As we began 2023, the 2019 promise of a new Employment Act was a dim and distant forgotten pledge, instead we have had a flurry (a snow storm may be a better description) of Private Members Bills on specific aspects of employment and equalities law adopted by the Government. Many have now become law though their substantive provisions will only be brought into force via secondary regulations "when parliamentary time allows". And, of course, we have the 'biggie' – the Retained EU Law (Revocation and Reform) Act 2023. While we are no longer facing a bonfire of all EU-derived employment legislation, it is not as simple as saying 'no change'.

So where are we now?

A Brexit Clearout?

  1. The Retained EU Law: Revocation and Reform
  2. Working Time & Holiday Pay
  3. TUPE

Family Friendly

  1. Protection from Redundancy
  2. Carers
  3. Neonatal
  4. High level reform not on the cards
  5. Paternity leave

Flexibility

  1. Flexible working requests
  2. Predictable working requests

Harassment

  1. In employment
  2. In public

Pay & Benefits

  1. Pensions Auto-enrolment
  2. Allocation of tips
  3. NMW
  4. Occupational Health

Business Protection

  1. Non- compete clauses
  2. Fraud

Industrial Relations

  1. Industrial action
  2. Fire & Rehire Statutory Code

Reporting

  1. Non-financial reporting
  2. Ethnicity pay gap reporting
  3. Whistleblowing framework

Data

  1. Artificial Intelligence
  2. ICO Data Protection Guidance

A Brexit clear out?

1. Retained EU Law: Revocation and Reform

On 26 June 2023, the Retained EU Law (Revocation and Reform) Act 2023 known as 'REULA' became law although most of its impact will not come into force until 1 January 2024.

As originally drafted, the vast majority of EU law was to be automatically revoked at the end of 2023, unless a statutory instrument was passed to preserve it. In the final version of the Act, that position has essentially been reversed. Now, everything will continue to be retained (at least for the moment) unless specifically revoked.

In terms of employment legislation, only three Regulations are going which relate to posted workers and European Cooperative Societies (which have been irrelevant since the end of the Brexit transition period anyway). The Government has expressly confirmed that it does not intend to reform family leave rights, 'atypical' workers' rights, and information and consultation rights, save for a small change in relation to Transfer of Undertakings (Protection of Employment) Regulations (TUPE). In addition to the relatively small proposed change to TUPE, significant changes are proposed to aspects of the Working Time Regulations.

However, the REULA 2023 remains controversial with a significant degree of uncertainty remaining due to:

  1. Wide-ranging ministerial powers to unilaterally restate, revoke, replace or make alternative provisions for EU derived legislation without Parliamentary oversight using secondary legislation. From 1 January 2024, what is currently referred to as Retained EU law will be instead known as Assimilated law.
  2. The general principles of EU law will no longer apply. For example, Article 157 of the Treaty on the Functioning of the European Union is frequently relied upon in large-scale equal pay cases. The Art 157 "single source" test is seen as a simpler, broader test for women to establish the right to compare with a cross-establishment comparator than the domestic "common terms" test. Unless saved by new domestic legislation before the end of the year (the Government has indicated that it will do so), the Art 157 principle will no longer apply in the UK.

In addition, case law will be impacted as:

  1. Currently, when the courts interpret legislation, retained EU law has priority over conflicting UK law passed or made before the end or 2020 (the transition period) but not over UK law passed or made afterwards. From 1 January 2024, the positon in relation to pre-2020 laws is being reversed so that where EU and domestic law conflict, domestic law takes priority, subject to exceptions notably the General Data Protection Regulation (GDPR).
  2. The general principles of EU law will no longer apply; and
  3. The UK courts and tribunals will have greater discretion to depart from retained EU case law (to be known as Assimilated law), including the ability for tribunals to refer questions on whether to depart to the higher courts.

These may lead to a potential increase in litigation with lengthy appeals as claimants and respondents seek to overturn the effect of long-standing embedded EU case law.

2. Working time & holiday pay

On 12 May 2023, the Department for Business and Trade (DBAT) published the 'Consultation on reforms to the Working Time Regulations, Holiday Pay, and the Transfer of Undertakings (Protection of Employment) Regulations'.

The majority of the consultation relates to changes it proposes to make to the Working Time Regulations 1998 (WTR) – the poster-child for complaints that EU regulations undermine flexibility, increase costs of hiring staff and cause unnecessary red-tape.

