On 8 November 2023, the Government published its much-anticipated response to key employment law consultations announced earlier this year. The consultations were focused primarily on areas of retained EU employment law where the Government “saw opportunities for improvements” following Brexit. This included reviewing elements of the Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”), the Working Time Regulations (“WTR”) and revisiting the calculation of holiday pay.

Consultations

On 12 May 2023, the Government began a consultation on areas of retained EU law which it had identified as ripe for review, namely:

  • Record keeping requirements under the WTR.
  • Simplifying annual leave and holiday pay calculations under the WTR; and
  • Consultation requirements under TUPE.

In addition, post the Supreme Court decision in Harpur Trust, the Government also consulted on how best to ensure that part year and irregular hours workers received holiday pay directly proportionate to the time they spent working. As detailed in our earlier post on this case, the impact of Harpur Trust has been that part year workers were entitled to a larger holiday entitlement than part-time workers who had worked the same total number of hours across the year. This anomaly had both cost and employee relations implications for employers.

The Government’s response

  1. Record keeping requirements under the WTR:

The Government has issued legislation to clarify that UK businesses do not have to keep a record of daily working hours for each worker.

Uncertainty as to whether such records needed to be retained arose following a European Court judgement in 2019 (CJEU Federación de Servicios de Comisiones Obreras (“COOO“) v Deutsche Bank SAE). This case held that working time records must be kept showing the number of hours a worker worked each day and each week. This was a surprise to most UK employers as, if the ECJ decision was right, it would mean a more onerous administrative burden on both employers and workers than had previously been the case. The WTR requires only that ‘adequate’ records should be kept in order to demonstrate compliance with specific provisions. It does not prescribe the specific form that working time records should take. Further, HSE guidance from 2019 made clear that ‘there is no specific need to keep records of actual daily working time’ and ‘it is not necessary to create records specifically for the purposes of the WTR, and employers may be able to use existing records kept for other purposes such as pay. If particular workers or groups of workers are unlikely to reach the various limits (e.g., because they always work a set 40-hour week), this requirement can be met simply by making occasional checks to ensure that nothing has changed’. The COOO decision cast serious doubt on whether UK employers had been taking the right approach to working time record keeping.

Implications for employers: The Government’s announcement is good news for employers. The uncertainty created by the COOO decision has been resolved.Employers will only need to follow current – and less onerous – record keeping requirements to show compliance with the WTR. They will not have to keep detailed records of each worker’s daily working hours. Note that other key protections under the WTR will remain in place and are unaffected by the Government’s reforms, including: the 48-hour working week and the ability to opt out of it and rest breaks of 20 minutes for a working day of 6 hours or more.

  • Annual leave and holiday pay calculations under the WTR:

The Government sought responses on whether to: (i) create a single annual leave entitlement of 5.6 weeks (i.e. combining the 4 weeks of so called “Euro” leave and the separate entitlement of 1.6 weeks of leave under the WTR into a single entitlement) ; and (ii) introduce rolled up holiday pay, which would see workers receiving an enhancement of 12.07% in each payslip to cover their holiday pay, as opposed to receiving holiday pay only when they take annual leave.

The Government has opted not to introduce a single annual leave entitlement, preferring instead to keep the ‘pots’ of holiday entitlement separate. The reason for this is that the two separate leave entitlements or pots currently in place are paid at different rates (the 4 weeks of “Euro” leave is paid at the rate of normal remuneration and the additional 1.6 weeks of leave is paid at the basic rate of pay). The Government’s view is that it would only be sensible to move to a single leave entitlement if there is single rate of pay applicable to that entitlement. For now, moving to a single rate of pay for holiday as opposed to the current system of two different rates of pay depending on the type of leave, is seen as too administratively burdensome for employers.

However, the Government says it will legislate to clarify what is meant by “normal remuneration”. This, it says, will allow employers to continue with their current payroll systems whilst clarifying which elements form part of normal remuneration.

In terms of rolled up holiday pay, the Government’s view is that there is little benefit in deploying this for full time or full year workers. Rolled up holiday pay will only be introduced for irregular hours workers and part-year workers (including some agency workers). The Government has confirmed that a worker is an irregular hours worker in relation to a leave year if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.

