How is the Cost of Living Crisis Continuing to Impact Employers and Employees?

The cost of living crisis refers to the situation whereby the cost of everyday essentials is rising much faster than average household incomes.

The prices of consumer goods and services in the UK rose at the fastest rate in four decades in 2022, according to statistics published by the Office for National Statistics, and the annual rate of inflation reached a 41 year high at 11.1% in October 2022. As a result, many individuals have had to prioritise cost cutting and the financial pressures have caused both mental and physical health issues.

Although some experts suggest that we are through the worst of the crisis, it is still very uncertain when we will be “out of the woods”. Therefore, it remains necessary for employers to consider the impacts of the cost of living crisis on their workforce so they can take the necessary steps to protect both employees and the success of their organisations.

Second Jobs

In a bid to boost household income, many individuals are choosing to obtain a second job. However, many employees fail to realise that they may be in breach of the express and/or implied terms of their contract of employment as a result.

All employees are under a duty of fidelity to their employer, which is also commonly known as the duty of good faith. As individuals often seek a second job that is similar to their first and/or in the same industry in order to utilise their skills and experience, employees may consequently be in breach of the duty of fidelity if they are deemed to be employed by a competitor.

Similarly, it is not uncommon for contracts of employment to expressly exclude working for competitors and restrictive covenants can prohibit working for a competitor both during or after the termination of the employment.

If an employee is found to be in breach of the implied or expressed terms of their contract of employment then it may lead to the dismissal of the employee and/or them being pursued for damages for any financial loss arising from the breach of contract.

Employees may need to consider whether they wish to incorporate express terms in employment contracts to exclude second jobs in the interests of the company or whether they are happy to allow this in the interests of the welfare of their workforce. Employers may also consider implementing a policy on second jobs in order to provide clear guidance to employees on what is deemed to be acceptable.

Employees also must be mindful of the Working Times Regulations 1998, as they are under a statutory duty to ensure that employees are not working above the prescribed limit, even if the excess would be as a result of the employee working a second job.

Disability discrimination claims under the Equality Act 2010

As mentioned above, the increased financial strain on households has resulted in an influx in mental health conditions. Data published by the mental health charity, ‘Mind’, suggests that the mental health of nearly 8 in 10 people that were surveyed has been affected by the cost of living crisis.

Under the Equality Act 2010, an individual with a mental health condition can be considered as disabled if they meet the statutory definition. For those employees that do meet the statutory definition of disabled, they are afforded several rights including the right to not be subjected to less favourable treatment on the grounds of their disability and there is also an obligation imposed on employers to make reasonable adjustments in relation to an employee’s disability.

Employers that fail to abide by the Equality Act 2010, risk employees bringing a claim against them in the employment tribunal for disability discrimination.  Therefore, it is advisable that employers take measures such as regularly reviewing any adjustments made to ensure that they are effective and consulting with employees on adjustments that could be made, in order to avoid legal action being pursued against them.

Increase in flexible working requests

We have seen a rise in the cost of many goods and services including childcare and petrol. As a result, the demand for flexible working by employees has increased in an effort to reduce the expense of commuting to work and arranging for childcare. Employers should therefore ensure that they have the necessary procedures in place to deal with flexible working requests.

Under Part 8A of the Employment Rights Act 1996 and the Flexible Working Regulations 2014, employees have the right to request flexible working, provided that they have at least 26 weeks continuous service.

Employers must deal with any requests within a 3-month period and they must also deal with requests in a reasonable manner, which can include assessing the advantages and disadvantages of the application, conducting a meeting to discuss the request and offering an appeal process.

An employer is entitled to refuse an application if they have a good business reason for doing so and such reasons are prescribed by statute. If the request is refused then an employee is not entitled to submit a further request for flexible working for the next 12 months.

However, it is vital that employers note that if they do not handle a request in a reasonable manner then the employee can pursue a claim against them in the employment tribunal.  Therefore, employers should ensure that they are adhering to legislation, and are, for example, adequately training HR staff on how to deal with flexible working requests and reviewing any flexible working policies.

The law surrounding flexible working requests is expected to be reformed in the not too distance future, depending on the success of the Employment Relations (Flexible Working) Bill 2022-23. Therefore, employers need to ensure that they remain up to date with any legislative changes and adapt accordingly.

The impacts of the cost of living crisis on both employers and employees are vast and the ongoing uncertainty of the economy means that employers cannot simply wait for the storm to pass. Action must be taken by employers to ensure that they are adhering to legislation and adequately protecting their workforce. Failure to do so may result in employers being at risk of legal action being pursued against them and a disgruntled workforce, which can have negative repercussions on the success of organisations.

Farleys Solicitors specialise in employment law & HR for businesses. If your business requires HR & employment law advice, including but not limited to the areas outline above, then please contact our experts on 0845 287 0939 or complete our online contact form and a member of the team will get in touch with you.