In the latest episode of OPEN Talks, our new series of short podcasts focused on diversity, equity and inclusion (DEI), Christopher Fisher, Head of the London Employment Group at Mayer Brown, interviews Nikki Lees, People Director, Inclusion & Wellbeing, at QBE. They discuss QBE’s strategy and approach to diversity, inclusion and wellbeing.  Listen to this episode here. If you would like to be notified of future OPEN Talks episodes, alongside the existing UK employment law podcast series, please contact us here.

Reversing his predecessor’s pledge, the new Chancellor of the Exchequer, Jeremy Hunt, announced in an emergency statement on 17 October 2022 that the off payroll rules will not be scrapped after all.  See Government news story here. Pending any further announcements, employers should therefore ignore the previous Chancellor’s announcement and continue to follow the off payroll rules which have been in place since April 2021.

In this episode of the Mayer Brown employment podcast, Chris Fisher looks at a recent case where an employer was unable to claim legal privilege over a grievance investigation report which they had sent to their lawyers for advice the day after it had been finalised, and before it had been sent to the employee.  Access the podcast here: https://www.mayerbrown.com/en/perspectives-events/podcasts/2022/10/claiming-legal-privilege-over-a-grievance-investigation-report

IR35 regime

Among possibly more eye-catching headlines, last week the Chancellor made a significant announcement in respect of the IR35 reforms by announcing that these will be repealed from 6 April 2023. Changes were made to the IR35 regime in April 2021, aimed at preventing tax avoidance through the use of intermediaries between clients and workers. Many have welcomed the decision as a positive step to re-introduce flexibility into the UK workforce, but others complain at the sudden U-turn and fear employers may now look to make redundant those self-employed individuals who were taken onto the payroll as employees when the reforms came in only 15 months ago.

From 6 April 2023

The Government Growth Plan 2022 has set out that, from 6 April 2023, workers providing their services via an intermediary will once again be responsible for determining their own employment status and paying the appropriate amount of tax and National Insurance contributions. The objective is to free up time and money for businesses that engage contractors that could be put towards other priorities. To enact the proposal, the next Finance Bill will need to be drafted, which has not been published yet.

Prior to 6 April 2023

IR35 rules will continue to apply to any large and medium sized businesses that engage contractors through an intermediary (such as by a personal service company). Under the current rules, the onus is on the business receiving the service to carry out a multi-factorial assessment as to whether or not the contractor would be considered an employee of the business if they were hired directly.

The HMRC “Check Employment Status Tool” (CEST) may be considered of use in any assessment as a starting point, however, the use of this tool is not legally required, and if results are conflicting, then other avenues may be preferred. Notwithstanding this, if a large business does use the CEST tool to determine the status of its contractors and it gives an “inside IR35” result, that business may need to think twice before it ignores that assessment.  If the tax saving is significant enough, then the business will need to notify HMRC that it is going against the CEST assessment, as a result of the Uncertain Tax Treatment (UTT) rules, introduced on 1 April 2022.

With menopause receiving much attention, both in the media and Government at the moment,  the cross-party House of Commons Women and Equalities committee has published a report which calls on the Government to take various actions in relation to menopause in the workplace.

The report considers the cost to women, employers, society and the economy of not addressing the challenges that employees experiencing menopause face, citing that women over the age of 50 are the fastest growing group in the workforce, with 4.5 million women aged 50 to 64 currently in employment. Women in this age group are often at the peak of their careers, being highly skilled and experienced, and act as role models to younger employees. However, of women that report at least one problematic menopausal symptom at the age of 50, 43% were more likely to have left their job by the age of 55, with 23% more likely to have reduced working hours.

The report refers to several approaches organisations can take to best support menopausal women in the workplace:

1. Openness, awareness and training: menopause in the workplace should be talked about more openly as a first step, in addition to referring to menopause in on-boarding and induction processes. This will make it clear that it is a health issue the organisation wishes to help with. Other suggestions include creating a library of books on menopause, appointing workplace menopause champions and running training sessions on the impact of menopause.

2. Menopause policies and guidance: having specific workplace policies which address how employees can be supported through menopause can assist both employees and their managers.

3. Sickness policies: where several short-term absences can trigger performance reviews or disciplinary action, it can be especially challenging for menopausal women. To address this, organisations could record menopause-related sickness absences as an ongoing issue, rather than as individual and discrete absences.

4. Flexible working: flexible working was cited repeatedly as a method for assisting menopausal women, both in terms of location of work and hours.

The report further calls on the Government to appoint a Menopause Ambassador, to champion good practice in the workplace and to work with businesses to encourage awareness and disseminate guidance to employers. Further, the report requests that the Government allows dual discrimination claims based on more than one protected characteristic under the Equality Act, for instance age and sex, and for the Government to consult on making menopause a protected characteristic in its own right. The Government is yet to respond to the report, although, as discussed in our previous blog post, it has previously announced that there is no intention to introduce the menopause as a new protected characteristic.

