UK employment: a sea change ahead | Goodwin

The employment law landscape in the UK is changing rapidly following the election of the Labor government. New legislation coming into force on October 26, 2024 that combats sexual harassment in the workplace and the recently published Employment Rights Act, which introduces significant reforms to workers’ rights, dominated the headlines. Many companies are considering how these changes will affect their operations and how they will adapt to the Labor government’s vision of the UK workplace.

Stronger protection against sexual harassment

The Worker Protection (Equality Act Amendment 2010) Act 2023, which comes into force on 26 October 2024, creates a new duty on employers to take reasonable steps to prevent sexual harassment of their employees . Under the existing regime, sexual harassment in the workplace is already prohibited, but the legislative change will create an advance duty on employers to proactively prevent sexual harassment of their employees. This new duty would also extend to circumstances where employees are sexually harassed by third parties (including customers, service users and visitors).

Although the new preventative duty does not create a stand-alone claim that workers can pursue directly, victims of sexual harassment may be entitled to receive higher compensation if they are able to bring a sexual harassment claim against their employer. As a result of the legislative change, the Employment Tribunal will have the power to increase compensation to victims of sexual harassment by up to 25% if their employer is found to have breached this new duty. Furthermore, the Equality and Human Rights Commission (EHRC) has the power to conduct investigations and enforce the new duty against employers without employees needing to make a complaint.

Whether an employer is considered to have taken reasonable steps to prevent sexual harassment will depend on the specific circumstances. Factors that will be taken into consideration include the size of the employer, the nature (and risks present) of that workplace, and the likelihood and types of third parties that employees may come into contact with in the course of their employment. Based on the EHRC guidance, it is clear that having adequate policies and procedures on sexual harassment and providing training to the workforce will only be the starting point for employers looking to fulfill this new duty. It is clear that a more targeted approach will be needed that carefully assesses the risks inherent in the specific workplace. Some companies are already implementing measures to reconfigure or streamline their internal lines of communication, strengthen their disciplinary and enforcement processes, and carefully monitor how third parties will interact with their workforce.

The new preventative duty is undoubtedly the result of the wider debate sparked by the “Me Too” movement, advancing the conversation about how to protect workers from sexual harassment in the workplace. The new duty is expected to be further strengthened when the government’s much-publicised Employment Rights Bill comes into force, which proposes extending the new duty to require employers to take “all” reasonable steps to prevent sexual harassment in the workplace and also contemplates that an allegation of sexual harassment will constitute a “protected disclosure” for the purposes of whistleblowing legislation. In this context, business leaders will need to carefully consider whether their compliance protocols will remain adequate in the future. For companies looking to acquire other companies, an assessment of that company’s approach to sexual harassment in the workplace will undoubtedly be a more important consideration during due diligence.

Labor Rights Bill ushering in employee-friendly reforms

The Employment Rights Bill is the Labor government’s flagship piece of legislation, setting out its vision for the reforms needed to better protect UK workers. The Labor Rights Act includes a set of worker-friendly changes that the government intends to make to current labor legislation. The government has already started to consult on some of the reforms, although most will probably only come into force in 2026. Key changes taking place in the future include:

Making unfair dismissal an immediate right
The main proposal of the Labor Rights Law is to make unfair dismissal an immediate right for all workers. Currently, workers must be employed by their employer for at least two years before they can make a claim for “ordinary” unfair dismissal. By government estimates, around 9 million UK workers have worked for their current employer for less than two years (and consequently have limited protection against unfair dismissal). The government proposes to abolish this waiting period.

Although the proposal presents a radical change to the way that employee redundancies are managed, an important caveat is that the government envisages that employees can be dismissed fairly, after a light procedure, during an initial legal probationary period (which should be nine months). This less costly process will have to be carried out in consultation; However, once implemented, the new right to unfair dismissal from day one will undoubtedly affect companies’ approach to hiring new employees, managing performance and exposure to liability associated with dismissing employees.

Strengthening flexible working rights
The UK, in the years following the COVID-19 pandemic, has addressed flexible working among workers more extensively. Currently, every UK employee has the right to make a flexible working request from their first day of work. There are specific reasons why an employer may refuse a flexible working request, which are not expected to change (and no changes are expected to the pay that workers receive if their employer does not comply with its legal obligations regarding flexible working requests) . However, the Employment Rights Act introduces the requirement that any refusal by an employer to a request for flexible working must be “reasonable”. While this change falls short of the government’s initial aim of making flexible working a “default” right for most workers, this proposal is likely to alter cultural expectations regarding workers’ ability to work flexibly and place on employers the burden of demonstrating why. a specific request cannot be fulfilled.

Introduction of a single implementing body
The Labor Rights Act proposes the creation of a Fair Labor Agency, a state law enforcement agency that will provide a stronger framework for workers to assert their rights. Currently, employment rights are enforced through a combination of individuals filing complaints with an employment tribunal and various government bodies enforcing certain rights on behalf of workers. The new state enforcement body will take over the enforcement of distinct labor rights in the first instance, but the Labor Rights Law provides that the body’s competence and powers will be expanded in the future. As with other law enforcement agencies that have been created or strengthened by previous governments, the key to the Fair Work Agency’s success will depend on it having sufficient resources to effectively fulfill its mandate.

The Employment Rights Act presents the most significant reform of UK employment law in years. According to the government’s own impact assessment, the Employment Rights Act is expected to impose a direct cost on UK businesses of up to £5 billion per year. Additionally, the Labor Rights Act is expected to have a far-reaching impact on companies’ business practices, compliance costs, and legal claims.

Given that most Labor Rights Act reforms will not come into force until 2026, companies have ample time to prepare. The trend line under the Labor government is clear, and companies that carefully assess how upcoming changes to employment legislation will affect their business and adapt accordingly will be able to effectively recruit, retain and manage their talent.

(See source.)