New Employment Bills the Consumer Sector should be aware of

Legislation which provides for new employment rights is expected to be approved this year. The proposed legislation is currently making its way through the legislative process in the form of seven Government-backed Private Members Bills.

Employers should prepare themselves on the impact that the introduction of the proposed legislation could have on their operations, workforce and employment policies and practices. Inevitably, changes to the legislation will have a bigger impact on certain sectors and employers than others.

In this article, we take a closer look at three of the Bills which could have a significant impact on employers in the Consumer Sector:

1. The right to request a predictable work pattern;
2. Expanding employer duties relating to harassment, including by third parties; and
3. Preventing employers making deductions from tips.

1. Right to request a predictable work pattern

Where has this come from?

This Bill follows the concerns raised by the Taylor Review and subsequent Good Work Plan to combat “one-sided flexibility” where workers are often on standby for work that never comes. The draft legislation, which applies to Great Britain, is expected to be finalised this year and implemented in 2024.

When and what can be asked for?

Under these new proposals workers would have the right to request a change to a to their terms and conditions of employment where:

• there is a lack of “predictability” as regards any part of their work pattern;
• the change relates to their “working pattern”; and
• the purpose of applying for the change is to get a more predictable work pattern.

Unhelpfully, there is no definition of “predictability”, but there will be assumed a lack of predictability in the case of fixed-term contracts for 12 months or less where the worker applies to extend the duration or to remove the fixed term. Otherwise, a lack of predictability is likely to need to be assessed on a case-by-case basis. It could include anyone whose hours or days or start and finish times vary in a way which provides them with an absence of certainty. It could also include those on annualised contracts where their hours differ from month to month and to certain agency workers who could make applications to their agency or directly to hirers.

Two applications may be made in a 12-month period and a 26-week service requirement is expected to apply. An employer would be able to turn down a request, but on specific statutory grounds only (i.e. burden of additional costs, detrimental effect on ability to meet customer demand, detrimental impact on the recruitment of staff, detrimental impact on other aspects of the employer’s business - performance and quality, insufficiency of work during the periods the worker proposes to work and planned structural changes) and after having followed a reasonable procedure, similar to that under the right to request flexible working. However, the flexible working regime only applies to employees whereas this new Bill is wider and includes workers and agency workers (albeit with slightly different conditions) who could make applications to their agency or directly to hirers.

It’s important to note that this Bill, if passed, provides the right to request a predictable working pattern and not the right to a predictable working pattern.

What if we don’t / refuse to engage with the request as an employer?

The penalties appear to reflect the flexible working regime and therefore the compensation available where there is a breach is not likely to be high. Claims for breach of the flexible working procedural requirements are rare, and even where successful any breaches only allow for compensation of up to 8 weeks’ pay if employers fail to adhere to a reasonable process.

For this Bill to have any “teeth” the incentive to comply would likely to be avoidance of discrimination claims where compensation is uncapped. As with requests under the current flexible working regime, employers will likely find themselves in situations where they will have to consider carefully each application to ensure that its policies, practices and decisions does not inadvertently discriminate against those with protected characteristics.

Other protections in addition to any breach of the statutory requirements would also apply, including protection from detriment and dismissal linked to the exercise this new statutory right.

What does it mean for employers in the Consumer sector?

The new legislation could see employers needing to justify the use of less predictable working models, including zero-hour contracts and flexibility clauses if they wish to continue using such models.

Although recent developments in rostering systems and shift swapping apps have often enabled workers have more input into, and therefore predictability over, their working arrangements, employers within the Retail and H&L businesses (where the use of casual workers, changeable shift patterns / rotas and short fixed-term contracts and agency workers is widespread) can expect to receive requests for more predicable work patterns. With peaks in demand and seasonal requirements, employers may in appropriate circumstances be able to justify the refusal of a request. However, employers should expect to need to dedicate additional resources to complying with the process requirements.

It should also be noted that employers will still have to comply and conclude the process once a request has been made even if the worker is no longer is employed during the decision period. However, the employer can then use additional grounds to reject the application (i.e., the worker was dismissed without notice because of their conduct, or the contract was terminated for a “qualifying reason” which includes a redundancy situation).

