UK Employment Law Coffee Break: Key dates for 2024, government guidance on holiday pay, and settlement agreements

Key dates for 2024

We looked in our last Coffee Break at the issues and challenges employers should prepare for as we enter 2024. The government introduced a number of legislative changes at the end of 2023 and employers should now ensure that they are aware of the key dates affecting their workplace practices so that the appropriate actions can be taken.

Headline dates are set out below. The government has also announced that the Spring Budget will be on 6 March 2024, with a general election now not expected until the second half of 2024 at the earliest.  

1 January: Record keeping and holiday pay/carry-over

Changes to working time regulations came into effect: clarifying employers are only required to keep "adequate" records to demonstrate compliance with the 48-hour limit on the average working week; setting out provisions relating to carry-over of holiday; and providing for pay for four weeks of statutory leave to reflect elements of normal remuneration.

8 March 2024: Statutory paternity leave 

New regulations are expected to apply making changes to how statutory paternity leave is taken for babies whose expected week of birth begins after 6 April 2024 and for children whose expected date of placement for adoption or expected date of entry into Great Britain for adoption is on or after 6 April 2024.

1 April: New statutory pay rates

New statutory national minimum wage rates and statutory family leave pay rates come into force.

1 April: Changes to holiday entitlement and pay for irregular and part-year workers

Holiday pay for irregular and part-year workers will be calculated at an hourly rate of 12.07% (effectively reversing the Supreme Court decision in Harpur v Brazel), subject to a maximum of 28 days a year. Rolled-up holiday pay will also be permitted from this date for irregular and part-year workers.

6 April: New legislative rights supporting flexible working and carers and those taking periods of statutory family leave

Introduction of a number of new rights including:

• Right to make a statutory request for flexible working becomes a day one right (the requirement for 26 weeks' continuous service is removed). It is anticipated that other changes to the statutory flexible working regime set out in regulations passed during 2023 will also be introduced on this date. 
• New right to be prioritised for offers of suitable alternative vacancies on redundancy extended during pregnancy and for 18 months where employees return from certain periods of statutory family leave.
• New statutory right to carer's leave expected to take effect.

1 July 2024: TUPE information and consultation permitted directly with employees where certain triggers met

For transfers taking place on or after 1 July 2024, employers are no longer required to elect employee representatives for information and consultation where an employer has less than 50 employees or where the proposed transfer includes less than 10 employees.

October 2024: New obligation to prevent sexual harassment

New duty to take reasonable steps to prevent sexual harassment takes effect.

Other important dates

The Information Commissioner's Office has issued two sets of guidance for consultation on keeping employment records and recruitment and selection. The consultations remain open until 5 March 2024.

We are waiting for further information on when we may see the new statutory right for workers to request predictable wording conditions will be implemented in practice. Our understanding is that the new statutory right for new parents to take neo-natal leave will not come into force until 2025.

For more information on these changes and also for the immigration and contingent workforce issues employers should be aware of as we enter 2024, please see our Regulatory Outlook.

Government guidance on holiday pay

The government has published guidance on calculating holiday entitlement and holiday pay with a particular focus on the rights of part-year workers and those working irregular hours. It follows the legislative changes introduced this January and provides examples of how the new provisions are intended to work in practice. The guidance is detailed and is not legally binding; care must therefore be taken when making any actions in reliance on it.

Settlement agreements: Future unknown claims can be waived  

We reported previously on a Scottish Employment Appeal Tribunal (EAT) decision which cast doubt on the ability to validly waive future unknown statutory claims under a settlement agreement. The case has now been heard by the Court of Session. It has held that section 147 Equality Act 2010 does permit settlement of future claims unknown to an employee at the time a settlement agreement is concluded so long as the types of claims are clearly identified and the objective meaning of the words used is such as to encompass settlement of the relevant claim.  

Here the claimant had entered into a settlement agreement on the termination of his employment for redundancy, the terms of which provided for him to potentially receive an "additional payment" pursuant to a collective agreement, but at the time he entered into the settlement agreement his entitlement to it was still uncertain.

