From 31 December 2024, the Home Office Guidance Guidance Workers and Temporary Workers: sponsor a skilled worker prohibits the recoupment of certain fees from sponsored workers. These changes are aligned with a commitment made in the Written Ministerial Statement on 28 November 2024, ensuring that specific costs are not passed on to sponsored workers.
Key Changes
- Skilled Worker Sponsor Licence Fees:
Sponsors are no longer permitted to pass on the cost of the sponsor licence fee or associated administrative costs, including premium services, to sponsored workers.
- Certificate of Sponsorship (CoS) Fees:
For CoS assigned on or after December 31, 2024, sponsors cannot pass on these fees to sponsored workers.
- Amendment for Study Route Switch:
A minor amendment has been made reflecting a change of name for the CoS category where the worker is applying to switch from a study route.
- Defined CoS Assignment:
It is now clarified that a Defined CoS must be assigned to a worker within 90 days from the date it was allocated to the sponsor, instead of the previously stated 3 months.
Consequences for Sponsors:
If a sponsor is found to have recouped or attempted to recoup these costs from sponsored workers, their sponsor licence will usually be revoked.
Commentary:
This now answers the question if these costs can be passed on to candidates. Indeed we understand that on occasion candidates offer to pay these costs in exchange for employment. Moving forward, this practice is no longer permissible. Businesses with any contractual recoupment clauses for these fees must ensure that these clauses are removed so as to comply with the new Guidance.
The Industrial Tribunals and Fair Employment Tribunal (Constitution and Rules of Procedure) (Amendment) Regulations (Northern Ireland) 2024 came into effect on 12 December 2024, making amendments to The Industrial Tribunals and Fair Employment Tribunal (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2020.
The key amendments include:
- Employment Judge Sitting Alone
An Employment Judge may now sit alone in certain circumstances. Whilst the specific conditions for this are not detailed in the Regulations, they may be outlined in a subsequent Practice Direction. Currently Employment Judges in Northern Ireland can sit alone in unlawful deduction from wages claims.
Since 2012, Employment Judges in Great Britain have been allowed to sit alone in unfair dismissal cases. We anticipate that we may follow this approach. In July 2024, the Senior President of the Tribunals in GB issued a Practice Direction which now permits Employment Judges to sit alone in all cases in GB.
- Multiple Claimants on a Single Claim Form
In certain circumstances the amendments allow two or more Claimants to make their claim on a single Claim Form. This change is intended to streamline the process for cases involving multiple parties.
- Default Judgments and Recording of Judgments
The Regulations provide for the issuance of default judgments and exempt the recording of judgments on the register when a claim is withdrawn.
- Reasonable Notice of Hearings
The amendments require reasonable notice of Hearings, which can be less than 14 days if all parties consent. This flexibility is designed to expedite the scheduling of Hearings.
Commentary
As the Employment Tribunal in NI continues to modernise it will be interesting to see whether we adopt the GB practice of allowing Employment Judges to sit alone in all cases.
In our experience lay members play a critical role in Employment Tribunal Hearings by bringing realism and industrial knowledge to the decision-making process. In panels of three, lay members have equal voting power and can out-vote the Employment Judge, although this is rare. Indeed, there was an extensive recruitment campaign for lay members which was completed earlier in 2024 so it will be interesting to see how the extent of their role develops.
On 26 November 2024, the Northern Ireland Statistics & Research Agency (NISRA) published the Women in Northern Ireland 2023 Report . This report delves into the characteristics of women in the Northern Ireland labour market and highlights some critical insights for employers.
Key Findings
A consistent feature of the report is the higher economic inactivity rates for females. Whilst women make up half of the working-age population (those persons aged between 16-64 years old), significant disparities exist when comparing economic participation between genders.
Comparisons Between Females and Males
- Economic Inactivity:
Three in ten working-age women are not working compared to one in five working-age men.
- Reasons for Economic Inactivity:
The main reason for economic inactivity among women is long-term sickness. Thereafter for women, looking after the family is the second most common reason for economic inactivity. In contrast, ‘looking after the family’ is the least common reason given by men.
- Employment Patterns:
Women are less likely to be self-employed and more likely to work part-time. Approximately 60% of employed women with dependent children work full-time, compared to 96% of employed men with dependent children.
The age of the youngest child in the household increases the likelihood of women working part-time. Women with dependent children are more likely to work full-time when the youngest dependent child is at secondary school.