Implications for employers: The Government’s decision to reject a single leave entitlement will be welcome news for employers. Current arrangements can continue unchanged. However, employers should review the Government’s definition of “normal remuneration” to ensure current arrangements are aligned with the clarification provided. In terms of a return to “rolled up” holiday pay, employers should benefit from the administrative simplicity it will bring to calculating holiday pay for those working irregular hours.  It is notable though that the definition requires the worker to work “wholly or mostly variable” hours in order to be classified as an irregular hours worker. In addition to checking whether its atypical workforce falls within one of the categories of worker than can now receive rolled up holiday pay, the main concern for employers will be that there is limited time to prepare for the switch to rolled up holiday pay. The legislation will be effective from 1 January 2024.

  • Holiday accrual for irregular and part-year workers

As noted above, the Government has decided to introduce rolled up holiday pay for irregular hours works and part-year workers (including some agency workers).

In response to the difficulties created by the Harpur Trust decision, the Government will also legislate to introduce an accrual method to calculate entitlement at 12.07% of hours worked in a pay period for irregular hour workers and part-year workers in the first year of employment and beyond. Other workers will continue to accrue annual leave in their first year of employment as they do now by receiving 1/12th of the statutory entitlement on the first day of each month and to pro-rate it thereafter.

Implications for employers: The Supreme Court judgment in Harpur Trust resulted in part-year workers getting different pro rata amounts of leave (in days or hours) than other workers who work similar hours over the year but with a different work pattern. Tackling this anomaly, through the introduction of a 12.07% accrual method, will no longer result in that outcome. This means that the approach to holiday entitlement and pay for irregular hours workers will be easier for employers to manage from an administration, costs and employee relations perspective. In addition, many employers will be familiar with the 12.07% accrual method, as it had been widely used (and well understood) prior to the Harpur Trust judgment.

  • Consultation requirements under TUPE

Since 2015, TUPE has included a “micro business” exemption, i.e., that employers with fewer than 10 employees can consult directly with those employees in relation to TUPE transfers where there are no existing appropriate representatives or a recognised union. The Government has decided to extend this exemption even further by confirming that small businesses (with fewer than 50 employees) undertaking a transfer of any size, and businesses of any size undertaking a small transfer (of fewer than 10 employees) will be able to consult their employees directly under TUPE if there are no existing worker representatives in place.

Implications for employers: The Government’s decision does not change the need for employers to engage in a proper and effective consultation process. It is also important to note that the exemption does not apply where representatives are already in place, even if the business is small or the number of transferring employees is under 10. Whilst extending flexibility in the way outlined will be viewed positively by employers, it may not have much practical impact. There are likely to be many employers who already opt to consult directly on small transfers where affected employees have consented to direct information and consultation.

  • Other matters

The Government will also restate various pieces of retained EU case law that it considers necessary to retain workers’ overall level of protection and entitlement in relation to the carry-over of annual leave when a worker is unable to take their leave due to being on maternity/family-related leave or sick leave.

Overall

Whilst the reforms do not go as far as some employers would like (particularly in relation to TUPE where many employers hoped to see some flexibility around harmonising terms and conditions of employment), the changes will be viewed positively by most employers. They promise much needed simplicity and flexibility on historically complicated areas of the law which have been heavily litigated in the European and domestic courts.

However, it is worth noting that the reforms are due to come into force from 1 January 2024 and so there is little time for businesses to adapt, particularly if they want to re-introduce rolled up holiday pay quickly. In addition, the Government response promises that “more fundamental” reforms to the rate of holiday pay are being contemplated, so employers will need to continue to monitor developments in this area for some time to come.

You can read the Government’s Response and draft statutory instrument online.

Edit – February 2024: Please note that it has now been confirmed that these changes will take effect for leave years beginning on or after 1 April 2024.

The Labour Party has announced that, should it win the next general election in 2024, Britain can expect a significant reform to employment law. In her recent speech to TUC Congress, Angela Rayner stated that within the first 100 days of entering office Labour will bring forward an Employment Rights Bill to legislate a “New Deal for Working People”.