The Government is consulting on proposals to:

  1. Reform the WTR record keeping obligations by clarifying that employers do not have to record daily working hours of their workers for WTR purposes as held by the Court of Justice of the European Union (CJEU) shortly before Brexit.
  2. To simplify holiday pay for employers, the consultation makes the following linked proposals:
    1. Creating a single annual leave entitlement of 5.6 weeks.
    2. Clarifying the minimum rate of holiday pay and what counts as "normal remuneration".
    3. Changing the method for calculating leave in a worker's first year of employment to remove an anomaly in the WTR.
    4. Removing the exemption allowing carrying over of leave due to COVID-19 as no longer needed.
  3. Allow rolled-up holiday pay.

As for clarifying the minimum rate of holiday pay, currently reg 13 leave must be paid based on 'normal remuneration' covering some additional payments such as regular overtime and commission following much EU case law. However, reg 13A leave is only required to be paid in in accordance with ss221 to 224 Employment Rights Act 1996 - for those with normal working hours and whose pay does not vary with amount of work done this is simple basic pay without any additional bonuses or overtime. The Consultation recognises that requiring employers to pay 'normal remuneration' for all 5.6 weeks could cause significant additional costs, while reducing the minimum to basic pay would have a financial impact on workers. The Consultation does not contain any concrete proposals for how holiday pay should be calculated, simply that defining 'normal remuneration' in legislation would be 'significantly challenging' and asks for views from employers and workers on how holiday pay should be defined. There is no easy or obvious answer here.

While no concrete proposals for how holiday pay must be calculated generally are set out, proposal 3 does propose making rolled-up holiday pay lawful. Rolled-up holiday pay arrangements provide that a specific part of a worker's wages represents holiday pay. As payment in respect of a period of holiday is spread throughout the year, the worker is then paid nothing when they physically take the holiday. The Government is proposing allowing rolled-up holiday pay to be paid at 12.07% of pay, as this is the proportion of statutory annual leave in relation to the working weeks of each year. This will provide significant simplification for calculating holiday pay in relation to casual/irregular hours workers.

There is also a second Consultation to take account of: the 12 January 2023 'Consultation: Calculating holiday entitlement for part-year and irregular hours workers' on other reforms to holiday entitlement for workers who work only part of the year or irregular hours.

This earlier consultation deals with how annual leave accrues for part-year and irregular hours workers as opposed to how that leave should be paid. The proposed change is that workers only accrue leave in proportion with the total annual hours they work. For part-year workers, the annual holiday allowance would be based on hours worked in the previous 52 weeks (including weeks not worked) x 12.07% and for agency workers based on 12.07% of the hours worked at the end of each month of an assignment.

The proposed changes will hopefully provide some much needed clarity and simplification, particularly around holiday pay for those with irregular hours.

  1. Easy amends:

    The amendments around record keeping, accrual during the first year of employment and removal of the COVID-19 provisions should be straight forward.

  2. "Do-able" amends Encapsulating years of case law as regards the carry over exceptions and what counts as "normal remuneration" while challenging is doable. As for amending the rules on accrual of holiday entitlement for part-years workers and allowing the use of rolled up holiday in some cases, these will be a bit more challenging but hopefully still doable and a welcome simplification.
  3. A step too far? The Government appear to want to avoid any increase costs for employers while at the same time not reducing holiday pay entitlement for workers. A single holiday "pot" will be welcomed simplification. However achieving this in a way that will not see an increased cost to all employers nor a reduction on holiday pay for all workers will be very difficult indeed. There will inevitably be some "winner" and "losers". To have this in place for the new year may be a step too far.

Change is coming. As for the Government's list of proposals, the phrase "the best laid plans of mice and men" springs to mind. It is a big ask to have amending legislation in place for 1 January 2024 for all of the above.

One to watch!

3. Transfer of Undertakings (Protection of Employment) Regulations (TUPE)

As for TUPE, the 'Consultation on reforms to the Working Time Regulations, Holiday Pay, and the Transfer of Undertakings (Protection of Employment) Regulations' proposal relates to information and consultation where a small number of employees are being transferred.

Currently under the Transfer of Undertakings (Protection of Employment) Regulations 2006, micro businesses with fewer than ten employees may inform and consult affected employees directly if there are no existing appropriate representatives in place (for example, if there is no recognised trade union). Larger businesses, however, are required to arrange elections for affected employees to elect new employee representatives if they are not already in place, which can add to the complexity of the TUPE transfer process. The Government is proposing to remove the requirement to elect employee representatives for the purpose of TUPE consultation for:

  1. Businesses with fewer than 50 employees irrespective of the size of the transfer; and
  2. Businesses of any size involved in a transfer of fewer than ten employees.

These changes simply extend the current exception for micro-businesses and in the latter case will most likely apply to small service provision changes such as outsourcing part of a function. In both situations, businesses meeting these criteria will be able to consult directly with employees, but only where no existing employee representatives are in place. If employee representatives are already in place, then the employer would still be required to consult with them.

While there are no other changes are being proposed to TUPE, the Consultation does make a general call for how the TUPE regulations 'could be improved' beyond these proposals.