Women with dependent children (of any age) are more likely to work part-time than those without children, while the opposite is true for men.
- Employment Rates and Earnings:
Over the past ten years, the female employment rate has been lower than that of males. Women earned 7.8% less than men in Northern Ireland, meaning for every £1 earned by men, women earned 92p.
Commentary
These findings are not surprising, but they emphasize the ongoing challenges women face in the workforce. Particularly striking is the disparity in reasons for economic inactivity and the continued prevalence of part-time work among women, especially those with dependent children.
To see more women in leadership positions, employers need to address these challenges head-on. With the implementation of Gender Pay Gap reporting now is a good time for each Organisation to consider the data in their workforces and identify steps they can take to support female employees and address these disparities.
In June 2024, we contacted the NI Department of Communities (DfC), which is responsible for introducing the NI Gender Pay Gap Regulations, asking about the expected timeline for the implementation of Gender Pay Gap Regulations. Their response was a vague “in due course.”
Then on 25 November 2024, DfC quietly launched the Consultation on The Gender Pay Gap Information Regulations to plan how these Regulations will be implemented in NI.
Background
Most people are aware that the Gender Pay Gap regulations require the reporting of differences in pay between male and female employees. These regulations have been in place in Great Britain for seven years and initially it had been envisaged that similar measures would be introduced in NI in and around the same time. Due to a delay with the transfer of functions between NI Departments (in part caused by delays with covid and Stormont being dissolved) the regulations were not implemented and were placed on hold.
The purposes of these regulations in the main are to:
- Identify gender pay gaps.
- Analyse the drivers behind these gaps.
- Explore how employers’ policies and practices may have contributed to these gaps.
- Encourage employers to take remedial action.
The consultation does note that the Gender Pay Gap in NI is lower than in the rest of the UK. This is largely due to a higher proportion of public sector jobs, where the pay difference is 6.2%. However, in the private and voluntary sectors in NI, the difference is more significant, with females earning 14.8% less than males.
Proposals
The NI Regulations are intended to go further than the original GB Regulations by requiring employers to publish information on workers related to ethnicity and disability. Although there is no legal obligation to record ethnicity or disability, the NI Regulations propose that, when this information is available or the employer is notified, it should be recorded and reported.
The Consultation seeks response on a proposed snap shot date of 5 April each year. The snap shot date is the specific date that businesses base their gender pay gap calculations on payroll data.
The regulations are proposed to apply to employers with 250 or more employees, the same as currently in place in GB. As of June 2024, it is estimated that this would apply to 345 employers in Northern Ireland.
Consultation Details
The consultation is short with only 16 questions seeking views on how the regulations will be implemented, not on whether they will be implemented which is a given. For example, one of the questions asks if the Office of National Statistics (ONS) definition of calculating “pay” should be used.
Timeline
The estimated timeline for implementing these regulations is approximately 18 months for the policy proposals, with laws likely to be passed in early 2027. Therefore, actual reporting would typically begin a year later, in 2028 and data gathered over the previous year.
Consultation Period
The consultation will run from 25 November 2024 until 14 February 2025.
This year, 2024 has been a significant year for employment law, and these regulations will be discussed at the Employers Federation End of Year Gathering on 19 December 2024. If you wish to book on that event please email at john@eefni.org
We very much encourage Members to feed in their views and opinions which will help shape our responses particularly from those with experience of completing gender pay gap reports in other jurisdictions. Any responses are welcome and should be sent to michelle@eefni.org
The Labour Government’s Autumn’s Budget Autumn’s Budget has met with mixed responses. Tax is not one of the areas that is devolved to the Northern Ireland Assembly and The Executive so the increases in taxation will apply here.
[Note however Northern Ireland does have responsibility for local taxes (domestic and business rates). In March 2015 Parliament passed the Corporation Tax (Northern Ireland) Act 2015 which, subject to commencement regulations, will devolve corporation tax rate setting powers to the Northern Ireland Assembly. The Government has committed to commencing the regime if the NI Executive demonstrates its finances are on a sustainable footing.]
THE TAX RISES IN THE BUDGET THAT WILL AFFECT BUSINESSES INCLUDE:
Employers National Insurance Contributions (NIC)
This is a rise of 1.2% rise from 13.8% to 15% to only the Employers element of National Insurance Contributions. The threshold at which payments start will also fall to £5,000 from £9,100 meaning that businesses will have to start paying NIC on a larger portion of their employees’ salaries.