If the employer grants the application, the employer must, before the end of the offer period, offer the worker a new worker’s contract with terms and conditions that (i) taken as a whole, are not less favourable than the terms and conditions of the worker’s contract at the time the application was made, and (ii) reflect the change relating to the work pattern that was applied for.

Will the Bill make the changes it has set out to do?

Whether or not the Bill will tackle the one-sided flexibility it has set to combat remains to be seen. Its success will ultimately depend on how and if employees and workers take up this new right, and whether and how employers are able to support applications under it whilst balancing the flexibility required for the running of its operations.

Under the flexible working regime, employees are able to apply for part-time working, full-time working (if currently part-time), annualised hours, compressed hours, flexi-time, homeworking, hybrid working, job-sharing, self-rostering, shift-working, staggered hours and term-time working, among others. There are in fact very few limits as to what the employee could request by way of variation. Furthermore, the Government is supporting a Bill which would require employers to consult with their employees, to review options, before rejecting a flexible working request; allow employees to make two (not one) flexible working requests in any twelve month period; require employers to respond to requests within two (not three) months; and, remove the requirement for employees to set out how the effects of their flexible working request might be dealt with by their employer. Separately it has also committed to the removal of the 26-week qualifying period before employees can request flexible working, making it a day-one right.

It will be interesting to see how the right to request a predictable work pattern and the right to request flexibility working will work together, and whether as a result employees will end up having multiple attempts of changing their working hours and the way they work depending on the route they make the request and what they are requesting.

With conflicting purposes and aims of the Government and Bills, employers will no doubt be faced with additional administrative burdens and the risk of multi-tier workforces to accommodate every employee and worker’s individual needs.

However, if employers can find a business model/working arrangement that works for employees and workers as well as the business, it will increase staff engagement and commitment. In return, it will gain a more stable workforce where it is able to retain talent and avoid high staff turnover which can create a different set of problems.

What should employers be doing now?

• Employers should look at their business model and consider how, and whether, such requests might affect their operations, and if so, what it can do in preparation.

• Draft policies and inform and train HR and line managers in readiness.

• Agencies, and hirers of agency workers, should also prepare, ensuring that their respective roles in the process are clearly understood (for example, that the worker’s contract is with the agency, not the hirer).

2. Expanding employer duties relating to harassment

Under this Bill, employers will become liable for the harassment of their employees by clients, customers and other third parties. The new law also creates a positive duty to prevent sexual harassment. The draft legislation, which applies to Great Britain, is expected to be finalised this year and implemented in 2024.

Where has this come from?

When the Equality Act came into force in 2010, whilst it did contain protections against harassment by third parties, those protections were seldom used in practice. In 2013, certain provisions of the Equality Act which held an employer accountable for the harassment of third parties in certain circumstances (requiring two previous incidents- the three-strikes rule) were appealed.

With the increase of social media and extensive publicity around sexual harassment with the #metoo campaign and recent high-profile EHRC investigations, there is a much higher expectation of employers and greater awareness amongst workers about their employment and discrimination rights.

What is the effect of the Bill on employers in the Consumer sector?

If the Bill is passed in its current form, staff who are harassed by clients and customers or other third parties will be able to bring harassment claims against their employer even if this was the first incident of its nature (as opposed to the former three-strikes rule). The new law will put a greater focus on employers being pro-active in their prevention (in the absence of a prior warning or complaint).

Given the high-level of customer contact in the consumer sector, often in busy restaurants, bars, hotels and retail outlets where there may be limited opportunity to monitor the conduct of customers and guests, the new law could have a significant impact. Although the Bill does not specify what steps employers should take to prevent sexual or other harassment (guidance on reasonable steps is expected in an EHRC Code of Practice), it is clear that employers will be required to become more vigilant regarding staff welfare and what they’re exposed to; as well as taking a more hard-line approach in circumstances where staff complain of guests / customers’ conduct.

