So little on the legislative agenda – and yet so much for employers to do

First announced in December 2019, the Employment Bill was set to cover a number of significant changes in employment law, including the creation of a single labour market enforcement agency, enhanced redundancy protection for pregnant employees and those returning from maternity leave, changes to the flexible working regime, and additional leave rights for carers and parents of neonates.  There is no mention of when, or if, these changes will now come into force and there is a noticeable lack of other concrete employment proposals in the pipeline.

In spite of this, employers now find themselves in incredibly challenging times – never before has there been so little on the legislative agenda and yet so much for them to grapple with.  We discuss below the key areas that we believe employers should be prepared to focus on in the months ahead.

How should the “future of work” look for your business?

Recent government analysis of individuals’ and businesses’ attitudes to home working found that the proportion of workers taking advantage of some form of hybrid working arrangement rose from 13% in early February 2022 to 24% in May 2022. The percentage working exclusively from home has fallen from 22% to 14% in the same period.[1] It is likely that hybrid working has now become a permanent feature of the workplace, but this doesn’t mean it’s an easy option for all employers.

The difficulties are played out in the press on a regular basis.  Jacob Rees-Mogg’s now infamous “I look forward to seeing you in the office very soon” notes, left in civil servants’ empty offices in April 2022, were heavily criticised by unions and the press.  Lord (Alan) Sugar recently branded staff at PwC “lazy g**s” after the company announced that workers could take Friday afternoons off over the summer.  Clearly, these are highly emotive issues in a world where both employers and employees have experienced the benefits and the drawbacks of home/hybrid working since 2020.

The benefits of home/hybrid working have been well researched and include higher staff retention levels, increased productivity, and lower costs.  The drawbacks, however, most noticeably a negative effect on staff mental health and your company culture, can be significant.  How do you create an inclusive culture and a “level playing field” for all staff, no matter where they are based?

The possibility of a four-day working week adds a further layer of complexity the future of work.  From June 2022, more than 30 companies in the UK will trial a four-day working week, with no loss in pay for employees.  As well as improved productivity, further benefits that are anticipated from the adoption of a four-day working week include reduced sickness absence and improved retention, innovation and recruitment, as well as improved gender equality.  However, employers considering this option need to be live to the potential drawbacks as well, including potentially decreased output, higher levels of stress and the potential for the creation of a two-tier workforce, with some outward facing roles still needing a five-day presence unless/until a four-day week becomes the accepted norm.

Employers need to remain focussed on their strategy when navigating all of these issues, looking at the implications of home/hybrid working for that strategy and the relative importance for the organisation.  Continuing to engage with staff to find out if it is really what they want will be vital.

Are you making enough progress with your ESG responsibilities?

The ability to demonstrate commitment to environmental, social and governance (“ESG”) best practice has risen in importance for employers in recent years, and is becoming increasingly relevant to employees and potential recruits in highlighting how committed employers are to ethical and business standards.

Out of the three factors, arguably the most prominent for employers at the moment is the “social” factor, with Diversity & Inclusion (“D&I”) taking particular importance.  As a minimum, employers should look to have a clear D&I strategy in place, alongside appropriate policies to ensure they support a diverse and inclusive workforce.

Without a focus on D&I employers put themselves at significant risk of discrimination claims (amongst others), and risk damaging their reputation.  However, D&I is not just about risk management.  There is a very clear business case for diversity with the companies who engage the most diverse workforces now more likely than ever to outperform less diverse peers on profitability.  For example, companies in the top quartile for gender diversity on executive teams are 25% more likely to have above-average profitability than companies in the fourth quartile.[2]

To get ahead on D&I employers should make it a central part of their business strategy.  Looking at your diversity data will be an important first step, but this data can sometimes be difficult to capture.  Work on policies and recruitment practices should also be top of the agenda.  Where they are not already legally required to do so, employers may also wish to consider voluntary reporting on, for example, their gender pay gap, ethnicity pay gap and disability workforce reporting.

Navigating the increased risks involved with fire and re-hire practices

Fire and re-hire practices (more traditionally known as dismissal and re-engagement) are used by employers to seek to change terms and conditions of employment when agreement cannot be reached with workers.  Employers are at risk of unfair dismissal claims, claims for failure to inform and consult, and even criminal liability if existing employment laws are not followed.

The heightened disruption and business challenges caused by COVID-19 meant that some employers were forced to consider firing and rehiring employees during the pandemic.  As businesses adjust outside of the pandemic and grapple with the current economic uncertainties and possibility of a recession, it is likely that fire and re-hire practices will continue to be used.

The practice, whilst legal (provided the correct process is followed), has always been controversial but has become even more so recently. The issue was debated in Parliament last year, and the government stated in February 2022, prior to the dismissal of nearly 800 workers by P&O Ferries without any form of consultation, that it had no plans to legislate to prevent the practice.  While P&O was savaged in the press and public opinion, and heavily criticised by Parliament, the current legislative framework seemed relatively toothless for discouraging an approach such as the one it adopted.

The government has accordingly now re-thought its stance and has recently announced that a new Statutory Code of Practice will be published.  The new Code will detail how employers must hold “fair, transparent and meaningful consultations on proposed changes to employment terms”, including the practical steps that employers should follow.

Importantly, a court or Employment Tribunal will be able to take the Code into account when considering relevant cases, including unfair dismissal. The courts will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code where it applies.

With risks that include extreme adverse publicity, unfair dismissal claims and, once the Code is published, a hefty uplift in any compensation award, employers will need to tread very carefully if looking to dismiss and re-engage.

Are you focussing on your employees’ mental health?

The HSE reports that, in 2020/21 stress, depression or anxiety accounted for 50% of all work-related ill health cases and recognises that the pandemic will have had a significant impact on our mental health.[3]  Proactive employers will recognise that supporting positive mental health amongst employees is vital going forward and should not have simply stopped with the end of lockdown.

On 12 April 2022, the government published a consultation called the “Mental health and wellbeing plan”.  It includes the development of a ten-year plan to reduce the prevalence, incidence and recurrence of mental ill-health.  The consultation suggests that employers will need to protect and promote positive mental wellbeing by both understanding and meeting physical and mental needs in the workplace.  It goes on to address two key challenges: the need for a clear role for employers to prevent the onset of mental health conditions and mental ill-health, and wider implementation of workplace interventions to support mental health.  Employers are also identified as an important source of support for employees who may not need “clinical” early interventions.  The consultation closes on 5 July 2020.

In our view it is only a matter of time before obligations are placed on employers to do more to proactively support positive mental health in the workplace.  Employers who can get ahead of the game on this now will benefit from a healthier and more productive workforce and will be much better placed to deal with issues as they arise.

Conclusion

Whilst the number of legislative employment proposals are minimal at present, it is clear that employers still have a lot to do.  Although the immediate aftermath of the pandemic is behind us, now is not the time to be complacent.  If you can plan ahead and tackle these issues head on, both your workforce and your business will see significant benefits.  Please do get in touch with a member of our Employment team if you need advice on any of the areas mentioned.

[1] According to government data received from the voluntary fortnightly business survey (BICS) and the Opinions and Lifestyle Survey (OPN), 23 May 2022.

[2] McKinsey & Company, “Diversity wins: How inclusion matters”, 19 May 2020.

[3] HSE: “Work-related stress, anxiety or depression statistics in Great Britain, 2021”, 16 December 2021.