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Employment law overview United Kingdom
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United Kingdom

Employment law overview United Kingdom

Introduction

This guide is intended as a brief outline of employment law in England & Wales.  Much of the relevant legislation also applies in Scotland.  Northern Ireland has a separate statutory code although much of its employment law is coordinated with that of England, Wales and Scotland.  This guide is therefore not to be used as authority for the law in Scotland or Northern Ireland. Provided they are prepared to pay sufficient compensation, employers in England & Wales can usually achieve what they wish. In any event, most businesses are conscientious about wanting to be seen as “good employers”.

Key Points

  • Termination of employment is process-driven so if the right procedure is followed, liability can usually be avoided.
  • Discrimination and whistleblowing laws provide a high degree of protection in the workplace; claims are frequently brought in the tribunals and compensation is based primarily on financial loss (with no cap) and there are no punitive damages.
  • Although union representation is declining, workplace representation is becoming more common but is generally not problematic for employers.
  • Women are entitled to take one year’s maternity leave, and this leave can be shared with their partner; maternity pay can also be shared but the pay that can be shared is limited to 37 weeks’ pay capped at GBP 156.55 per week (3 April 2022 – 2 April 2023).

Employment law in the United Kingdom is derived from three main sources:

  • Common law (custom and practice and court decisions);
  • UK employment legislation which has supplemented the common law rules; and
  • Retained EU Law

Across the UK, the majority of disputes between employers and employees are heard by employment tribunals, and not within the civil courts structure. The tribunal, established in the 1970s, has its own set of rules and regulations and is entirely separate from the civil courts. If a party wishes to appeal a tribunal judgment, they may do so to the Employment Appeals Tribunal. Subsequent appeals are made to the Court of Appeal and the Supreme Court.

New Developments

  • COVID-19 guidance: The current Government guidance for employers on COVID-19, which came into effect in April 2022, states that employers have a legal duty to provide a safe place of work and manage risks to those affected by their business. Employers should continue to consider the needs of those who are at greater risk of serious illness from COVID-19, such as those with compromised immune systems. The guidance makes it clear that responsibility is now more on individuals and businesses to put in place measures that they think are appropriate given their particular circumstances and health and safety risks. People who test positive for COVID-19 or have symptoms of a respiratory infection such as COVID-19 are advised to try to work from home if they can or to talk to their employer about the options available to them. Taking an approach that goes against the guidance could put employers at risk of claims.
  • Independent contractors: Reforms to the off-payroll working rules in the private sector took effect from 6 April 2021, having been postponed from 6 April 2020 because of the pandemic. By way of background, there are tax advantages in the UK for independent contractors who provide their services through an intermediary such as a personal service company. Previously, under the so-called “IR35 regime”, such intermediaries were required to determine whether, if it wasn’t for the intermediary, the contractor would be regarded as an employee of the client organisation engaging them.  If the answer was yes, the intermediary was obliged under IR35 to deduct tax and national insurance contributions as if the contractor were an employee.  Under the measures in force from April 2021, responsibility for determining the contractor’s employment status is on the client end-user business.  If they determine that the off-payroll rules apply, they will be responsible for deducting  income tax and national insurance contributions as the deemed employer. These rules have applied in the public sector since April 2017.
  • Data protection: In June 2021, the European Commission adopted the UK adequacy decision, allowing personal data to flow freely from the EU to the UK under the EU General Data Protection Regulation.
  • Industrial action: In July 2022, restrictions were removed that prevented employment businesses (agencies) from supplying an employer with temporary workers to cover the duties normally performed by a worker who is taking part in a strike or other industrial action, or by any other worker who has been assigned to cover the striking worker. In addition, there has been an increase by four-fold in the maximum damages that a court can award against a trade union where strike action has been found to be unlawful. The level of damages awarded depends on the size of the union, but for the largest unions (those with 100,000 members or more) the maximum award has increased from GBP 250,000 to GBP 1 million.
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