These changes are expected to come into force on 1 January 2024.

Family Leave

On 24 May 2023, three new Acts were passed that will give parents and unpaid carers new protections at work. All three new Acts will require secondary legislation to bring the provisions into force "in due course" with some significant detail awaited.

4. Protection from redundancy

The Protection from Redundancy (Pregnancy and Family Leave) Act 2023, allows for the extension of existing redundancy protections (priority for suitable alternative employment) while on maternity, adoption or shared parental leave to also cover pregnancy and 'a period of time' after a new parent has returned to work.

In July 2019, the Government Consultation Response proposed extending protection from the date an employee notifies the employer of her pregnancy until six months after the end of the leave period. However, it is understood that the 'up to six months after' is still 'under consideration'. Also 'under consideration' is that regulations will impose a minimum threshold, so that only those who have taken six weeks of qualifying leave or more will qualify for the post return extended protection.

As for implementation 'in due course', this is not expected to be before April 2024 (at the earliest) possibly April 2025.

5. Carers

The Carer's Leave Act 2023 creates a new statutory entitlement to at least one week of unpaid leave per year for employees who are caring for a dependent with a long-term care need (not ordinary childcare needs). The period of leave entitlement and blocks in which it may be taken is left to secondary legislation.

As for implementation 'in due course', this is not expected to be before April 2024 (at the earliest) possibly April 2025.

6. Neonatal Care

The Neonatal Care (Leave and Pay) Act 2023 allows eligible employed parents whose new-born baby is admitted to neonatal care to take up to 12 weeks of paid leave. This is in addition to other leave entitlements such as maternity and paternity leave.

As for implementation 'in due course', with amendments needed to several parts of tax legislation, as well as HMRC and payroll systems, it is not expected to be brought into force before April 2025. Many of the necessary legislative changes to implement the Bill will be via changes to the Social Security Contributions and Benefits Act 1992 through the introduction of new sections 171ZZ16 to 171ZZ24 – the sort of numbering suggesting it may be time for the 1992 Act to be rewritten and simplified!

7. High level reform not on the cards

In July 2019, the Government announced it was considering "high level" reforms for reforming parental leave and pay "with a view to achieving greater equality in parenting an at work". The review was to consider options ranging from tweaks to exiting forms of leave to a bold 'wiping the slate clean and start again' to develop a new modern comprehensive suite of family-related policies.

On 29 June 2023 the 'Parental Leave and Pay Good Work Plan: Proposals to Support Families Government Response' was finally published after COVID-19 delayed matters. Tweaks or bold action? Well, as the Government states in the Response "we recognise that these changes to parental leave are not the radical reforms that some respondents argued for" – so very minor tweaks. The Response confirms that no changes are proposed to Shared Parental leave and unpaid Parental leave. However, three tweaks are proposed to Paternity leave.

8. Paternity leave

Paternity leave is available to employed fathers/partners who have completed six months' service with their employer into the 15th week before the week the baby is due can take up to two week's paid (at statutory rate) paternity leave to support the mother and to care for the child (equivalent provision also apply in relation to adoptions). The majority of the existing provision for Paternity leave and pay will remain unchanged save for:

  1. Currently the leave can be taken either as one week or two consecutive weeks' of leave. This will be changed to either two consecutive weeks' of leave or two separate blocks of one week of leave.
  2. Currently the leave must be taken within eight weeks of birth/placement for adoption. This will be extended to within 52 weeks.
  3. Currently for new births, notice as to the father's/partner's entitlement to take leave, how much leave they wish to take and when they want the leave to start must be given by the 15th week before the expected week of childbirth, unless this is not reasonably practicable. The start date can be changed by giving 28 days' notice. This will be changed so that only the entitlement to take the leave must be given by the 15th week before the expected week of childbirth, unless this is not reasonably practicable. Also, only 28 days' notice will be required of the dates that they intend to take each period of leave.

These changes will be introduced via secondary legislation and expected to take effect from April 2024.

Flexibility

9. Flexible working requests

The Employment Relations (Flexible Working) Act 2023 was passed on 20 July 2023. The Act requires secondary legislation to bring its provisions into force "in due course" with some significant detail awaited.

When its provision are brought into force, employees' rights to request flexible working will be enhanced by:

  1. Extending the number of flexible working requests an employee can make during a 12-month period from one to two;
  2. Requiring an employer to consult with an employee, as a means of exploring the available options, before refusing a flexible working request (although there is no legislative de minimis requirement of what that 'consultation' needs to include);
  3. Requiring employers to respond within two months rather than the current three month period if no extension is agreed; and
  4. Removing the requirement for the employee to set out how the effect of their request may be dealt with by their employer.