Within the speech and Green Paper, extensive reforms are being proposed including:

  • the creation of a single status of “worker” – under UK employment law there are currently three classification of individuals: “employees”, “workers” or “self-employed”. Determining which category an individual falls into is not straightforward and there has been much case law on the matter. The new status of “worker” would cover everyone who works (including anyone who would have been an “employee” before),  except for the genuinely self-employed. This would lead to individuals who would previously have been “workers” gaining much broader employment rights, including the right not to be unfairly dismissed;
  • ending the qualifying period for certain employment rights – currently workers must have two years’ service to bring certain claims such as unfair dismissal. Labour wants to make certain key rights -including unfair dismissal, sick pay and parental leave – available to workers from day one;
  • extending the time period to bring Employment Tribunal claims – this is currently three months for most claims, but Labour plans to extend it (albeit it has not said how far);
  • outlawing “fire and rehire” programmes;.
  • a ban on zero-hour contracts; and
  • removing caps which limit the amount of compensation workers can receive for claims – it is not yet clear what caps are being referred to here so further guidance is awaited.

Labour believes that implementing these changes will lead to fairer working conditions which, in turn, will improve productivity, economic opportunity, health and wellbeing. While the details have not yet been finalised, if implemented, the New Deal for Working People could mean the most significant reform to employment law in decades.

In four decisions given on 13 September 2023, the French Supreme Court has created a big stir in the French HR world.  

Through an extensive interpretation of article 7 of EU directive 2003/88/CE of 4 November 2003, which provides that any employee should benefit from a global paid annual leave of at least four weeks, combined with article 31 of the Charter of the Fundamental rights of the EU (“any employee is entitled to paid annual leave”), the French Supreme Court has confirmed that:

  1. Employees on non-occupational sick leave can also accrue PTO (paid time off). Traditionally, France considered that paid leave was compensation for periods of effective work and only leave that is treated as effective work (such as paternity, maternity leave or leave consecutive to an occupational accident or sickness) could enable the employee to accrue paid leave (Cass. soc. 13-9-2023 n° 22-17.340 et 22-17.342 Sté Transdev);
  2. Employees off work due to an occupational illness or accident continue to earn paid leave after an uninterrupted period of one year (Cass. soc. 13-9-2023 n° 22-17.638, Sté Transports Daniel Meyer);
  3. Paid leave earned prior to parental leave is carried over after the date of return to work (only for situations prior to 11 March 2023) (Cass. soc. 13-9-2023 n° n° 22-14.043, CGR); and
  4. The statute of limitation for the right to paid leave (normally three years) can only start running once and only if the employer has taken all necessary measures to enable the employee to effectively exercise their right to paid leave. In practice, this means that employees could bring claims for back payment of paid leave for more than three years (Cass. Soc., 13 sept. 2023, FP-B+R, n° 22-11.106).

HR should therefore be prepared to face new claims on PTO back-payment for their employees (past and current) that were on ordinary sick leave during the employment relationship.

Analysis from the French Supreme Court : https://www.courdecassation.fr/print/pdf/node/17035

https://www.legifrance.gouv.fr/juri/id/JURITEXT000048085897

https://www.legifrance.gouv.fr/juri/id/JURITEXT000048085922

https://www.legifrance.gouv.fr/juri/id/JURITEXT000048085897

https://www.legifrance.gouv.fr/juri/id/JURITEXT000048085922

 For any queries related to this article, please contact Julien Haure or Marine Hamon.

traveler in airport

By James Perrott & Firuza Ahmed on October 2, 2023

POSTED IN EMPLOYMENT, FOREIGN WORKERS, IMMIGRATION, MAYER BROWN GLOBAL MOBILITY, UK

The UK Home Office has announced that, with effect from 4 October 2023, there will be an increase in application fees for a number of UK immigration and nationality routes.  The headline increases are:

  • Work and visit visas – increasing by up to 15%
  • Family visas, settlement and citizenship fees – increasing by up to 20%
  • Student visas – increasing by up to 35%

Background to the fee increases

Since the introduction of visa and settlement application fees in the UK in 2003, the cost to individuals and businesses has risen significantly over the years.  The UK government’s view is that those who benefit the most from the immigration system, that is migrants themselves and those, such as employers, who sponsor migrants, should pay for its costs.  To this end, the fees set by the Home Office are above the actual cost of processing immigration applications as the income generated is also used to fund the operation of the UK’s border control and immigration system as a whole, including the compliance and enforcement functions.  A spreadsheet of the new 4 October fees detailing the actual cost to the Home Office for each category can be found here.

