This year will see significant reform in employment laws. In addition to the rules imposed by the regulators, financial services firms should be aware that employees are set to benefit from various new statutory rights, including carer’s leave, greater workplace protections against sexual harassment and for pregnant employees and new parents and a “day one” right to request flexible working. 

Following last year’s consultations from the PRA and FCA about diversity and inclusion in the sector, employment-related regulatory change is also afoot. New rules regarding DE&I frameworks within FS firms, including in relation to data gathering, disclosure and reporting, are expected to be published this year and implemented 12 months later to allow those affected time to prepare.

Flexible working

From April 6, 2024, employees will enjoy a “day one” right to request flexible working. The existing requirement for an employee to need to have 26 weeks’ continuous service to qualify for the right will be removed. 

Further changes to the existing flexible working regime are expected to come into force in July 2024, one year after the Employment Relations (Flexible Working) Act 2023 received Royal Assent. This Act provides the following changes to the current regime:

• allowing employees to make two requests for flexible working in any 12-month period (rather than the current one request);
• reducing the decision period within which employers are required to respond to a request from three months to two months;
• introducing a requirement for employers to consult with an employee before rejecting their request;
• removing the requirement that an employee must explain what effect the change would have on their employer and how that might be addressed.

The business reasons for refusing a statutory flexible working request will remain unchanged.

Employers should update their flexible working policies to reflect the upcoming changes. The ability to make a request from the start of employment is a significant change, and the shorter decision period and consultation requirement should be communicated to managers to ensure their compliance with the new regime.

Enhanced redundancy protection

With effect from April 6, 2024, the Protection from Redundancy (Pregnancy and Family Leave) Act 2023 will provide for the extension of the right to be offered “suitable alternative employment” in a redundancy situation to those employees who are pregnant, on maternity, adoption or shared parental leave and for a period after the leave has come to an end.

The changes do not prevent employers from making pregnant employees or those who are taking or have taken a period of maternity, adoption or shared parental leave redundant. However, employers should note that all redundancy exercises, including those that start before April 6, 2024 could be affected by these changes.

New employer duty to prevent sexual harassment

With effect from October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 introduces a new employer duty to take reasonable steps to prevent sexual harassment of employees in the workplace.

The Act does not reinstate employer liability for third party harassment following substantial amendments to the bill that was originally introduced to Parliament.

Unpaid carer’s leave

The Carer’s Leave Act 2023 will introduce a new statutory right to one week’s unpaid leave each year for the purpose of caring for a dependant with a long-term care need. The right will apply from “day one” of employment and include protection from dismissal or detriment because of having taken the leave.

Employers should consider updating their family friendly policies to include this new right.

Statutory right to request predictable working 

The Workers (Predictable Terms and Conditions) Act 2023 (which is expected to come into force in September) gives workers and agency workers a statutory right to request a predictable work pattern where there is a lack of predictability about any part of their work pattern and their purpose in applying for a change is to give them a more predictable work pattern.

This new right is likely to significantly affect employers who rely on casual workers and those requiring short term labor.

Other anticipated changes in 2024

• Industrial relations. Since the Strikes (Minimum Service Levels) Act 2023 allows the Secretary of State to set minimum service levels (MSLs) in various sectors, including health, transport, fire and rescue and education during strike action. Regulations specifying MSLs for passenger railway services and ambulance services came into force on December 8, 2023, and for border security on December 12, 2023. MSLs in the education sector are currently under consultation. A statutory Code of Practice on the reasonable steps a trade union should take to comply with the Act also came into effect on December 8, 2023.
• DE&I in the financial services sector. The financial regulators’ consultation on diversity and inclusion in the financial sector closed on December 18, 2023. The FCA is aiming to publish a policy statement in H2 2024 and it is expected that the PRA will publish its final policy around the same time.

Employers should start preparing for these changes now by reviewing and amending relevant workplace policies and procedures, and by training staff.