The Government also announced that it will also:

  1. Remove the 26-week qualifying period before employees can request flexible working, making it a day-one right (not included in the Act as the Sec of State already has the power to make this change via secondary legislation).

What the Act does not do:

  1. The current list of business reasons for rejecting flexible working requests will remain unchanged.
  2. It remains the case that where the request has been refused, there is no obligation on the employer to allow the employee an appeal against the decision. However, the statutory Acas Code states that the employer should nevertheless allow the employee a right to appeal, noting that it may be helpful to talk to the employee about the decision 'as this may reveal new information or an omission in following a reasonable procedure when considering the application'.
  3. It remains the case that there is no mechanism by which a tribunal can enforce a request for flexible working where the employer has unreasonably refused it. If a tribunal finds that an employee's complaint is well founded it can award up to eight weeks' pay subject to the statutory cap. It is the cross over with a potential sex discrimination claim that is the larger financial risk for an employer.

Acas is currently updating its statutory Code of Practice on handling requests for flexible working in a reasonable manner to reflect the anticipated reforms to legislation, significant shift in flexible working in the workplace and changing views since the existing Code was published in 2014. The updated Code includes:

  • Extending the categories of those individuals who may accompany an employee at meetings to discuss a request to trade union officials (Note: currently Code suggests work colleague. Currently and after the upcoming changes there is no legal right to be accompanied).
  • That employers should set out such additional information as is reasonable to help explain their decision.
  • That employers should allow an appeal where a request has been rejected (Note: currently and after the upcoming changes there is no legal right to an appeal).

The consultation closed on 6 September 2023.

10. Predictable working requests

The Workers (Predictable Terms and Conditions) Act 2023 was passed on 18 September 2023. The Act requires secondary legislation to bring its provisions into force. According to the Government's press release, the measures in the Act and the secondary legislation will come into force approximately one year after its passing (so September 2024), which will ensure that employers have time to prepare for the changes. Acas will be producing a new Code of Practice that will provide guidance on how to make and handle requests for a more predictable working pattern. A draft Code of Practice will be available for public consultation 'in the coming weeks'.

The Act introduces a new statutory right for workers to request a more predictable working pattern where:

  • There is a lack of predictability as regards any part of their work pattern (for example the hours or times they work);
  • Fixed term contracts of 12 months or less are presumed to lack predictability.
  • The change relates to their work pattern.
  • Their purpose in applying for the change is to get a more predictable work pattern.

It is expected that a 26-week service requirement will apply via the subsequent implementing regulations. However, given the aim of the legislation, workers will not have had to have worked continuously during that period.

The new law will also apply to agency workers who will be able to apply to either the temporary work agency or the hirer to request a more predictable working pattern, provided they meet certain qualifying conditions.

The Act mirrors the statutory framework for flexible working applications (as to be amended) in several respects, notably employers will be required to deal with any requests in a reasonable manner, notify the worker of their decision within one month and a maximum of two applications may be made in a 12-month period. Also, employers, temporary work agencies or hirers (as the case may be) will be able to reject applications based on statutory grounds being:

  1. the burden of additional costs,
  2. detrimental effect on ability to meet customer demand,
  3. detrimental impact on the recruitment of staff,
  4. detrimental impact on other aspects of the employer's business,
  5. insufficiency of work during the periods the worker proposes to work,
  6. planned structural changes, and
  7. such other grounds as the Secretary of State may specify by regulations

Also like the position in relation to flexible working requests, this is a right "to ask" not a right "to necessarily get".

Previously considered measures such as compensation for shift cancellation or curtailment without reasonable notice are not included in the Act.

Harassment

11. Harassment (in employment)

The Worker Protection (Amendment of Equality Act 2010) Bill when introduced in 2022 included two main provisions:

  • Introducing a duty on employers to take all reasonable steps to prevent sexual harassment of their employees and provides for a 25% compensation uplift in sexual harassment cases where there has been a breach of the employers' duty.
  • Re-introducing protection from third-party harassment subject to an "all reasonable steps" defence. Unlike the new preventative duty, this is not limited to sexual harassment, but also covers the other relevant protected characteristics.

During a difficult passage through Parliament, the Bill has been very significantly diluted. In the latest (and likely last) version of the Bill:

  • The provisions for the re-introducing employer liability for the harassment of employees by third parties in the course of employment have been removed altogether. So position remains as it has been since the removal of the third-party harassment protections back in 2013.
  • In relation to the preventative duty, employers will only be required to take "reasonable steps" rather than "all reasonable steps" to protect employees from sexual harassment in the course of their employment.

It is already the case that an employer can be liable for discrimination or harassment committed by an employee in the course of their employment against another employee. However, there is a statutory defence available to an employer if it can show that it "took all reasonable steps to prevent the employee from doing the discriminatory act or from doing anything of that description" (section 109(4) Equality Act 2010).