In this short article, James Perrott, who leads the UK immigration and European Mobility practice at Mayer Brown, considers the particular challenges involved in sponsoring nannies to work in the UK under the Skilled Worker route.  James looks at why the current Overseas Domestic Worker route is not suitable for families looking to bring nannies to the UK long-term, who can sponsor nannies to work in the UK, the situations where it might be possible for companies to sponsor nannies to work in the UK, and the important points to consider when making these sponsorship applications.

In the case of Harper Trust v Brazel, the Supreme Court has confirmed that workers who only work for part of the year, but on permanent contracts, are effectively entitled to the same holiday allowance as workers who work all year.

The Working Time Regulations entitle workers to 5.6 weeks’ paid annual leave. Where an employee does not have regular working hours, employers are to calculate holiday by looking at average earnings over the previous 52 weeks, discounting weeks where no work was carried out. This can be a tricky calculation where the employee works irregular hours, requiring detailed records of hours worked, even in cases where employees do not work on an hourly basis. As such, some employers have calculated holiday pay in such circumstances by applying 12.07% of pay per hour or pro-rating holiday entitlement to reflect the number of weeks employees actually worked in a year.

The Supreme Court’s decision means the % approach above should no longer be used. Employers must calculate the average pay received during the 52 week period prior to the employee taking annual leave, ignoring any weeks where the employee did not work.

This decision will impact those employees with atypical working patterns who do not work a full leave year. The obvious example would be an employee in the education sector which operates on a termly basis, as was the case for the claimant in this case. However, a number of employers in other sectors have flexible arrangements, such as working only term time dates or irregular working hours. Whilst employees who work on part time contracts are not affected, zero hours employees who do not work a full year will be.

The ruling could potentially have a large financial impact on employers who have staff who do not work all year round, in addition to having an employee relations impact. It will be difficult for employers to explain to part time employees why they are entitled to less holiday pay than an employee who works the same number of hours in total across the whole year, due to their atypical working pattern. Effectively, a term time worker would receive holiday pay representing a higher proportion of their annual pay than a part time worker working regular hours, or indeed a full time worker. Employers may want to use this as an opportunity to review the working patterns they have in place and particularly how permanent contracts are used for employees working different patterns. Employers may also face questions from workers about whether, in light of this judgment, they are owed back pay of holiday in respect of any underpayments.

An analysis of court records conducted by the Menopause Experts Group found that there has been an increase of 44% in the number of employment tribunal claims citing menopause in 2021, when compared to the number of claims in 2020. Of these 23 claims, 16 fell under disability discrimination, 14 claimed unfair dismissal, and 10 were brought as sex discrimination claims.

Additionally, there were 207 mentions of the word menopause in tribunal documents in 2021, which is up 75% from 2020.

Despite this substantial rise in menopause-related claims, it has been announced in a letter from Baroness Stedman-Scott (Minister for Work and Pensions (Lords) and Minister for Women) to Caroline Nokes MP that there is no intention to introduce the menopause as a new protected characteristic under the Equality Act 2010.

This follows a period of lengthy debate about whether the menopause warrants becoming a standalone protected characteristic, as opposed to its current position, which requires it to fit within the confines of an existing protected characteristic, namely sex, disability, or age.

However, whilst the current legislation won’t be amended to make menopause a new protected characteristic, officials in the government’s Equality Hub, in consultation with Acas and the Equality and Human Rights Commission, will look at existing menopause guidance for the workplace. The aim here will be to make improvements to assist employer and employee understanding of the law in this ever-evolving and complex area, as the current upwards trend of claims suggests that there will be many more menopause-related employment law claims to come.

Our Employment & Benefits team in Hong Kong have published the Asia Employment Law: Mid-Year Review – 2022 H1, a publication covering 14 jurisdictions in Asia.

In this thirty-fifth edition, they flag and comment on employment law developments during the first half of 2022 and highlight some of the major legislative, consultative, policy and case law changes to look out for in 2022.

For other recent commentary from our Hong Kong team, please click here. If you or a colleague would like further guidance on employment and benefits issues in Hong Kong, please contact Duncan AbateHong Tran or Jennifer Tam.

We recently launched OPEN Talks, a special podcast series focused on diversity, equity and inclusion (DE&I). Each episode will focus on a particular DE&I initiative or issue, hosted by a member of the Mayer Brown Employment & Benefits team.

In the latest episode of OPEN Talks, Employment & Benefits partner Miriam Bruce interviews Danielle White, Mayer Brown’s Diversity & Inclusion Manager for Europe, who discusses diversity and inclusion at Mayer Brown and in the legal sector more broadly. Listen to this episode here.

If you would like to be notified of future OPEN Talks episodes, alongside the existing UK employment law podcast series, please contact me here.