Geoffrey Caesar, Solicitor

Diversity, inclusion and equality are ethical values and business imperatives. A diverse, inclusive and equal workplace can foster innovation, creativity, productivity and employee engagement. It can also enhance an organisation’s reputation, attract talent and customers, and reduce legal risks.

However, achieving diversity, inclusion, and equality can be challenging. Employers may face challenges such as unconscious bias, stereotypes, harassment, discrimination and lack of awareness. Employers also need to comply with the relevant legislation and case law that protect workers from discrimination on various grounds, such as sex, race, disability, age, religion or belief, sexual orientation and gender reassignment.

In this blog post, I will explore some key employment law developments in 2023 and 2024 that affect workplace diversity, inclusion and equality. I will also provide some practical tips on how employers can promote these values and avoid discrimination claims.

New employer duty to prevent sexual harassment

One of the most significant changes in employment law in 2024 is introducing a new duty on employers to take ‘reasonable steps’ to prevent sexual harassment of their employees. The Worker Protection (Amendment of Equality Act 2010) Act 2023 received royal assent on 26 October 2023 and will come into force in October 2024. This legislation will amend the Equality Act 2010 to:

• Allow employment tribunals to uplift compensation in successful sexual harassment claims by up to 25% where an employer is found to have breached the new duty to prevent sexual harassment.
• Extend the protection from third-party harassment to all protected characteristics (not just sex).
• Extend the time limit for bringing a discrimination claim from three months to six months.

Sexual harassment is defined in the Equality Act 2010, s. 26(2) as unwanted conduct of a sexual nature that has the purpose or effect of violating a person’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them. It can take various forms, such as verbal comments, physical contact, jokes, gestures, emails or social media posts.

The new duty to prevent sexual harassment means that employers must do more than just have a policy or react to complaints. Employers will need to take proactive and effective measures to prevent sexual harassment from occurring in the first place. Some of the reasonable steps that employers should consider taking are:

• Conducting a risk assessment to identify potential sources of sexual harassment in the organisation.
• Developing and communicating a clear and comprehensive anti-harassment policy that covers all forms of harassment and sets out the expected standards of behaviour.
• Providing regular and tailored training to all staff on what constitutes sexual harassment and how to report it.
• Creating a safe and confidential reporting mechanism that encourages victims and witnesses to come forward.
• Taking prompt and appropriate action against perpetrators and supporting victims.
• Monitoring and reviewing the effectiveness of the anti-harassment measures.

Employers should be aware that failing to take reasonable steps to prevent sexual harassment could result in costly and damaging claims. According to a survey by the Trades Union Congress (TUC) in 2023, one in three women has experienced sexual harassment at work in the past year. The average compensation award for sex discrimination claims in 2023 was £26,622.

Underpayment of holiday pay

Another critical development in employment law in 2024 is the potential increase in the value of claims regarding underpayment of holiday pay. The Supreme Court’s decision in Chief Constable of the Police Service of NI and others v Agnew in October 2023 means that employees have more scope to link back a previous series of underpayments of holiday pay.

Under the Working Time Regulations 1998 (WTR), workers are entitled to 5.6 weeks of paid annual leave per year. The WTR implemented the EU Working Time Directive (WTD), which requires workers to receive average remuneration during their statutory holiday. This means that holiday pay should reflect not only basic salary but also other elements of pay that are intrinsically linked to the performance of the worker’s tasks or their personal or professional status. Such components may include overtime pay, commission, bonuses or allowances.

However, many employers have been paying holiday pay based on basic salary only, resulting in underpayment of holiday pay for some workers. Workers can claim an unlawful deduction from wages under the Employment Rights Act 1996 (ERA) if they have been underpaid their holiday pay. However, an employee can only bring such a claim within three months of the last deduction or two years if it is part of a series of deductions.

The Supreme Court’s decision in Agnew established that it is a matter of fact for the employment tribunal to determine whether or not any given underpayment of holiday pay can or cannot be linked to any previous or subsequent underpayment, but crucially that underpayments of holiday pay can be linked even where there is a gap of more than three months between any underpayment. This means that any claim regarding underpaid holiday pay can go back to up to two years’ worth of underpayments, even if there were gaps of more than three months between any underpayment.

Employers should be aware that this decision could increase their exposure to claims for underpaid holiday pay, especially from workers who work irregular hours or receive variable pay. Employers should review their holiday pay calculations and ensure that they include all relevant elements of pay that the WTD requires and the case law. Employers should also consider whether they need to make any back payments to workers who have been underpaid their holiday pay in the past two years.

Codification of EU equality rights into UK domestic law

A third development in employment law in 2024 that affects diversity, inclusion and equality in the workplace is the codification of EU equality rights into UK domestic law. The UK left the EU on 31 January 2020 and entered a transition period until 31 December 2020, during which EU law continued to apply in the UK. After the transition period, the UK is no longer bound by EU law, but it has retained most of the EU-derived legislation and case law that were in force before 31 December 2020.

However, some EU equality rights were not explicitly incorporated into UK domestic law by Parliament but were derived from EU law and interpreted by the European Court of Justice (ECJ). These rights include:

• Protection from associative discrimination (discrimination based on someone’s association with a person who has a protected characteristic).
• Protection from perceptive discrimination (discrimination based on someone’s perceived protected characteristic).
• Protection from indirect discrimination for disability.
• Protection from harassment for religion or belief, sexual orientation and age.
• Protection from victimisation for former workers.
• Protection for breastfeeding mothers.
• Protection for gender reassignment without medical supervision.

These rights were at risk of being eroded or removed after the UK left the EU, as UK courts and tribunals are no longer obliged to follow the ECJ’s decisions and can depart from the pre-existing ECJ case law in certain circumstances.

The UK government introduced the Retained EU Law (Revocation and Reform) Act 2023 (REUL) to address this risk, which came into force on 1 January 2024. As part of REUL, the Equality Act 2010 (Amendment) Regulations 2023 are in force starting 1 January 2024. This legislation codifies several necessary EU equality rights (arising from EU law and ECJ cases) into UK domestic law, meaning workers can now rely directly on UK legislation and not on tribunals interpreting the Equality Act 2010 (EqA 2010) in a way which gives effect to EU equality rights.

Employers should be aware that these regulations do not introduce new rights or obligations but rather preserve and clarify the existing ones. Employers should ensure that they comply with the EqA 2010 as amended by these regulations and do not discriminate against workers on any of the protected grounds.

Conclusion

Diversity, inclusion and equality are essential for creating a positive and productive workplace culture. Employers should be aware of the recent and forthcoming changes in employment law that affect these values and take steps to promote them and avoid discrimination claims. Employers should also keep updated with further developments in this area, as employment law constantly evolves and adapts to new challenges and opportunities.

I regularly advise employers and employees on all matters relating to employment law. If you require employment law advice, contact me using the enquiry form on gcaesar.com.