Immigration Health Surcharge

The Home Office has also proposed to increase the Immigration Health Surcharge by 66% from £624 to £1,035 per year.  Although the UK Government has yet to publish the date that this will come into effect, it is likely to be early next year.

Immigration Skills Charge

One piece of good news is that there are currently no plans to increase the Immigration Skills Charge, which currently costs £364 or £1000 per year for each sponsored migrant, depending on whether the sponsor is a small or large employer.

Immigration and Nationality Fees

Below is a table listing some of the main fee changes which are likely to affect employers who sponsor migrants to work in the UK.  The full details of the new fees may be found here.

 ApplicationCurrent feeNew fee as of 4 October 2023Fee change / Percentage increase
Certificate of Sponsorship (“CoS”) – including Skilled Worker and Senior or Specialist Worker£199£239£40 / 20%
Skilled Worker or Senior or Specialist Worker visa application for three years or less (main applicant and each dependant)£625£719£94 / 15%
Skilled Worker or Senior or Specialist Worker visa application for more than three years (main applicant and each dependant)£1,235£1,420£185 / 15%
Skilled Worker or Senior or Specialist Worker in-country extension application for three years or less (main applicant and each dependant)£719£827£108 / 15%
Skilled Worker or Senior or Specialist Worker in-country extension application for more than three years (main applicant and each dependant)£1,423£1,500£77 / 5.4%
Indefinite leave to remain on the basis of five years’ sponsored employment in the UK (also known as settlement)£2,404£2,885£481 / 20%
Naturalisation as a British citizen (adult – this is in addition to the Citizenship Ceremony fee of £80)£1,250£1,500£250 / 20%
Registration as a British citizen (child)£1,012£1,214£202 / 20%
Priority processing of out of country visa applications (non-settlement)£250£500£250 / 100%

To give sponsoring employers an idea of how this will affect them, the overall cost, excluding legal fees, of sponsoring a migrant for five years, where the sponsor is a large employer and the priority service is used, will increase by £475 (from £9,804 to £10,279) while the overall cost of sponsoring a migrant who has a partner and two children accompanying them to the UK for the same period will increase by £1,780 (from £23,619 to £25,399).

Conclusion

Whilst the Home Office states that all fee changes take into account the overall cost to applicants and employers versus the necessity of generating income to achieve the Home Office’s aim of a “largely self-funded” immigration system, there is no doubt that these above inflation fee increases will add to the significant fees burden already imposed on employers and migrants to the UK.  These fee increases may potentially affect the UK’s economic growth if they lead to companies moving specialist roles which they cannot fill from the UK’s domestic labour market to other countries or they result in highly skilled migrants deciding not to relocate to the UK as they consider the immigration costs to be excessive. 

Sponsoring employers may therefore wish to consider the duration of sponsorship.  If a CoS is assigned for the maximum five year period at the outset, although this may save on potential extension application costs, it does result in a significant up-front outlay.  We are therefore increasingly seeing employers sponsoring permanent UK employees for a shorter initial period.  We are also receiving a number of requests to assist in the preparation of clawback provisions to be inserted into the employment contracts of sponsored migrants, which enable employers to claim back all, or a proportion of, the immigration costs if the sponsored migrant leaves their employment before their sponsorship ends.  Care must be taken in the drafting of such terms to ensure that they are not deemed to be penalty clauses since this could result in them being found to be unenforceable.  In addition, it is important to be aware that there are some immigration costs that sponsor licence holders are not permitted to claw back, which includes the Immigration Skills Charge.

Tags: Employer-Employee, Employment, Fees, Immigration, UK Home Office, UK Immigration, Visa

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The US securities exchanges (NYSE and Nasdaq) recently introduced new rules requiring listed US companies to adopt policies that provide for clawback of incentive-based compensation in the event of a restatement of the company’s financial statements.

