Flexibility, digital and diversity issues to shape UK workplace in 2022

Diversity and inclusion issues also remain high on the agenda, as employers seek to go beyond minimum legal requirements and differentiate themselves from their peers on metrics including disability, ethnicity and social mobility.

Workforce and remuneration issues

Vaccinations and sick pay

As the impact of the Omicron variant of Covid-19 continues to be felt, combined with the usual winter illnesses, many employers are now considering their approach to sick pay and absence, particularly for unvaccinated employees. With mandatory vaccination requirements already in force, or in their way, in some care and healthcare settings, employers considering policies of their own must get to grips with a range of data protection and other issues.

Hybrid and flexible working

Responsive policy development must allow the business to thrive while remaining adaptable to changeable Covid guidance and the UK government’s anticipated response to its 2021 consultation on extending the right to request flexible working. Effective performance management tools will also be important as new working models emerge.

HR should also be poised to react to an anticipated new right for all workers to request a more predictable contract, following recommendations made by the Low Pay Commission.

Skills shortage, attracting talent and increasing retention

Innovative reward schemes and a focus on workplace culture will increase in importance. Global reputation is also becoming increasingly important to attracting cross-border talent.

Ongoing impact of Covid-19

Institutional shareholder expectation remains for companies that have taken, and not repaid, government support to show pay restraint and not award annual bonuses.

Increases to NMW/NLW rates

With both the National Minimum Wage (NMW) and National Living Wage (NLW) due to increase in April 2022, employers may wish to consider pay simplification strategies to guard against breaches and make headline rates attractive to recruits – for example, consolidating allowances into basic rates.

Employee and worker status

The ‘grace period’ for genuine mistakes in IR35 implementation in the private sector ends in April, so employers have a final opportunity to ensure comfort around compliance.

On worker status, HR may need to react to the Court of Appeal, which will give further guidance on the test for worker status later this year in Nursing and Midwifery Council v Somerville.

Industrial relations

Plan ahead for any possible tension, as 2021 closed with many reports of increasing activism by trade unions. Crucially, detriment protection for employees who engage in industrial action will be assessed by the Court of Appeal later this month in Mercer v Alternative Future Group Ltd.

Diversity, inclusion and equality

Corporate D&I strategies

Your diversity and inclusion (D&I) strategy should be a living document which is continually refreshed. For example, what permitted positive actions are currently being taken to accelerate change, and are existing measures achieving the desired results? Are D&I strategies being developed and adjusted in line with up-to-date diversity data, and what are the data protection issues around this?

The House of Commons Women and Equalities Committee (WEC) has called for a new cross-departmental equalities strategy for the government, which could set out new best practice and result in D&I strategies needing to be revisited.

Social mobility

Employers will continue to increase their focus on monitoring the socioeconomic background of their workforces and determine how they can advance social mobility – by, for example, facilitating gateways into careers and continued mentoring and coaching.

Domestic abuse and menopause

Policies will continue to be developed and workforce awareness raised around issues connected with domestic abuse and the menopause. These should be informed by the expected government response to its call for evidence on workplace support for domestic abuse survivors and the WEC’s anticipated report on menopause and the workplace.

Gender pay gap reporting

Gender pay gap (GPG) reporting obligations seem likely to run as normal this year following Covid-related enforcement gaps. There is a growing trend towards businesses voluntarily reporting on a range of diversity pay gaps beyond gender including ethnicity, disability, sexual orientation and social class.

HR may wish to contribute to any evidence-gathering opportunity when the government reviews the impact of the GPG reporting regulations.

Ethnicity-based pay disparities

Continue to consider how HR can monitor and improve any ethnicity-based pay disparities. The government may come to a settled position on ethnicity pay gap reporting, something which it has continued to grapple with following its 2018 consultation.

Disability employment and pay gap

Continue to consider strategies to boost disability inclusion in the workforce and tackle pay gaps. The government will also consider its response to the consultation on disability workforce reporting.

HR may also wish to consider the support in place as more becomes known in 2022 about ‘long Covid’ and other Covid-related disabilities.

Sexual harassment

Prevention strategies should be ready to be reviewed if the government produces draft legislation to introduce a positive duty on employers to prevent sexual harassment. HR will also need to revisit the use of non-disclosure agreements (NDAs) if long-awaited draft NDA legislation, first proposed in 2019 following consultation, is published.

Gender identity

The Forstater decision on ‘gender critical’ beliefs and recent UK Supreme Court decision on gender-neutral passports have shone a spotlight on gender identity issues. Divergence in the approach being taken by the Scottish and UK government in respect of transgender identities is evidenced by the 2022 Scottish Census, in which respondents will be able to self-identify when it comes to sex, and the Scottish government’s proposed changes to the Gender Recognition Act.

Family rights

HR should also prepare to deal with anticipated draft legislation in relation to carer’s leave and neonatal leave and pay, and extended redundancy protections to prevent maternity and pregnancy discrimination. Possible reform proposals in relation to shared parental leave and pay may also need HR attention.

Digital transformation in the workplace

Digitalisation raises a range of challenging issues including in relation to equality, privacy and data protection, fairness and workplace culture.

Artificial intelligence (AI) and data analytics can help deliver on HR processes, from recruitment to training, but HR should develop a framework for implementing digital solutions. Frameworks will need to factor in new guidance on monitoring workers and using AI tools in recruitment expected this year from the ICO and the Equality and Human Rights Commission.

Green HR and business protection

Sustainability and ESG

COP26 is likely to have triggered reviews of business’ commitments on sustainability and other environmental, social and governance (ESG) issues.

Many employers are looking to implement effective or more effective HR and incentive strategies to progress in these areas. The November 2021 updated Investment Association principles require companies which have incorporated ESG risks and opportunities into their long term strategy, but which have not followed through into setting ESG remuneration targets, to explain to shareholders how they intend to do so and to outline the approach they intend to take in future years.

Whistleblowing structures

Employers should continue to monitor the integrity and effectiveness of their whistleblowing policies and procedures, especially if the government progresses its commitment to review the UK statutory whistleblowing regime – and with a view to the EU Whistleblowing Directive for cross-border businesses.

Restrictive covenants

The government is likely to respond to its consultation on non-compete clauses. HR should review any restrictive covenants and non-compete clauses against this response to ensure business interests remain protected.

Additional reporting by Gemma Herbertson of Pinsent Masons.