It was subsequently decided that the claimant was not entitled to the additional payment on the grounds that those over the age of 60 at the point of redundancy were ineligible for the additional payment. Consequently, the claimant subsequently claimed unlawful age discrimination. The employer resisted these new claims on the basis that, among other factors, the claim was validly compromised by the voluntary redundancy agreement.

The Court of Session agreed with the original Employment Tribunal decision that the claimant's claim was precluded by the agreement. The agreement stated that it constituted full and final settlement of the claims that the claimant "intimates and asserts" against the employer and listed various types of claim including age discrimination under the Equality Act.

The agreement also provided that the waiver applied “irrespective of whether or not, at the date of this Agreement, the Employee is or could be aware of such claims or have such claims in his express contemplation (including such claims of which the Employee becomes aware after the date of this Agreement in whole or in part as a result of new legislation or the development of common law)." The Court of Session considered that the EAT was wrong in finding that the current claim fell foul of the "particular complaint" requirement set out in the legislation because, at the time of the agreement between the parties, the alleged discrimination had not happened.

In its view the "particular complaint" requirement does not mean that the complaint must have been known of or its grounds at least in existence at the time of the agreement – it simply requires one to ask whether the complaint being made is or is not covered by the terms of the contract. If it had been Parliament's intention to limit parties' freedom to contract, one would expect that to be expressed in clear and unequivocal terms.

Commenting specifically on points that the EAT had relied on, the Court of Session noted as follows:

• The law promotes the resolution of disputes, subject to certain safeguards. Lady Justice Smith in the Court of Appeal case Hinton v University of East London (2005) had stated that the statutory purpose of section 203 Employment Rights Act (ERA) (the equivalent provision in the ERA to that being considered here under the Equality Act) was to protect claimants from signing away rights without a proper understanding of what they were doing, and which would mean that a rolled-up expression such as "all statutory rights" was insufficient. However, here the level of particularity required by the court Hinton was met.
• The EAT had relied on a passage in Hansard when the statutory rules on settlement agreements were introduced. It stated that the agreement must be one "… which settles a particular complaint that has already arisen between the parties to that complaint" and that a construction that possible future causes of action were in view would be contrary to the broad purposes of the statutory conditions on settlement agreements which are imposed "to protect employees when agreeing to relinquish the right to bring proceedings". However, in the Court of Session's view, the minister was focusing on protections for employees settling a particular issue during the parties’ relationship, not on "clean break" agreements of the present kind. In any event, the Court of Session was required to address the words used in the current legislation, not comments made during a debate in respect of different provisions in an earlier statute.

Accordingly, the Court of Session held that section 147 Equality Act does not exclude the settlement of future claims provided the types of claim are clearly identified and the objective meaning of the words used is such as to encompass settlement of the relevant claim. Here, these requirements were met in the settlement terms and the claimant was therefore precluded from pursuing a claim of age discrimination in the circumstances.

What does this mean for employers?

The decision is a welcome one for employers who agree "clean break" terms with an employee only to find themselves at risk of further litigation; however, as a decision of the Scottish Court of Session it will not be binding on Employment Tribunals in England and Wales.

The Court of Appeal held in Hinton that in order to comply with this statutory requirement "the particular claims or potential claims to be covered by the agreement must be identified… either by a generic description such as 'unfair dismissal' or by reference to the section of the statute giving rise to the claim".  This has led to the common practice of employers setting out a long list of claims in the settlement agreement in order to enable arguments to be made that any future claims raised in these respects are validly covered, in addition to specifically identifying particular complaints relevant to the circumstances in hand.

As we enter the new year, it will be important for employers to revisit and review existing "standard" wording to ensure that it reflects the Court of Session's ruling that the wording used in listing claims intended to be covered by the agreement, together with more general waiver wording, is objectively clear and unambiguous.

The importance of ensuring there is no ambiguity in the wording used is also reflected in another Court of Appeal decision which we reported on here.

Employers should, however, continue to remain mindful of the impact of provisions introduced into any settlement agreement; for example the #metoo campaign shone a spotlight on so-called gagging clauses preventing employees from raising issues related to sexual harassment. This is an area which remains under increasing scrutiny.

The facts of this case are also a welcome reminder of the care needed to avoid situations of discrimination and victimisation following termination, for example in giving references, re-employment or making decisions related to outstanding bonus and other payments.