In this Legal Update, Mayer Brown’s Employment and Benefits Group discusses the impact of the new rules on companies that may need to enforce such rules in other countries, including specific commentary on the laws of: Brazil, China, France, Germany, Hong Kong, Singapore, the United Arab Emirates and the United Kingdom.  In particular, we consider whether such policies are enforceable in those countries and how easily clawback can be achieved. 

You can read the update here.   If you have any questions, or would like to learn more about the topics discussed in this Legal Update, please contact Ryan J. Liebl, Laura D. Richman, Duncan A.W. Abate, Miriam Bruce, Aline Fidelis, Christopher Fisher, Régine Goury, Julien Haure, Hagen Köckeritz, Jad A. Taha, Jennifer C.W. Tam, Hong Tran or Guido Zeppenfeld.

In the latest episode of OPEN Talks (our series of short podcasts focused on diversity, equity and inclusion), Louise Fernandes-Owen, Global PSL for the Employment & Benefits Group, interviews Pensions Partner, Jay Doraisamy, Employment Partner, Christopher Fisher and Pensions Professional Support Lawyer, Katherine Carter about the new Pensions Regulator’s Guidance on Equality, Diversity and Inclusion.

In March 2023, the Pensions Regulator published guidance for trustees and employers on equality, diversity and inclusion (EDI); in this episode Louise, Jay, Katherine and Chris discuss the origins of the guidance, its key principles and suggested action points for trustees and employers. They also explore other regulator-issued EDI guidance, amongst other legal perspectives.

As a reminder, our Pensions team has produced a guide for trustees and employers, which sets out a series of trustee steps for the implementation of EDI in their scheme, the many employer-specific considerations, and how we can support trustees and employers in improving EDI in their scheme.

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.

The global workplace is continuing to evolve, with many businesses experiencing significant and long-lasting change alongside increasingly challenging market conditions.

For an employer considering potential redundancies and reductions in force (RIFs) across multiple jurisdictions, understanding how to navigate the various, complex, legislative frameworks is vital.

Our new practical guide on this topic highlights the key legal considerations for redundancy and RIF programmes across selected jurisdictions in the Americas, Asia, Europe and the Middle East. For more information, please get in touch with Louise Fernandes-Owen or one of the contacts listed in the guide.

In March 2023, the UK Government published its AI White Paper, setting out its proposals and expectations for the regulation of artificial intelligence (AI) in the United Kingdom. The White Paper discusses the empowerment of regulators and a principles-based approach to aid the use of AI in the United Kingdom.

In our latest AI Perspective, the Intellectual Property team discuss the various aspects of the White Paper in detail and share their legal viewpoint on how the White Paper should be interpreted and what businesses should be doing now, and in the future, to comply with regulatory developments in this space. Read the update here. If you have any questions, or would like to discuss any aspect of the White Paper further, please contact Mark Prinsley or Oliver Yaros.

On 18 April 2023, the German Federal Ministry of Labor and Social Affairs (BMAS) presented the long-awaited draft amendment to the Working Time Act and other regulations. Following the decision of the Federal Labor Court of 13 September 2022 (case no. 1 ABR 22/21), the new law is intended to specify how employers must precisely record the working hours of their employees. The BMAS has not succeeded in making a big splash. Instead, the bill comes with a number of inconsistencies and questionable simplifications for employers bound by collective bargaining agreements (CBAs).

Read more here New rules proposed to record working time | Perspectives & Events | Mayer Brown

In March 2023, the Pensions Regulator published guidance for trustees and employers on equality, diversity and inclusion (EDI). The guidance explains what EDI is, why it is important for occupational pension schemes to improve EDI in their trustee boards, and how trustees and employers can do so. For more information on the Regulator’s guidance, please see our legal update.

We have produced a guide for trustees and employers that sets out:

  • A series of trustee steps for the implementation of EDI in their scheme.
  • A number of employer-specific considerations.
  • How we can support trustees and employers in improving EDI in their scheme.

If you have any questions, or would like to discuss any aspect of the Regulator’s guidance or our guide further, please contact Jay Doraisamy.