To soften the impact on small businesses, in April 2025 Employment Allowance will increase to £10,500 (from £5,000), providing some protection to the smallest businesses.
Income Tax
The Budget confirmed that Income Tax and National Insurance Contributions thresholds will continue to be frozen and only unfrozen from 2028-29 onwards.
National Living Wage
Prior to the Budget the Government confirmed that from April 2025 the National Living Wage for those aged 21 and over would increase to £12.21, representing a 6.7% increase of 77p.
National Minimum Wage
In addition the Government also confirmed that they would fully accept the Low Pay Commission’s (LPC) recommendations on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW). For the first time, the Government asked the LPC to take into account the cost of living, including expected trends in inflation up to March 2026, when recommending the NLW. The LPC expects its recommended rate to represent a real-terms increase across the whole of the period to March 2026, using any major inflation measure, thereby protecting low-paid workers’ living standards.
- 18-20 years old from £8.60 to £10.00 (increase of 16.3%)
- 16-17 years old from £6.40 to £7.55 (an increase of 18.0%)
- Apprentice rate from £6.40 to £7.55 (increase of 18.0%)
Corporation Tax
This will be capped at 25% for next 5 years and small business tax multiplier froze.
Capital Gains Tax (CGT)
Effective immediately, CGT charged on profit made from the sale of assets, will increase with the lower rate rising from 10% to 18%, and the higher rate from 20% to 24%.
Fuel Duty
Fuel duty will be froze for another year with the temporary 5p cut extended to 22 March 2026.
Company Car Tax Incentives for electric vehicles.
Impact
The investment projects in England proposed to boost the economy do not apply here. Instead Northern Ireland receives additional funding via the Barnett formula and NI Executive then decides on how to spend that money.
This additional funding amounts to £1.5 billion in 2025-26:
- £1.2bn for day-to-day spending and;
- £270m for capital expenditure i.e. infrastructure investment.
Statistics for March 2024 show that the majority (89% or 71,425) of businesses in Northern Ireland are micro-sized businesses (less than 10 employees). These tax measures will affect all businesses especially with the higher minimum wage and changes afoot on employment rights.
See Press Release: A Budget to fix the foundations and deliver change for Northern Ireland
THE LANDMARK THE BILL EMPLOYMENT RIGHTS BILL IN GREAT BRITAIN
On 10 October 2024, the Labour Government unveiled its once-in-a-generation Employment Rights Bill (the Bill), in what has also been referred to as a significant milestone in the evolution of workers’ rights in Great Britain. The Bill runs to 157 pages and is accompanied by over 100 pages of Explanatory Notes. In addition to the Bill, the Government also published a document Next Steps to Make Work Pay that summarises the reforms in the Bill and also other changes it is looking to implement in the future.
With 28 individual employment reforms, this substantial Bill will dramatically transform employer’s obligations and the workplace landscape. These changes will apply across the board and include changes on matters such as unfair dismissal, sick pay, changing terms, unpredictable hours contracts, flexible working, equality at work, trade union rights, family leave, and redundancy.
This Article considers the key proposals and compares the position in GB to what is being proposed in Northern Ireland.
CONSULTATIONS
Whilst most of the Consultations (and there will be quite a few) flowing from the Bill, will commence in 2025, four Consultations were commenced on 21 October 2024. Those Consultations periods will last for 6 weeks until 2 or 4 December 2024.
These are Consultations on:
- Strengthening Statutory Sick Pay
- Application of Zero Hour Contracts (ZHC) measures to Agency Workers
- Creating a Modern Framework for Industrial Relations
- Strengthening remedies against abuse of rules on collective redundancy and fire and rehire
FACTSHEETS
Given the scope and breadth of the changes the Government also published
10 Factsheets summarising the key changes and areas for consultation. The Factsheets cover:
1. Employment Rights Bill Overview
2. Unfair Dismissal
3. Fire and Rehire
4. Statutory Sick Pay
5. Trade Unions
6. Bereavement, Paternity and Unpaid Parental Leave
7. Zero hours contract
8. Fair Work Agency
9. Adult Social Care Negotiating Body
10. School Support Staff Negotiating Body
SUMMARY OF THE KEY CHANGES
Day 1 Right to Claim Unfair Dismissal:
At present in GB, employees need 2 year’s continuity of service to bring a claim for unfair dismissal. In Northern Ireland only 1 year’s continuous service is required. The Bill will introduce a Day 1 right to claim unfair dismissal in GB.
