Fire & re-hire

Most contractual changes can be agreed between employer and employee, but this is not always the case. Forcing through a change can sometimes be necessary, either by unilaterally imposing the change or, more drastically, by dismissing those employees who refuse to accept the changed terms, and offering to re-employ them on the new terms. Employment lawyers call this dismissal and re-engagement. The press uses the snappier label “fire and re-hire”. This option of last resort has come under heavy criticism in recent months, particularly after the well-publicised P&O episode, with litigation reaching the Court of Appeal in at least one dispute. In March 2022 the Government committed to introducing a new statutory Code of Practice to give clearer guidance in this area. A draft Code has now been published, and we explore the draft in this month’s podcast.

Non-competition clauses

Still on the subject of Government consultations, readers may remember that the Government ran a consultation process in 2020/21 on whether post-termination non-competition provisions (non-competes, for short) should be unenforceable as a general principle, or whether employees should have to be paid to compensate them for time spent "out of the market". English law has (for several centuries) upheld contractual clauses that go no further than necessary to protect an employer’s legitimate business interests. Modern non-competes, non-solicitation, non-interference and non-poaching clauses are the result, and the courts balance these against the public policy in favour of promoting free enterprise, the restraint of trade doctrine.

No formal announcement of the Government’s position has yet been made, so the future of this important area of the law remains uncertain. In a potentially important development, the US Federal Trade Commission (FTC) has proposed an outright ban on non-competes in the USA, suggesting that they stifle wages, hamper innovation and impair entrepreneurial activity. Those same purported justifications also feature in the UK Government’s consultation.

The FTC’s proposed rule would render all non-competes unenforceable, and require employers to notify that fact to all employees, workers, or consultants whose contracts contain such a provision. US commentary suggests that the width of the drafting might capture NDAs, garden leave clauses, and some repayment provisions. 

It is impossible to say whether or not the FTC’s proposal produces a fundamental change in US practice, as it is likely that an outright ban would be challenged by employer groups across the US. From a UK perspective, the key point is that the Government may feel emboldened by the FTC’s stance to push forward legislation of its own. As a number of commentators made clear when responding to the consultation, the Government’s proposal would mark a radical shift in English employment law. Employers should keep a close eye on developments in this area.

Menopause

We have flagged in previous editions of this briefing that understanding the effects of the menopause is becoming increasingly important in the workplace. The Women and Equalities Committee has been at the forefront of this trend, proposing a number of legal reforms in its 2022 report. The Government has now responded to those proposals, but in relatively unexceptional terms. While the Government has restated its commitment to better guidance for employers and employees, and has underlined the useful role that the forthcoming changes to the flexible working regime we noted last month will have for women, it has stopped short of legislating to make the menopause a new protected characteristic for discrimination law purposes.

The Government’s reasoning is that most women who are ill-treated because of something connected to the menopause should be able to rely on the existing protections on grounds of age, sex and/or disability. That is probably correct, although campaigners in this field have pointed out that it is often the combination of age and sex that is relevant to women in this position – and the combination of two different protected characteristics has been a problematic area for claimants. The Equality Act 2006 contains a provision specifically dealing with combined or dual discrimination, but that section has never been brought into force. That does not appear likely to change in the immediate term. Employers should therefore consider whether a menopause policy would be appropriate for their workplace, and whether other supportive measures might be put in place to assist women going through the menopause. Our team is, of course, on hand to help clients interested in this area.

Home Office loses challenge to the EU Settlement Scheme

Many employers will have employees who have the right to work in the UK under the EU Settlement Scheme. This immigration status was granted to EEA nationals to allow them to stay in the UK post-Brexit. However, the Home Office decided that Pre-Settled Status would only be granted for five years before the EEA national had to apply to upgrade to Settled Status. If employees forgot to apply or did not qualify for Settled Status then they would lose their right to live in the UK.

The High Court has recently ruled that this approach is unlawful. The law has not changed yet and the Home Office will challenge the ruling, but this is a positive development for those EEA workers who face some uncertainty over their immigration status.

For further details, see our in-depth note.