If and when the Bill is enacted as it currently stands, to establish a s109(4) statutory defence in a sexual harassment claim involving harassment by a colleague, the employer will still need to show that it took "all reasonable steps" to prevent the sexual harassment. But where a claim is upheld and the employer fails to establish the statutory defence, the employer may still potentially be able to avoid a "failure to prevent claim" and the corresponding 25% uplift to compensation if the employer can show it took "reasonable steps" to prevent sexual harassment of employees – a lower threshold.

The Bill is expected to be passed in its diluted form soon with its provisions coming into force one year after the Bill is passed.

12. Harassment (In public)

On 18 September 2023, the Protection from Sex-based Harassment in Public Act 2023 was passed. The Act will amend the Public Order Act 1986 to introduce a new criminal offence of intentional harassment, alarm or distress carried out because of a person's sex, or presumed sex. The substantive provisions of the Act will come into force on a day appointed in a statutory instrument made by the Secretary of State.

The Parliamentary Under-Secretary of State for the Home Office said that an implementation period will be necessary to ensure that all processes, systems and guidance are updated, and the statutory guidance required under the Act is drawn up. Therefore, it was not possible to provide a timescale for implementation of the new offence, however the Government will ensure that the legislation comes into force "as quickly as reasonably possible".

Pay & benefits

13. Pensions Automatic Enrolment

The Pensions (Extension of Automatic Enrolment) Act 2023 was passed on 18 September 2023. The Act amends the Pensions Act 2008 to enable the Secretary of State for Work and Pensions to make regulations to:

  • decrease the age for automatic enrolment in workplace pension schemes. The Government intends to use this power to reduce the lower age limit from 22 to 18; and
  • reduce or remove the lower earnings limit of the qualifying earnings band, so that contributions are calculated from the first pound earned.

The Regulations to be made under the Act are subject to the affirmative resolution procedure and the Secretary of State is required to consult on proposed secondary legislation to implement the Government's policy position.

14. Allocation of Tips

The Employment (Allocation of Tips) Act 2023 was passed on 2 May 2023. The Act will require employers to fairly allocate tips over which they exercise control or significant influence and pay them to workers in full within a month of payment by the customer. Where tips are paid on more than an occasional and exceptional basis, an employer must have a written policy, available to all workers, setting out how qualifying tips are dealt with. The Act will be supported by a new statutory Code of Practice which will provide businesses and staff with advice on how tips should be distributed.

The measures are expected to come into force some time on or after 2 May 2024, following a consultation and secondary legislation with the official date of commencement to be confirmed later this year.

15. National Minimum Wage

We currently await the Low Pay Commission's recommendations for the National Minimum Wage (NMW) annual increased for April 2024. What we do know is that the National Living Wage (NLW) band that applies to those aged 23+ is to be expanded to those ages 21+. Currently the NLW is £10.42 and the 21-22 year old rate is £10.18. While conformation is awaited, the April 2024 NLW is expected to rise to somewhere between £10.90 and £11.43.

As for other changes, the draft National Minimum Wage (Amendment) (No 2) Regulations 2023 have been published which will remove the exemption from the national minimum wage (NMW) for live-in domestic.

Currently, workers who live in their employer's family home and are treated as a member of the family (as regards the provision of living accommodation and meals and the sharing of tasks and leisure activities) and are not charged for food or accommodation do not qualify for the NMW (regulation 57(3), National Minimum Wage Regulations 2015. In March 2022, it was confirmed that the Government accepted the Low Pay Commission's conclusion that the exemption is not fit for purpose and should be removed.

The draft regulations will repeal regulation 57(3) and are expected to come into force on 1 April 2024. From that date, live-in domestic workers previously covered by the exemption must be paid the NMW.

The Regulations do not remove the NMW exemption contained in regulation 57(2) for actual members of the family in respect of domestic duties where the worker resides at home. This exemption will continue to apply.

16. Occupational health

On 20 July 2023, a package of two Occupational Health consultations were published. They are intended to be read together as a compliment of non-fiscal levers and fiscal levers in supporting greater occupational health provision. Both run until 12 October 2023.

Non-fiscal:

In Occupational Health: Working Better, the Department for Work and Pensions (DWP) is seeking views on proposals aimed at increasing employer use of Occupational Health (OH) Services. It is seeking views on establishing an agreement and partnership between government, employers and OH providers to help drive an ambitious increase in OH coverage. The consultation document is divided into three chapters seeking view on:

  • Voluntary proposals: these include a national "health at work" standard for employers which would embed a baseline for quality OH provision including sharing of best practice and the development of new and consolidated guidance. There would also be an option for employers to pursue accreditation (Chapter 1).
  • Lessons from international comparators: best practice from other countries and other UK-based employer models that enable employers to provide support for their employees (set out in Chapter 2).
  • Developing work and health workforce capacity: through new service models, building the skills mix and diversity of the current workforce and partnering with the private sector to develop a long term sustainable multidisciplinary OH workforce (set out in Chapter 3).