In a concession to the business community who raised concerns that Day 1 Rights will discourage employers from taking a chance on new employees, the Government has included a new statutory probationary period. The suggested period is 9-months which is subject to Consultation. The Consultation process will also flesh out how this new right will operate, what type of ‘lighter touch’ process will apply during the probationary period and what compensation will be available to employees.
Statutory Sick Pay (SSP):
In GB, the Government will remove both the 3-day waiting period and the lower earning threshold (of £123) before being entitled to SSP. This will mean that more workers, including those with lower incomes, will be able to SSP from the first day of the sickness.
On 21 October 2024, the Department of Work and Pensions (DWP) in GB launched a Consultation to consider what the percentage rate for those earning below the current flat rate of Statutory Sick Pay should be.
SSP is a devolved matter in Northern Ireland. This means that any decisions on changes to SSP in Northern Ireland (including whether to continue to align with the changes proposed in GB) are a matter for the Executive and NI Assembly.
Having said that historically Northern Ireland has maintained parity with the rest of the UK. On 30 October 2024, the Northern Ireland Department for Communities (who has responsibility for SSP) published a link to the DWP’s Consultation on its webpage and is actively encouraging Northern Ireland stakeholders to respond. This is perhaps a signal that similar changes to SSP will be made here.
To prepare for potential changes members could work with their payroll provider to calculate the possible extra cost and check that it will be able to adjust its systems as appropriate when the measures are implemented in GB and potentially NI. In addition, since the changes could potentially increase short-term absence in companies with no or limited company sick pay, you may want to review attendance management procedures, including triggers, and refresh manager training for handling frequent short-term absence.
Ending ‘Exploitative’ Zero-Hours Contracts
The Bill seeks to end the one-sided flexibility of certain ‘exploitative’ zero-hours contracts by providing that employers must make a Guaranteed Hours Offer to zero-hours workers and those with a ‘low’ number of guaranteed hours at the end of a specified reference period. This offer may need to be repeated at the end of each subsequent reference period.
The ‘Next Steps to Make Work Pay’ document indicates that the reference period, which is not currently defined, will be 12 weeks, and the definition of ‘low’ guaranteed hours is left for Regulations and will be subject to consultation. The offer of guaranteed hours, which may be a contract variation or a new contract, must reflect the number of hours that the individual regularly worked over the reference period and cannot be for a limited term contract, unless reasonable. The Bill allows for Regulations to go further and provide that the guaranteed hours offer must also reflect the pattern, days and times of day worked in the reference period. The worker will be able to agree, ignore or refuse the offer, but the offer must be made regardless.
As stated above the Consultation has been launched that considers whether to extend these measures to agency workers.
It is intended that where the employment is genuinely temporary, employers will not have to offer permanent contracts, and that workers on other types of contract who occasionally pick up overtime will not be affected.
The Bill contains lengthy and complicated provisions aimed at ensuring that workers get reasonable notice of the scheduling of a shift, as well as of changes and cancellations to shifts, with proportionate compensation for any shifts which are cancelled or curtailed at short notice. These provisions apply to zero-hours workers and those on minimum hours and those who do not have a set working pattern. There will be a presumption that notice is not reasonable, unless it is given a ‘specified time’ before the shift is due to start. Regulations will define the ‘specified time’. It also remains to be seen what type of reasons would be sufficient to counter the presumption that notice is not reasonable, where notice is shorter than the specified time.
To prepare for this change, it is worth reviewing your processes around scheduling rosters and shifts.
Proposals to ending exploitative Zero Hour Worker Contracts in Northern Ireland are also being considered with options being proposed are moving to a Banded Hour Contract, similar to that in operation in Republic of Ireland or moving to measures similar to GB.
Making Flexible Working the Default from Day One
The Bill amends the current GB provisions in place that extended the right to request flexible working in April 2024. The proposals in the Bill further extend that right by shifting the emphasis to a default right unless there are reasonable grounds for refusing it.
The eight statutory grounds for refusing a request will remain as will the compensation regime which is limited to 8 weeks pay. However, this reasonableness requirement is a higher threshold than under the current GB laws. In addition, employers will be required to explain, in writing to the employee, why their refusal is reasonable.