The new Bill goes much further than the previous three-strikes rule. One incidence of third-party harassment could trigger employer liability, if it has failed to take all reasonable steps to prevent the harassment - an employer is no longer required to have knowledge of previous occasions of harassment, so may find themselves liable without any warning or indication that their staff are at risk of harassment from third parties. The Bill also provides a compensation uplift (maximum 25%) in successful sexual harassment cases. Compensation for sexual harassment is uncapped and awards vary depending on the severity of the injury to feelings and loss of earnings. In addition, the Equality and Human Rights Commission will have stand-alone enforcement powers.

The Bill does clarify that employers will not be required, as part of all reasonable steps, to prevent certain conversations in the workplace which an employee may overhear and to which they may take offence - other than in limited circumstances, including certain indecent or grossly offensive expressions of opinion. An employer would still need to show they have an effective anti-harassment policy in place, but the policy does not need to prohibit all expressions of opinions. Applying this test in practice will be challenging for employers and they should check its scope when the Bill is finally approved, as it may be subject to further change.

What if we don’t / refuse to engage as an employer?

Employers who do not engage and/or fail to prepare and have relevant policies and processes in place for the new harassment laws face increased risk of discrimination claims, the risk of bad publicity and not to mention a negative workplace culture.

Compared to other sectors, employers in the consumer sectors often have the issue of higher staff turnover to deal with. A positive workplace and culture would support a more stable workforce, where harassment is not tolerated, and staff are protected and supported by their employers. Therefore, irrespective of the changes the Bill brings, employers should be thinking about what it can do in terms of retention and building a positive and safe work culture and environment.

What should employers be doing now?

• Carry out assessments of various types of roles and the way in which they interact with third parties. Identifying the risk of harassment in each set of roles and circumstances and steps that are required in each case to protect these workers.

• Update and re-circulate anti-harassment policies and carry out relevant training to help managers spot the potential harassment of staff members and ensure workers know how to raise issues.

• Consider installing visible signs in areas where customers interact with staff members explaining that threats, violence, and harassment will not be tolerated.

3. Preventing employers making deductions from tips

Where has this come from?

To address its concerns that hard-working staff might be missing out on tips they have rightfully earned due to the increase of the use of card payments (making it easier for businesses to retain a proportion before passing the rest to staff) a new Bill proposes to require employers to allocate fairly, without deductions, all qualifying tips, gratuities, and service charges (including tronc arrangements) and to pay them to workers within a set timescale. The changes would also apply to agency workers.

What is the effect of the Bill for employers in the consumer sector?

If passed, the Bill is estimated to affect around 2 million hospitality workers in the United Kingdom working in pubs, cafes, and restaurants, often paid minimum wage and for whom tips can make up a large proportion of their income.

In addition to allocating all qualifying tips, gratuities, and service charges (including tronc arrangements) fairly, without deductions, and to pay them to workers within a set timescale, employers would also be required to share with workers a written policy setting out how they deal with tips and to disclose, upon request, how tips received have been allocated to a worker. It will further be required to keep a record of how tips have been dealt with for three years from the date received.

What if we don’t / refuse to engage as an employer?

At a time of rising costs generally, this could be a significant additional burden for hospitality businesses to bear. However, tribunals would have new powers under the new law including the power to order employers to revise the allocation of tips or to make a payment to a worker.

Employers should also consider what impact it would have on their reputation and employee engagement if they refuse and/or do not engage with a positive attitude with the changes.

What should employers be doing now?

• Consider preparing/updating the written policies on the allocation of tips.

• Look at its current practices on how it records how tips are shared with its employees and workers and consider whether these will need to be revised.

• Consult with agencies that it uses to ensure that they are also aware of the new Bill and how new practices will be implemented in terms of tips.

Further information and how we can help

Our teams of lawyers have extensive experience in supporting consumer sector businesses in a range of issues, including planning for new and updated legislation, strategy and policy advice, supporting training, or assisting with litigation issues.

If you have any questions regarding how we can support you, including on any issues highlighted in this briefing, please don’t hesitate to get in touch with Wie-Men Ho or Connie Coleman.

Read our full article on the seven Private Members Bills >