these circumstances, in order to explore alternatives to dismissal, including engaging in meaningful consultation with trade unions, employee representatives and / or affected employees as appropriate.

In particular, the Code suggests that employers should undertake an analysis of why the proposed contractual changes are needed, including (but not limited to):

• the objectives it is seeking to achieve;
• the negative consequences of imposing the changes with the employee’s agreement;
• whether its plans carry any risk of discriminatory impacts; whether there are any alternative ways of achieving the same objectives.

Does this mean the end of “dismissal and re-engagement”?

The Code does not prohibit dismissal and re-engagement.

However, it is clear that imposing contractual changes without the employee’s agreement (including any dismissal and re-engagement) should be a last resort, and only after it has undertaken the steps set out in the Code and been unable to agree the proposed changes. It also cautions against using threats of dismissal to put pressure on staff to agree proposed changes to contractual terms.

There will be no standalone cause of action for failure to follow the Code. However, failure to follow the Code could result in an uplift of up to 25% of compensation awarded in a relevant claim.

What does this mean for my organisation?

Your organisation may already be doing many of the steps set out in the Code. In this way, the Code may not mean significant changes to your existing procedures.

Nevertheless, we would recommend that you review your existing procedures and consider whether changes are needed to ensure compliance with the Code (once introduced).

If you would like advice on whether your existing procedures are likely to be compliant with the Code, or if you think you would benefit from training on how to go about changing terms and conditions, please contact the team, who will be happy to help.

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Flexible Working Reforms: becoming the default

At long last, the government has given the green light to introduce reforms to The Flexible Working Regulations 2014 (“Regulations”). Just over a year after launching a consultation seeking views on various proposals, the government published its response on 5 December 2022 announcing a number of proposed changes to the current regime. The majority of these have now been captured in a Private Members’ Bill - The Employment Relations (Flexible Working) Bill) - which is currently making its way through parliament. The ‘day one’ right referred to below requires secondary legislation which we understand will be introduced separately to the Bill, when parliamentary time allows.  

What are the proposed changes?

1. Making a request for flexible working a ‘day one’ right, removing the current 26 weeks’ service requirement. NB this is only a right to request flexible working, not an automatic entitlement to it;
2. Broadening the requirement for employers to consult with employees about other options they can explore before denying a request;
3. Allowing employees to make two requests for flexible working in any 12 month period, instead of the current limit of one;
4. Reducing the obligation on employers to respond to any request within a two-month timeframe, instead of the existing three months; and
5. Removing the burden on the employee to set out the effects of their request on the employer, with a view that this will become the joint responsibility of the employer and employee to explore.

The government notably also made commitments to retain the current list of business reasons for refusing a flexible working request, develop guidance to improve understanding and awareness around flexible working and launch a call for evidence to better understand whether people were aware of informal or time-limited flexible working requests (which are already permitted under the Regulations), as well as the extent to which they operate in practice.

Why are these reforms happening?

Reform of the Regulations gained momentum against the backdrop of the Coronavirus pandemic necessitating changes to almost every aspect of our lives, meaning that expectations have shifted in respect of how, when and where people work. The new laws are part of the measures being pursued by the government whose aim is to ‘make flexible working the default’.

The majority of responses to the consultation were supportive of the changes, with the Chartered Institute of Personnel and Development running its #Flexfrom1st campaign championing better workforce practices. There will of course be industries and roles whereby flexible working is not a reasonable or practical option, but the general consensus is that it makes real business sense to jump on the bandwagon favouring flexible working in an ever-changing workforce landscape.

What does this mean for employees and employers?

Although legislative changes will not be immediate, they will significantly alter the way in which both employees and employers approach flexible working. The current Acas Code of Practice (on handling in a reasonable manner requests to work flexibly) still provides useful guidance for employees when considering making a flexible working request. They should monitor any future guidance for additional ‘best practice’ tips.

For employers, we recommend they review and update existing policies and practices and consider how any changes will be communicated to staff. They should also ensure that HR staff are suitably trained on the requirements, including any changes to the Regulations that will require ongoing compliance.

Commentary

Overall, there was resounding support throughout the consultation for a number of the proposals, including the requirement to consult with employees. However, one thing that remains unclear is what the sanction will be for failure to consult under new regime. Will employment tribunals be able to award an Acas uplift or something else to cover any negative impact on employees? What if the employee refuses to participate in consultation, how far does an employer’s obligation go?

The shortening of the employer’s response time to two months has also been largely applauded, especially given the exposure to criticism when reasons for refusal take three long months to identify. But it does beg the question as to whether existing processes are fit for purpose in undertaking timely reviews, consultation and decision making (emphasising the need to review those processes now!).