In Northern Ireland proposals to extend the right to flexible working are also being considered. However, as they stand these proposals are simply to level Northern Ireland up to the position in Great Britain following the changes that were implemented in April 2024. This includes making the right a Day 1 right, permitting two requests (and not one) in any 12 month period and no longer requiring the employee to explain what effect their request will have on the employer.
Positive Duty to Prevent Sexual Harassment
On 26 October 2024, a new positive duty was placed on employers in GB to take reasonable steps to prevent sexual harassment at work. The Bill will extend this duty so that employers will have to take all reasonable steps to prevent sexual harassment of their workers in the course of employment. See our previous article here
Currently there is ambiguity around the ability to bring a third-party harassment claim i.e. a claim brought by an employee alleging that they have been sexually harassed by a third party such as a client or customer who is not an employee of the Company. Although the Equality and Human Rights Commission takes the view that the sexual harassment preventative duty already covers third party harassment, this can only be enforced by the EHRC.
The Bill would give workers the right to claim compensation for third party harassment – without the requirement (that is currently the position in Northern Ireland) for the employer to be aware of two previous occasions of harassment. In addition, the Bill will extend what is a protected disclosures under whistleblowing legislation to include a disclosure that sexual harassment has occurred, is occurring or is likely to occur.
This is one area in which the law in Northern Ireland and GB differs significantly.
In Northern Ireland an employer is currently liable for third party sexual harassment if it knew that an employee has been harassed on grounds of sex in the course of their employment on at least two other occasions by a third party, and not taken reasonable steps to prevent it from happening for a third time to the employee.
In Northern Ireland there are no similar proposals to introduce such a positive duty – however employers should take heed of the guidance as it may influence the NI Tribunals when assessing what constitutes reasonable steps to successfully defend against a discrimination case. In NI discrimination laws are the responsibility of the Executive Office, not the Department of Economy, and therefore this is an area that was not included in the Good Jobs Consultation.
Ending Fire & Rehire Practices
Much to the surprise of the business community, the Bill goes much further than anticipated. It effectively makes the use of dismissal and and re-engagement only possible if necessary for business viability where no genuine alternative exists.
The Bill will make it automatically unfair to dismiss an employee in order to vary their contract where the employee does not agree the variation, or to employ another person on varied terms to carry out substantially the same duties as the employee before the dismissal. The Government is of the view that current Statutory Code of Practice on Dismissal and Re-engagement, which came into force on 18 July 2024, does not go far enough.
The Bill sets out factors that a tribunal must consider when determining whether a dismissal is fair, including if there was any consultation with the employee and/or any consultation with a recognised union or other representative body. The Tribunal can also take into account if anything was offered to the employees in return for them agreeing to the variation.
This is an area that the Northern Ireland ‘Good Jobs Bill’ Consultation is also considering and it has been anticipated Northern Ireland would implement a Statutory Code of Practice on Dismissal and Re-engagement,. Time will tell whether the direction in GB paths the way for similar proposals here.
Strengthening provisions on Collective Redundancy Consultation
Statutory Collective Redundancy Consultation is currently triggered where an employer proposes 20 or more ‘redundancies’ (which includes dismissals and re-engagements to change terms) in a rolling 90-day period at one establishment.
The Bill removes the wording ‘at one establishment’, so employers with more than one site (but where the employer is the same legal entity) will have to count proposed redundancies across all sites in a 90 day period when assessing whether statutory collective consultation is triggered.
In Northern Ireland there are no similar proposals in the Good Jobs Bill. However, in our response to the Department of the Economy we made submissions asking for the current 90 day consultation period (that is required in NI when proposing to make redundancies of 100 or more) to be reduced to 45 days in line with Great Britain.
Changes to Family and Other Leave
The Bill introduces various enhancements to family and other leave including Day 1 rights to unpaid parental leave and paternity leave. The Bill also extends the entitlement to unpaid Bereavement Leave when anyone dies to whom they have a specified relationship. What constitutes a special relationship will be a matter for consultation.
The restriction on taking paternity leave following a period of shared parental leave will also be removed.
In its Next Steps Document, the GB Government has stated that it plans an overhaul and review of the whole parental leave system so we can expect more changes here.
In Northern Ireland, the ‘Good Jobs Bill’ Consultation proposes to introduce new rights reflecting those that were introduced in GB in 2024. In the main (with some small differences) the proposals will reflect those rights currently in place in GB before the changes provided for in this Bill.