Fiscal:

In Tax Incentives for Occupational Health, the HM Treasury and HM Revenue & Customs considers the role of tax incentives for boosting occupational health provision by employers.

This consultation focuses on the possible expansion of the current income tax and National Insurance Contributions (NICs) exemptions for certain medical benefits in kind. The Government proposes retaining this treatment for employer-funded recommended medical treatment to aid return to work, annual health screening and medical check-ups, welfare counselling and eye tests (and glasses or contact lenses). However, the Government is seeking views on extending this treatment to further health screenings and check-ups, (preventative) treatments to minimise workplace absence or improve performance, and flu vaccinations (employer paid or refunded). The Government does not propose expanding this treatment to private medical insurance, non-clinical treatments, OH staff wages and strategy consultation fees or costs relating to employees' family or other non-employees.

Business Protection

17. Non-compete clauses

On 12 May 2023, the Government announced that it intends to introduce new legislation to limit the duration of non-compete provisions to 3 months. The announcement came alongside the long-awaited response to the 2020 consultation on the reform of non-compete clauses in employment contracts. The proposals only apply to employment and worker contracts and not to non-competes in other types of contracts, such as sale and purchase agreements. The legislation is not intended to impact non-solicitation clauses or confidentiality clauses. It is also not expected to introduce any restrictions on garden leave.

The proposals, however, raise a number of questions, including:

  • What will be the impact on existing covenants? Will they be void or only enforceable up to a maximum of three months? Likely the latter.
  • What will amount to an employment or worker contract? What about incentive arrangements with parent companies or settlement agreements?
  • Will this lead to longer notice periods and an increased use of garden leave?

The Government's press release does not specify when the new legislation is likely to be introduced, stating only that this will happen 'when parliamentary time allows'. Since May there has been radio silence. As previous calls to limit non-compete clauses by legislation have been seen as unnecessary, whether this will see the light of day is questionable.

18. Fraud

On 11 April 2023, a failure to prevent fraud offence was added to The Economic Crime and Corporate Transparency Bill 2022. Under the proposed new offence:

  • An in-scope organisation will be strictly liable where an employee or agent commits a specified fraud or false accounting offence under UK law with intent to benefit the organisation, or another person to whom they provide services on the organisation's behalf.
  • It will only apply to large companies and partnership including not-for-profit organisations and incorporated public bodies, and it will not need to be proven that consent or connivance existed.
  • A defence for the organisation will be available where it had in place reasonable fraud prevention procedures at the relevant time. The Government will publish guidance on the nature of reasonable procedures to prevent fraud before the new offence comes into force.
  • The offence can be committed even if the organisation and the relevant employee are based outside of the UK.
  • The maximum penalty on conviction will be an unlimited fine.

A new Factsheet: Failure to prevent fraud offence has been added to the Government's series of factsheets on aspects of the Economic Crime and Corporate Transparency Bill (ECCT) Bill. The Bill is currently in its final stages before Parliament.

Industrial relations

19. Industrial action

On 20 July 2023, the controversial Strikes (Minimum Service Levels) Act 2023 (MSL) was passed. This highly controversial Act allows the Secretary of State to make 'minimum service regulations' for strikes in 'relevant services' in the fields of health, transport, education, fire and rescue, border control, and nuclear decommissioning and radioactive waste management service.

Where a union calls a strike in a service to which MSLs apply, the employer would be able to give the union a "work notice", identifying the workers that are required to work and the work they are required to do during the strike. The employer must first consult the union and must not identify more workers in the notice than are "reasonably necessary" to meet the minimum service. The union will lose its immunity from liability in tort if it fails to take reasonable steps to ensure compliance by any union members identified in the work notice. The Act also amend unfair dismissal rights, so that any worker identified in a work notice who takes part in the strike to an extent not permitted in the work notice will lose their automatic protection from dismissal.

Much of the detail is left to be set out in regulations, including the MSLs themselves and the scope of the relevant services.

The Government is now proceeding to implement MSLs in relation to

(Consultation in relation to hospital services was launched on 19 September and closes on 14 November 2023).

On 25 August 2023, the Department for Business and Trade published a draft statutory Code of Practice on the "reasonable steps" a trade union should take to comply with the Strikes Act and also opened a consultation seeking views on the draft Code.

