Employment Corner, March 2023

What’s on the employment agenda for 2023?

With 2023 now well underway, HR professionals and in-house employment lawyers are looking at a packed agenda for the rest of the year. In this article, Senior Associate Kate Hurn looks ahead to the key challenges facing UK employers over the coming months, including the continued impact of the cost of living crisis, something which is likely to have particular impact in the Hotels, Hospitality and Leisure sector with its high number of low paid workers.

International Know-How

• Bird & Bird’s International Business Immigration team have produced a Typical Business Immigration Visa Routes map to help international businesses understand the principal work visa routes for key jurisdictions.
• As part of our recently launched series, Managing Compliance: the People Risk Agenda, the International HR Services Team have produced global guidance on criminal liability arising from workplace obligations. A copy can be accessed here.

Case update

Teixeira v Zaika Restaurant Ltd and another

With continued difficult trading conditions for many employers in the Hotels, Hospitality and Leisure sector, the importance of ensuring that redundancies are effected fairly remains paramount. In this case, the Employment Appeal Tribunal (“EAT”) held that the Employment Tribunal (“ET”) was wrong to make a 100% reduction to an unfair dismissal compensatory award on the basis that a redundancy “pool of one” meant that the dismissal was inevitable.

The Claimant worked as a chef in an Indian restaurant. He was one of a team of ten, and was a “non-speciality chef” with considerably less experience than the others. In 2020, the Covid-19 pandemic caused a significant reduction in business at the restaurant and the Respondent informed the Claimant that he was dismissed by reason of redundancy. None of the other chefs were made redundant during this period. The ET found that this dismissal was procedurally unfair because no prior meetings or consultation had been held. However, it found that even if the proper redundancy procedure had been followed, the Respondent could reasonably have determined that the Claimant was in a redundancy selection pool of one because he was the only non-speciality chef, and even if he had been pooled with the other chefs he would have been the lowest scorer. The ET concluded, therefore, that the redundancy was inevitable and the Claimant’s compensation should be reduced to zero.

On appeal, the EAT held that the ET had failed to properly apply the relevant legal principles in its reasoning. The ET should have considered the general legal requirement of some warning and consultation, even in the case of a small business and even where the selection pool would consist of just one person. The EAT held that the warning or consultation meetings might have resulted in a wider selection pool, the selection criteria used and even the outcome itself. In addition, even if the dismissal was inevitable, it might have been delayed by the consultation procedure, which would have resulted in some compensation for the Claimant’s loss of earnings for that period, unless there was a compelling reason why the dismissal would have been fair without any consultation. The ET had not given any compelling reason in its judgement.

This case highlights the risks run by employers who do not warn and consult employees whose roles are at risk of redundancy. Whilst there may be a compelling argument that consultation would have made no difference to the outcome, this is not always clear cut, and in an unfair dismissal claim an ET must properly engage with the question of what impact prior warning and genuine consultation would have had on the employer’s decision making.

Legal updates

1. Harpur Trust - Government Consultation

The UK Government has published a consultation paper to examine ways of addressing issues arising from the Supreme Court’s judgment in Harpur Trust v Brazel in July 2022. As a result of the case, which decided on the calculation of holiday entitlement and pay for part-year workers, these workers may have a larger holiday entitlement than part-time workers who work the same total number of hours across the year. This has a particular impact in the Hotels, Hospitality and Leisure sector which relies on seasonal and zero-hours workers who do not work regular hours throughout the year. To address this, the Government is proposing to replace the current 52-week reference period for calculating holiday pay, which disregards weeks in which no remuneration is earned, with a 52-week reference period which includes weeks with no remuneration.

The consultation paper seeks to understand the implications of the Harpur Trust ruling on different sectors including agency workers who have bespoke service contracts. The Government’s impact assessment calculates that this change will save businesses approximately £113m per annum.

2. National Minimum Wage, SSP, SMP etc. rates 2023/2024

The Department for Work and Pensions has published its annual rate increases for 2023/2024, which will take effect from 6 April 2023.

• The rate for statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase to £172.48 per week (from £156.66). The rate for statutory sick pay will increase to £109.40 per week (from £99.35).
• The minimum wage and national living wage will also increase, effective from 1 April 2023.

3. Flexible Working

The UK Government has published its response to last year's consultation on updating flexible working legislation. The response includes a number of conclusions drawn from the consultation:

• the right to request flexible working will become a right for all employees from day one of their employment;
• employees will be allowed to make two requests within a 12-month period, and the response time for employers will reduce to two months from the current three;
• there will be a new duty on the employer to discuss alternatives to the request (if rejected);
• the procedure for requesting flexible working will be simplified by removing the requirement for employees to set out how their flexible working request might impact upon the employer; and
• there will be no change to the list of eight business reasons the employer has to refuse a request for flexible working.

The consultation paper notes that primary legislation is required to implement some of these changes, but does not include any draft legislation or set out a timetable for implementation. However, the Government has said it will support the existing Private Members' Bill, which includes the changes allowing employees to make two requests within a 12-month period and reducing the response time to two months.