Northern Ireland will therefore align to GB (before these further changes provided for in the Bill) on areas of:
- Flexible Working
- Carers Leave
- Neonatal Care Leave & Pay
- Extension to protection from Redundancy
- Paternity Leave
Equality Action Plans
The Bill requires large employers to publish action plans to address Gender Pay Gaps and support staff going through the menopause. Regulations may prescribe the content of such plans, how frequently they should be published and the requirement for senior leadership approval. The Bill also introduces a new requirement for employers to identify the providers/employers of contract workers when publishing their gender pay reports.
In Northern Ireland, the Department for the Communities (who has responsibility for this area) has informed us that the legislation is in place that when enacted will require employers to publish information relating to the pay of employees for the purpose of showing whether there are differences in the pay of male and female employees, i.e. the Gender Pay Gap. The way forward on how this legislation is to be enacted is currently being considered and will be announced in due course.
When enacted the Northern Ireland provisions will require reporting on disability and ethnicity of workers within each pay band. Precisely what statistics must be calculated and within which “pay bands” is still unknown at this point and remains to be clarified by the eventual Regulations.
Trade Unions and Industrial Action
Strengthening the trade union movement is one of the key aims of both the GB Government and Department of Economy in Northern Ireland. However, the laws governing trade unions are different in GB and Northern Ireland. This is because Northern Ireland never implemented counterpart laws to the Trade Union Act 2016 in place in GB or sought to impose restrictions on striking which were introduced in GB under the previous Conservative Government.
Many of the GB proposals are around repealing the Trade Union Act 2016 and subsequent laws that were introduced under the previous Conservative Government. Essentially this will bring the position back in GB to the current position in Northern Ireland. Some of the changes in GB include simplifying the ballot and notice requirements for industrial action and the process for TU recognition. Both jurisdictions are also considering permitting electronic ballots.
In both jurisdictions there are proposals to make it easier for trade unions to access the workplace but the detail may differ as Northern Ireland’s proposals are not as well formed as GB’s. The GB Bill requires employers to inform their workers that they have the right to join a trade union and makes it easier for trade unions to access the workplace. There are detailed provisions about negotiating access agreements, which involve the Central Arbitration Committee (CAC), who will also be responsible for dealing with complaints about breaches of access agreements. The equivalent to the CAC in Northern Ireland is the Industrial Court.
The Bill also bolsters rights to time off and access to facilities are strengthened for TU officials and learning representatives, and TU equality representatives who have met specific training conditions.
We do recommend that you review your industrial relations strategy, and move towards a proactive approach; for example, consider the introduction of works councils, employee forums etc. to improve workforce engagement and give staff a collective voice. You may also want to support your managers on working more successfully with trade unions, for example training them on negotiation skills and managing conflict.
New Single Enforcement Body, the Fair Work Agency
The Bill provides for a new single enforcement body, the Fair Work Agency, to strengthen enforcement of workplace rights. This will bring together existing enforcement functions, including with regard to the minimum wage, statutory sick pay, the employment tribunal penalty scheme and labour exploitation and modern slavery, as well as gaining a remit over the enforcement of holiday pay.
There are no similar proposals in Northern Ireland at present.
Looking Ahead
The Consultations on the GB Bill is ongoing, with critical details and operational mechanisms being scoped out. While some rights will require primary and secondary legislation, others could be implemented more quickly. It is predicted that the new unfair dismissal rights will not come into force until October 2026.
Employment law in Northern Ireland is devolved, with the Department for Economy currently considering responses to the NI Good Jobs / Employment Rights Bill. While there are some similarities to GB proposals, Great Britain is undoubtedly leading the way and will likely influence policy making and direction in Northern Ireland. The rapid changes in the employment landscape highlight the importance of staying informed and prepared for future developments.
We will of course keep you updated on any further developments.
Currently to be eligible for Statutory Sick Pay an employee must have average weekly earnings at or above the Lower Earnings Limit (currently £123 per week). Those that are eligible are only paid from their fourth day of sickness absence.
In Great Britain, the Government has stated that they will remove the requirement to earn at or above the Lower Earnings Limit before being entitled to SSP. The Government also plans to remove the waiting days meaning everyone will be eligible for SSP from the first day of sickness absence. Furthermore, enforcement and resolution of SSP disputes will be included within a newly established Fair Work Agency. See Factsheet summarizing the changes.