The draft Code of Practice proposes five steps which a trade union should take to satisfy the reasonable steps requirement:

  • Step 1: Identification of members (ensure membership data up to date).
  • Step 2: Encouraging individual members to comply with a work notice.
  • Step 3: Communication to the wider membership.
  • Step 4: Picketing (Instruction of picket supervisors).
  • Step 5: Assurance (a trade union should ensure that it does not undermine any of the reasonable steps that it takes and to correct actions by union officials or members which may also undermine the reasonable steps).

The Consultation on the draft Code will close on 6 October 2023.

20. Fire & rehire statutory code

Over the last couple of years, the practice of "fire & rehire" ("dismissal & re-engagement") has come under increasing scrutiny from politicians and unions. On 24 January 2023, the Government launched a Consultation on a statutory Code of Practice on Dismissal and Re-engagement (together with the draft statutory Code) which ran until 18 April 2023.

The draft Code is intended to act as practical guidance clarifying the steps employers are expected take when seeking to change contractual terms and conditions of employment where there is the prospect of dismissal and re-engagement. The expected steps include providing information, engaging in meaningful consultation and exploring alternatives.

The Code will apply where an employer is considering dismissal to effect changes to terms and conditions but still needs the roles to be filled. The Code will apply regardless of whether the roles might be filled by the employer's existing staff or by new hires.

While the use of dismissal and re-engagement is not being banned, it should be used as a last resort and failure to follow the Code could result in a 25% uplift to compensation awards in relevant cases. Employers need to take note of what is to come as:

  1. The draft Code does not supplant existing legal requirements but it does significantly supplement them.
  2. Employers will need to introduce more formal, and well documented procedures to demonstrate compliance with the Code.
  3. There is no minimum number requirement to trigger the information & consultation required under the Code.
  4. The expected information & consultation goes beyond the familiar existing rules as apply in relation to collective redundancy consultation and TUPE in expecting:
    • Employers to continue to engage with the workforce about the changes even after new terms have been agreed; and
    • Employers to provide practical support (for example by phased introduction of changes or extending contractual notice periods) when new terms are to be imposed by dismissal and re-engagement.

The Code will be brought into force "when Parliamentary time allows". No timeline has yet been given for consideration of consultation responses or publication of the final Code of Practice.

Reporting

21. Non-financial reporting

On 24 May 2023, the Department for Business and Trade and the Financial Reporting Council launched a Call for Evidence for the non-financial reporting requirements UK companies need to comply with to produce their annual report, and whether the size thresholds remain appropriate. The review includes seeking views on gender pay gap reporting and modern slavery reporting. The review closed on 16 August 2023. The Government intends to develop proposals for public consultation in 2024 and, thereafter, look to legislate for any changes.

22. Ethnicity pay gap reporting

Five years after its launch in 2018, in July the Government has published its Response to the mandatory ethnicity pay gap reporting consultation. Worth the wait? – no, given that the Inclusive Britain strategy published by the Government in March 2022 already told us that mandatory reporting was ruled out. The Response confirms that the Government will not be legislating to make ethnicity pay gap reporting mandatory. Employers should instead have regard to the April 2023 guidance on voluntary ethnicity pay reporting.

23. Whistleblowing framework

On 27 March 2023, the Department for Business & Trade published the Review of the whistleblowing framework: terms of reference. The stated purpose is to "examine the effectiveness of the whistleblowing framework in meeting its original objectives. The review will provide an up-to-date evidence base to inform Government about policy choices to develop and improve the whistleblowing framework" and "will consider how the whistleblowing framework currently operates, including Public Interest Disclosure Act 1998 (PIDA) and subsequent legislative and non-legislative interventions".

It is expected that the research will be concluded by Autumn 2023, with recommendation to follow some time in 2024.

Data

24. Artificial intelligence

In September 2022, the Government published a policy paper entitled 'Establishing a pro-innovation approach to regulating AI' containing proposals for the regulation of artificial intelligence (AI) predominantly through regulator guidance. This was accompanied by a House of Commons Science and Technology Committee inquiry into the governance of AI and a call for evidence.

On 29 March 2023, the Department for Science, Innovation and Technology published the long-awaited AI white paper setting out the Government's pro-innovation approach to AI regulation. The white paper describes five principles regulators must consider to build trust and provide clarity for innovation: (i) safety, security and robustness; (ii) appropriate transparency and explainability; (iii) fairness; (iv) accountability and governance; and (v) contestability and redress. UK regulators will incorporate these principles into guidance to be issued over the next 12 months. Risk assessment templates and other tools will also be issued, including assurance techniques, voluntary guidance and standards.

