435: Recent developments in employment law

New HMRC guidance on umbrella companies

HMRC has published new guidance for recruitment agencies on their responsibilities when working with umbrella companies. Under this type of arrangement, the umbrella company will usually be the worker’s employer and will be responsible for paying their wages and operating PAYE. The guidance covers the employment and tax law obligations of the recruitment business as well as how to support workers who are employed by an umbrella company. It also highlights the obligation to issue a key information document (KID) to all workers when they first register. KIDs must be updated and reissued if there are any significant changes. The guidance emphasises that lack of awareness of non-compliance will not normally be a defense and sets out the potential penalties for failing to take reasonable measures to avoid being part of a non-compliant supply chain. To protect their business, recruitment agencies are advised to carry out regular and proportionate due diligence on umbrella companies, to keep a record of those checks, and to train staff to identify and report on any non-compliance.

ICO consultations published

The Information Commissioner’s Office (ICO) has published two consultations on the latest updates in its series on employment practices and data protection. The draft updated guidance on employment records covers legislative requirements and best practice in relation to collecting and keeping records, including the challenges of using consent as a lawful basis for processing in an employment context. It also sets out the limitations on how employment records can be used in various situations such as during mergers, acquisitions and TUPE transfers, and when outsourcing HR processes. The ICO has also published draft updated guidance for employers and recruiters on their data protection obligations when carrying out recruitment exercises. This covers all aspects of the recruitment process from advertising vacancies, interviewing and vetting, through to deleting information about candidates, as well as detailed guidance on the use of automated decision-making and profiling. Both consultations are open for public input until 5 March 2024.

Retained EU Law Act (Assimilated Law)

With effect from 1 January 2024, the Retained EU Law (Revocation and Reform) Act has revoked the principle of EU supremacy, meaning that UK law will normally no longer have to be interpreted in line with EU law. Retained EU law will now be known as ‘assimilated law.’ In order to provide clarification for employers, the Government has legislated in several key areas of EU-derived employment law including annual leave, holiday pay, working time record-keeping and TUPE consultation. Amendments have also been made to the Equality Rights Act 2010 to incorporate existing equality rights which were established in EU case law. For example, the definition of ‘normal day-to-day activities’ in the disability discrimination legislation has been amended to include an inability ‘to participate fully and effectively in working life on an equal basis with other workers.’ There are also new provisions on direct discrimination protection for women who are pregnant, on maternity leave or breastfeeding; the right to claim indirect associative discrimination; and discriminatory statements in recruitment.

Consultation on allocation of tips

The Department for Business and Trade has issued a consultation on the draft statutory Code of Practice which will accompany the measures in the Employment (Allocation of Tips) Act 2023. This Act will require employers to distribute tips and service charges fairly, transparently, and in full. Both the Act and the Code of Practice are expected to come into force on 1 July 2024. The Code deals in detail with four key areas:

• which tips and workers are covered by the statutory provisions;
• the principles relevant to fairness in allocating and distributing tips;
• the meaning of transparency; and
• how to ensure fair processes for resolving issues and responding to queries.

A useful glossary of terms is also included. Responses on the consultation may be submitted until 22 February 2024. Employers who will be affected by the new legislation are advised to start considering the practical steps needed, including preparing a written policy and implementing internal procedures to deal with record-keeping and requests for information on tips.

DoE consultation on kinship carers

On 15 December 2023, to accompany its first National Kinship Care Strategy, the Department for Education (DoE) published guidance for employers on supporting kinship carers in the workplace. Kinship care is where a child is being raised temporarily or for the longer term by a family friend or family member who is not their parent. Employers are being encouraged to support kinship carers either by creating a specific workplace policy or by adapting existing policies and schemes, for example, by mirroring leave and pay schemes already in place for statutory adoption. Kinship carers should also be signposted towards existing relevant entitlements to flexible working, time off for dependents, and unpaid parental leave. The guidance also stresses the importance of creating and embedding a culture of support for kinship carers, including systems to enable them to raise issues they may be experiencing in balancing work with their other responsibilities.