UK: Employment Updates for the Retail & Consumer Sector (October 2024)

1. Employment Rights Bill – what should be on your radar? 

The Government’s Employment Rights Bill (the “Bill”) and the accompanying Next Steps policy paper (published on 10 October 2024) set out a vast framework of enhanced worker rights. There will be a lot for retail employers to get to grips with – there are 28 individual reforms in the Bill alone. However, much of the Bill contains placeholders, with some of the most important terms left for consultation and future legislation or regulations. 

Therefore, there will be some breathing space before the changes happen on the ground. Consultation on much of the reforms will take place in 2025 and the majority of the changes will not come into effect before 2026. In particular, certainty about the earliest date (Autumn 2026) for introducing the day 1 right to unfair dismissal protection will be welcome to many employers.

Highlighted below are several key aspects of the Bill that retail employers will need to navigate:

• Day 1 unfair dismissal protection: No earlier than Autumn 2026, the two-year qualifying period will be removed, and unfair dismissal protection will start from day one of employment.  A maximum statutory probation period (which should allow a simplified process for some types of dismissal) will be introduced, subject to consultation. The Government’s preference is for a nine-month period.
  
• Zero-hours contracts: (i) Employers must offer a guaranteed hours contract to zero-hours workers and workers on “low” guaranteed hours who regularly work more hours over a defined period; (ii) workers will have the right to reasonable notice if they are required to work a shift or if a shift is cancelled or changed; and (iii) workers will be entitled to a payment for shifts cancelled at short notice. These changes are subject to consultation but are very complex and will certainly have implications for retailers relying heavily on flexible and seasonal labour to meet fluctuations in demand. 
  
• Trade unions will be given new rights to access workplaces for meeting, recruiting, or organising workers; there will be a simplified process for trade unions to secure recognition; and employers will need to notify workers of their right to join a trade union.  Managers will therefore need upskilling to deal with potential access requests and to navigate communication lines with trade unions. 
  
• Fire and rehire: It will be automatically unfair to dismiss an employee for refusing to agree to changes in terms or to replace them with someone on varied terms but in substantially the same role, unless the business is in significant financial difficulties and the changes are unavoidable. 

For a full summary of all the reforms in the Bill and Next Steps paper, please review our latest news flash. There is nothing immediate for employers to do now, as the Bill may change as it passes through Parliament before becoming law at some future point. 

2. Case update 

There have been a number of recent high profile cases involving retailers: 

i. Equal pay for equal value work: an Employment Tribunal (“ET”) recently ruled that Next breached equal pay law by compensating predominantly male warehouse staff at a higher rate than predominantly female shop-floor sales staff, despite the two groups performing work of equal value. Next’s justification for the difference in pay centred around cost-cutting. It sought to rely on various “material factors” such as market forces, market price, recruitment difficulties, and the performance of the company and its subsidiaries, to justify the pay disparity. However, the ET dismissed these arguments, ruling that these factors were indirectly discriminatory and could not be justified.  This is an important decision. Whilst not binding on other Tribunals, it is likely to be significant considering the number of similar on-going equal pay cases being made against other UK retailers. It demonstrates that retail employers may face difficulties in justifying pay differences on the basis of market forces alone. Ms M Thandi and Others v Next Retail Limited and Next Distribution Ltd: 1302019/2018 and Others (LINK)

ii. Fire and Rehire: the Supreme Court (“SC”) upheld an injunction preventing Tesco from firing employees with the intention of removing or diminishing a “retained pay” arrangement and re-hiring them with lower pay. The case specifics are unique, and its wider impact remains to be seen, but it serves as a warning that the practice of 'fire and rehire' may not be a simple solution for removing costly contractual benefits, particularly if they are expressly stated to be permanent. The Government has kept to its pledge to restrict the use of 'fire and rehire' in its Employment Rights Bill, and employers' ability to change terms and conditions through this method are highly likely to be extremely limited in the coming months. Tesco Stores Ltd (Respondent) v Union of Shop, Distributive and Allied Workers and others (Appellants) [2024] UKSC 28 (LINK).  

3. Sexual harassment duty 

Lastly, a reminder that from 26 October 2024, all employers (regardless of size) have a proactive and mandatory duty to take reasonable steps to prevent sexual harassment of their employees.  The duty requires employers to take a proactive approach to anticipate the risks of sexual harassment happening in the workplace (not just by co-workers but also by third parties, such as customers and members of the public) and to implement preventative measures. The Equality and Human Rights Commission (“EHRC”) has published updated technical guidance to help employers navigate the new duty. 

An employee cannot bring a claim for breach of the new duty. However, if an employee succeeds in a sexual harassment claim, the employment tribunal will have power to increase any harassment compensation by up to 25% if an employer has failed to comply with the duty, potentially leading to substantial financial and reputational consequences for non-compliance. The EHRC will also have enforcement powers where they consider the new duty has been breached.   

Complying with the duty involves:

• Assessing risk to identify areas where sexual harassment might occur within the workplace, and identifying and implementing preventative steps to avoid those risks;
  
• Fostering an inclusive and respectful work culture, including comprehensive and tailored staff training on sexual harassment and a clear, up-to-date anti-harassment policy;
  
• Ensuring there is an effective internal reporting and complaints handling process in place;
  
• Taking measures to notify third parties that there is a zero-tolerance policy towards sexual harassment of employees.