On 31 August 2023, the House of Commons Science, Innovation and Technology Committee published an interim report based on input from its inquiry into the governance of AI. Given the recent rate of AI development, a report was considered necessary to consider the Government's response to these developments and to compare this with other jurisdictions. It identifies 12 challenges which must be met through domestic policy and international engagement:

  1. Bias. AI can introduce or perpetuate biases.
  2. Privacy. AI can allow the misuse of personal information.
  3. Misrepresentation. AI can generate deliberately misleading material.
  4. Access to data. Large datasets required by AI are held by few organisations.
  5. Access to compute. Significant compute power required by AI is limited to a few organisations.
  6. Black box. Lack of explainability is a challenge to transparency requirements.
  7. Open-source. Requiring code to be openly available may promote transparency.
  8. Intellectual property and copyright. Use by AI models of proprietary content must protect the rights holder.
  9. Liability. Policy should consider whether AI providers are liable if their models cause harm.
  10. Employment. Disruption to employment opportunities caused by AI must be managed.
  11. International co-ordination. Effective AI governance frameworks must be an international undertaking.
  12. Existential. Governance should consider protections for national security.

The report proposes that the 12 challenges should form the basis for discussion at the forthcoming global summit on AI safety, hosted by the Government at Bletchley Park. It urges the Government to confirm whether AI-specific legislation, such as the introduction of a legal requirement for regulators to pay due regard to the AI white paper principles, will be introduced in the next Parliament.

The Government's response to the interim report is due by 31 October 2023. The inquiry is continuing, and a further report will be published in due course.

25. ICO data protection guidance

Subject Access Requests (SARs):

On 24 May 2023, the UK Information Commissioner (ICO) published new guidance for organisations on responding to SARs. The new guidance is intended to assist employers in responding to SARs appropriately and within applicable time limits and to make sure that employees are able to obtain access to their personal data when they wish to do so. Of note, the new guidance clarifies:

  1. When companies can 'stop the clock' on the standard 30-response deadline.

    The new guidance explains that, where an organisation processes a large amount of information about the worker, they may ask the individual to specify the information or processing activities their request relates to before responding. The time limit for responding to the request is paused ('stop the clock') until clarification is received. This should not be used as a ''blanket response', but only where required. Also, it remains that there is no requirement for an individual to narrow the scope of their request: if they refuse to clarify or provide any additional information, organisations are still expected to comply by running reasonable searches for this information.

  2. The definition of 'manifestly excessive' requests.

    The ICO has broadened the definition of 'manifestly excessive', clarifying that organisations need to consider whether the request is "clearly or obviously unreasonable" when balanced against the burden or costs in dealing with it. The new guidance sets out the factors that should be considered, including:

    • The nature of the requested information;
    • The context of the request, and the relationship between the organisation and the individual; and
    • An organisation's available resources.
  3. The efforts that companies have to make to find the requested information.

    Organisations are not required to conduct searches that would be unreasonable or disproportionate to the importance of providing access to the information. In order to determine unreasonableness or disproportionality, organisations need to consider the following:

    • The circumstances of the request;
    • Any difficulties involved in finding the information; and
    • The fundamental nature of the right of access.

    The burden of proof falls on the organisations to justify why a search may be unreasonable or disproportionate. The ICO has also expanded on the definition of what may be classed as a complex request, including the need to obtain specialist legal advice.

  1. What to do about information that contains data about third parties.

    The guidance sets out a three-step approach to dealing with requests that include the personal data of others:

    • Does the request require disclosing information that identifies another individual?
    • Has the other individual provided consent?
    • Is it reasonable to disclose without consent?

    In looking at whether the other individual has provided consent, the guidance now states that it may not be appropriate to ask a third party to provide consent where "it would be inappropriate for the third party to know that the requester has made a SAR". Regarding expectation of confidentiality, it states that organisations should now take the "content and context of the third-party data into account. For example, if it reveals that the third party is the subject of an ongoing disciplinary investigation".

    This is helpful in contentious situations or where organisations want to maintain discretion about the existence or nature of a SAR.

Health data:

On 31 August 2023. The ICO published guidance on processing workers' health data to help employers comply with their obligations.

The first part of the guidance explains how the UK GDPR and Data Protection Act 2018 (DPA) applies to the employer and steers them through the essentials of:

  • Complying with the stricter statutory requirements for processing special category data.
  • Providing employees with information about the employer's processing of their data.
  • Performing a data protection impact assessment before processing any health data.
  • Data minimisation and security.

The second part focuses on how data protection law applies to specific workplace scenarios such as managing sick absence records and occupational health schemes, conducting drugs and alcohol testing, and how to approach sharing employee health data. The ICO confirms the legal requirements the employer must comply with for each aspect of employment practice covered and sets out recommended good practice that it expects should be adopted by the employer to comply with legal requirements.

There is also a set of checklists included to give employers an overview and quick guide to help run through their data protection considerations whenever they need to process workers' health information.