Furthermore, removing the burden on employees to set out the effects of their request seems counter-intuitive as it also removes the requirement for them to give serious thought as to what they are asking for, even though they will need to do this anyway as part of any consultation. Not only is there no requirement to provide an in-depth analysis of the effects at present, nor can a request be invalidated due to deficient wording on this point, but removing the window for reflection entirely may encourage greater (possibly unrealistic) expectations.

Lastly, there has been some doubt as to whether allowing immediate requests for flexible working creates operational challenges and triggers a long chain of legal obligations (more onerous to the employer) where an individual may not yet have worked a single day in the role nor have had their suitability assessed. Nay sayers believe this will negatively impact on the relationship before it has even started and induce higher levels of early grievances or sickness absence (if requests are refused). Similarly, it is presumed that the protections under the Employment Rights Act 1996 from being subjected to a detriment or dismissal as a result of making a flexible working request will also apply from ‘day one’. This means that employers will have to justify decision making during what would ordinarily (and currently) be a six month probationary period prior to any permitted requests to vary the contract. Having said this, there remains significant support to move forward with the reforms, largely in favour of shifting the perception of flexible working being ‘earned’ rather than becoming ‘the norm’. Let’s also not forget about the possibilities it brings for employers, with wider recruitment potential and in particular the likelihood of attracting those re-entering the workforce with a need to work flexibly.

If you would like to discuss issues arising out of this article or the employment implications of flexible working more generally please contact a member of our Employment Team.

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Industrial Action and Key Considerations for the Public Sector

Industrial action (and in particular strikes) has been a key consideration for public sector employers both at the end of last year and beginning of this year.

As well as employers having to re-familiarise themselves with the complex existing law in this area, we have also seen changes to the law as well as further proposed changes.

What is new?

Last year we saw the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 come into force which enabled employers in England, Scotland and Northern Ireland to use agency workers to perform the duties normally performed by striking workers or to perform the duties normally performed by another worker who has been reassigned to perform the duties of a striking worker. This received considerable challenge from unions and is currently subject to a judicial review.

A new bill (the Strikes (Minimum Service Levels) Bill) has also been put forward by the Government which would grant the Secretary of State powers to make minimum service regulations. This could set minimum service levels required during strikes in certain sectors. This bill has been met by opposition from unions and further challenges are to be expected.

What are the key consideration for employers with employees striking?

When looking at the existing law, the following are a number of key considerations for employers when planning for and managing industrial action within their workforce:

Protections for those striking

• It is important for employers to understand what protections from dismissal there may be for employees who strike. This is particularly complex where you have different unions balloting in the same sector (and even in relation to the same employer) regarding the same issues and some unions have received the required numbers to strike and others haven’t.
• The law on this area is not straight forward. Assuming at least some of those taking part in the strike are members of a union, the protection for individual employees striking will depend on whether the union who has authorised the strike conducted a lawful ballot and whether the employee in question is a member of that union, is a member of another union or is not a member of a union at all.
• It may surprise employers that employees who strike and are not part of any union often have the same protections as those who are striking as a result of their own union authorising the strike following a lawful ballot.
• Legal advice should be sought for employers considering dismissal where the individual is or has been engaging in industrial action.

Managing Absence

• Given that in most cases employees will not be paid for days during which they strike (save where partial performance has been agreed), employers are likely to want to be particularly vigilant in dealing with sickness absence at the time of a strike. There is the heightened possibility of misuse of sickness absence procedures during the time that a strike is happening.
• Some employers have considered introducing stricter requirements in terms of certification of absences whilst industrial action is ongoing and providing guidance to managers on how to deal with sickness absence during a strike.

Picketing

• Many questions we get from employers focus on how best to plan for picketing.
• The Trade Union and Labour Relations (Consolidation) Act 1992 contains some laws on the purpose of picketing and the role of the picketing supervisor. However, more extensive best practice guidance in this area can be found in the code of practice on picketing. This contains helpful guidance (which is admissible in court in evidence) on, for example, the numbers of people recommended at any one entrance or exit and the care that should be taken to ensure picketing does not cause distress, hardship or inconvenience to members of the public.

Commentary

It is apparent that whilst the Government has and is taking steps which could reduce the impact of strikes or make it harder for certain employees to strike, these are certainly open to challenge by the unions and careful attention should be paid to any updates on challenges being made. Many public sector managers and leadership teams feel conflicted at this time between their need to prioritise the wellbeing of their service users and supporting their staff who feel undervalued or unable to makes ends meet.

With the focus for most public sector employers being on the strikes currently taking place or being proposed, employers’ plans for the managing of industrial action are likely to include consideration of how best to manage picketing, support for managers in managing staff absences at the time of strikes and seeking advice where needed on the legal protections striking employees have.

If you need support in this area please contact Sarah Wimsett or Heather Stickland.

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If you would like advice or assistance in relation to any workforce issues, or indeed any of the topics mentioned in this newsletter, please get in touch with a member of our Employment Team.