On 21 October 2024, the Department of Work and Pensions (DWP) in GB launched a Consultation to consider what the percentage rate for those earning below the current flat rate of Statutory Sick Pay should be.
SSP is a devolved matter in Northern Ireland. This means that any decisions on changes to SSP in Northern Ireland (including whether to continue to align with the changes proposed in GB) are a matter for the Executive and NI Assembly.
Having said that historically Northern Ireland has maintained parity with the rest of the UK. On 30 October 2024, the Northern Ireland Department for Communities (who has responsibility for SSP) published a link to the DWP’s Consultation on it’s webpage and is actively encouraging Northern Ireland stakeholders to respond.
This is perhaps a sign that we will maintain that parity approach. We would encourage members to respond and also start planning for a change. We will keep Members updated with any further developments.
On 12 September 2024, in the case of Tesco Stores Ltd v USDAW and Others [2024] UKSC 28, the UK Supreme Court unanimously allowed an appeal brought by USDAW (the Union) on behalf of employees and restored an injunction preventing Tesco from firing and rehiring employees for the specific purposes of depriving them of Retained Pay (RP) as it was agreed that RP was a permanent benefit.
The appeal raises fundamental questions about an employer’s right, under contract law, to terminate a contract of employment by giving notice and the remedies for breach of employment contract.
Background
RP was a financial contractual entitlement that was agreed between the Union and Tesco to be a permanent benefit.
In 2007, Tesco closed some Distribution Centres to incentivise existing employees to relocate. Tesco and the Union collectively agreed to provide RP to employees that agreed to relocate.
As this RP was agreed via a collective agreement, the right to RP was then incorporated into those employees’ contracts of employment as an express term.
The RP clause stated that RP would “remain a permanent feature” of an employee’s contractual entitlement, subject to certain qualifications.
A separate clause gave Tesco a contractual right to dismiss employees without cause, on notice.
In 2021, Tesco offered to buy out the right to RP. Tesco informed employees that, if they did not agree to the removal of the RP term, they would be dismissed and offered re-engagement on identical terms, but with no RP term
Some employees refused to accept the offer; the Union then successfully applied to the High Court for an injunction to restrain Tesco from terminating their employment for the purposes of removing their right to RP.
Tesco appealed to the Court of Appeal, who overturned the High Court’s decision to impose an injunction.
Supreme Court (SC)
The SC unanimously restored the injunction and, by virtue of doing so, have restrained Tesco from terminating employees for the purposes of removing their right to RP.
The SC held the employment contracts contained a term implied by fact meaning
Tesco’s right to terminate could not be exercised to deprive employees of their right to RP.
In arriving at that decision, the SC started by interpreting the express RP term.
The SC rejected Tesco’s argument that the RP term simply meant that the RP entitlement was only “permanent” for the contract duration and was subject to Tesco’s unqualified right to dismiss on notice.
The SC stated that such an interpretation would give no substance to the express promise that the entitlement is “permanent”. The correct interpretation of the RP clause was that it would continue for as long as the employee remained employed in the same role, subject only to the qualifications stated within the clause.
Indeed, the SC acknowledged that the right to RP was deprived of value if Tesco could at any time unilaterally terminate the employment; therefore, the right to dismiss was qualified by an implied term not to dismiss in a way that would deprive employees of the right to RP.
The SC found it ‘inconceivable’ that the parties’ objective mutual intention was that Tesco could unilaterally dismiss to deprive these employees of the right to RP.
Importantly, the SC noted that Tesco’s right to dismiss for any other reason was entirely unaffected by this implied term. The SC drew an analogy to employees with entitlement to Permanent Health Insurance (PHI) benefits and the implied term that employer was restrained from dismissing to deprive them of PHI.
On remedy, the SC recognised that an injunction would amount to indirect specific performance of Tesco’s obligation to continue to employ the employees on RP. Whilst the general rule is that specific performance will not be granted: (i) of an employment contract; or (ii) where damages are an adequate remedy, this was an exception to that rule. Here, the SC found that damages would be inadequate and, as there was no breakdown of trust and confidence between Tesco and the employees, the contract could continue. In those circumstances, the injunction was granted.
