Employment Law Coffee Break: Addressing the ESG agenda, changing working models, and a new body to protect workers’ rights

Written on 11 Jun 2021

Welcome to our latest Employment Law Coffee Break in which we look at the latest developments impacting UK employers.

Addressing the ESG agenda

Environmental, Social and Governance (ESG) factors are playing an increasingly important role in the evaluation of investments, suppliers and corporate performance; a trend we expect to grow rapidly. Engaging with initiatives that avoid contributing to climate change, pollution, human rights and labour abuses can have real value. Businesses can reduce reputational risk and encourage more responsible business practices which benefit them and their stakeholders in the long term. Ignoring ESG concerns can also have a bottom line impact, including regulatory costs, damage to business brand or simply losing competitive advantage in the marketplace for business and talent. The government this week has announced that it will be proceeding with plans for a new labour supply chain enforcement body (see below).

In our latest webinar, partners Mary Lawrence and Anna Elliott look at the role diversity, inclusion, mental health and wellbeing play in an organisation's approach to social responsibility as part of the ESG agenda. You can register to watch the recording here.

Capucine de Hennin, employment team trainee, also shares her thoughts on digital inequality and how employers can respond in light of the recent House of Lords Covid-19 Committee report "Beyond Digital: Planning for a Hybrid World", published on 21 April 2021. The report follows an inquiry into how a rapidly increasing reliance on digital technology, accelerated by the Covid-19 pandemic, may have a long-term impact on the social and economic wellbeing of the nation.

Changing working models

Our next webinar on 15 June will be looking at the central legal and practical issues our clients are facing in implementing new ways of working and our four panellists Emily Plotkin (GitLab), John Nurthen (Staffing Industry Analysts), Paul Allsopp (The Agile Organisation) and Sue Rains (OVO) will be sharing their experiences. We aim to give you some key takeaways to help your business with the transition to hybrid or agile working. Please register here.

We will also be discussing how the finance sector is managing hybrid working in our next FS HR & Compliance network event on 16 June, sponsored by Veran and Osborne Clarke. FS HR & Compliance is a free events network which seeks to help HR & Compliance professionals understand upcoming regulations and the impact on companies in the financial services sector. Please register here.

Another trend we are seeing is businesses adopting an increasingly flexible approach to talent hiring with many shifting roles to contingent, project or contract work as a way of minimising fixed employment costs. The use of umbrella companies and  "employee leasing" as an engagement model was increasing pre-Covid-19 but the pandemic and IR35 have together accelerated this trend.  In this Insight we look at how umbrella companies are developing, how they can be used safely and what the future direction of travel looks likely to be. Proposals for the new workers' watchdog (see below) indicate that new legislation will be introduced to regulate employment intermediaries such as umbrella companies.

New body to protect workers' rights and clamp down on workplace abuse 

The Department of Business, Energy & Industrial Strategy has announced in its latest consultation response a "new workers' watchdog" which will provide a "one-stop shop" approach to tackle modern slavery, enforce minimum wage rates and protect agency workers (responsibility for which is currently spread across three different bodies – the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate and HMRC's National Minimum Wage Enforcement) as well as delivering "a significantly expanded remit". The government intends this one-stop shop approach to help improve enforcement through better coordination and pooling of intelligence.

The new body will also have greater flexibility in the sanctions that can be issued to tackle the spectrum of non-compliance with an expansion to the reach of compliance notices and civil penalties. The new body will continue the existing Naming and Shaming scheme which has an important deterrent effect and this enforcement activity will also be extended to cover other regulations protecting the pay of workers, including those employed through agencies. The government is also looking to replicate this approach for the enforcement of holiday pay for vulnerable workers and statutory sick pay avoiding individuals going through a "lengthy" Employment Tribunal process.

The new watchdog will also enhance workers' rights by providing a "single, recognisable port of call for workers so they know their rights and can blow the whistle on bad behaviour". To help businesses understand the rules, the new body will provide guidance on best practice, complementing the work already carried out by existing authorities such as the Advisory, Conciliation and Arbitration Service. It will seek to build strong links with community and worker groups to spread awareness and support engagement with at-risk groups, including the low-paid and those in sectors at higher risk of abuse such as the construction industry.

While there will inevitably be a period of time before the new body is up and running (the consultation response indicates that plans will be subject  to the usual government approval process and primary legislation will be required), this new announcement indicates a clear direction of travel towards greater governance and enforcement. In the meantime, employers must continue to ensure that their processes are legally compliant. The government's consultation response is here.