Commentary
This is a reminder that any contractual term is underpinned by implied obligations by law and fact. Here, the implied obligation that had arisen out of the facts was to not act in a way that deprived the employee of a benefit which they were entitled to. It demonstrates the willingness of the Supreme Court to stand back and assess the reality of the situation. Here it was ‘inconceivable’ that when RP was agreed that the parties intended that Tesco could unilaterally terminate their contracts at any time to deprive them of this permanent benefit to RP.
It is also a noteworthy development from the SC that by issuing the final injunction it was thereby preventing Tesco, a private sector employer, from dismissing an employee for an indefinite period if the purpose of the dismissal is to remove the RP benefit. It may well be the case that we will see more claims for specific performance in breach of contract claims with arguments being made that compensation is an inadequate remedy.
This is another case that casts a bad light on the use of fire and re-hire. This is so when both Northern Ireland and Great Britain are looking at strengthening the rights of workers that includes curtailing the use of fire and re-hire.
Judgments from the Supreme Court (SC) are like buses – you wait for one, and then two come along at once. On 16 September 2024, in HMRC v Professional Game Match Officials Ltd (PGMOL) [2024] UKSC 29, the SC delivered a significant judgment on employee status, addressing the question:
“Is the relationship between a company responsible for providing football referees to the Football League and part-time referees an employment relationship, thereby obligating the company to deduct Income Tax and National Insurance from the payments it makes to the referees?”
Background
In the United Kingdom, there are currently three categories of persons for employment rights purposes: employees, workers, and the self-employed. However, for tax purposes, only two categories are recognised: employees and the self-employed. This judgment concerns tax, but its principles can be applied more broadly.
Facts of the Case
The case involved part-time referees for First and Second Division football matches supplied by Professional Game Match Officials Limited (PGMOL). HMRC had classified these referees as employees. This finding was subject to appeals that centered on the classic employee status tests:
- Mutuality of Obligation: Was there an obligation for the referees to provide personal service and for PGMOL to provide work?
- Control: Did PGMOL have a sufficient degree of control over the referees?
- Other Circumstances: Were all other surrounding circumstances and the contract consistent with employment?
Supreme Court’s Judgment
In examining the facts, the SC noted that the referees were:
- Appointed on an annual basis.
- Match appointments for the weekend were usually offered on the Monday.
- Referees could refuse appointments, although they were typically asked for a reason if they cancelled.
- Once accepted, referees could back out before arriving at the match, generally only doing so for illness, injury, or work commitments.
- Similarly, PGMOL could cancel appointments at any time.
- When accepted, a contract was formed to officiate and complete a match report.
- PGMOL would pay the fee.
- There were no sanctions on either party for cancelling.
This case underscores the importance of examining the mutuality of obligations, control, and overall circumstances to ascertain whether an employment relationship exists.
Implications and Future Considerations
This is the latest in a long line of cases focussing on what constitutes an employee. The landmark case of Uber BV and others v Aslam and others UKSC 2019/0029 changed the emphasis. Since then we have seen a willingness from courts and the SC to find employee status, perhaps lowering the threshold required to establish sufficient mutuality of obligations and control. This trend indicates a broader interpretation of employment relationships, potentially offering more protections to individuals previously classified as self-employed or workers.
However, this case may have less significance in the future if proposals to move to only two categories of persons – employees and the self-employed – are accepted. Such a change would simplify the classification process but could also impact the rights and obligations of many individuals currently classified as workers.
Employment law is devolved in Northern Ireland and it is Stormont’s responsibility to determine what rights are in place. It is widely recognised that we are long overdue a review of our legislation, not least if the intent is to keep pace with developments in GB and ROI. In recognition of the need for reform, on 1 July 2024, the Department for the Economy launched its very ambitious ‘Good Jobs’ Employment Rights Bill Consultation – which in some respects is a ‘catch up’ with our counterparts but it also paves the way for more significant changes further down the line.
On Friday 30 August 2024, Michelle McGinley, Director of Legal & Policy and Kathryn O’Lone, Head of ROI and Business Improvement held a Briefing Session, in a partnership with Manufacturing NI, providing an overview of the Consultation’s content and sharing insights on what maybe taken forward. We were also joined by Stephen Kelly, CEO for Manufacturing NI.
It is vital that the business community’s voice is heard in the Consultation responses. If you were unable to join us you can watch the webinar through the link – https://youtu.be/HcWrW307Go8
Please do feel to contact either Michelle or Kathryn if you have any comments/questions on the Consultation