The top employment law cases that the Retail, Leisure and Hospitality sector needs to look out for in 2024

We have identified the cases which could have a big impact on the retail, leisure, and hospitality sector over the next 12 months. 

These cover:

• Religious or Belief Discrimination Claims; 
• Holiday Pay and Entitlement Claims; 
• Dismissal and re-engagement (“fire and rehire”); and
• Equal Pay Tribunal Claims.

For an analysis of upcoming legislative changes that will impact the retail, leisure, and hospitality sector, click here.

1. Religious or belief discrimination cases 

In a society where individuals have many different beliefs and values, it is not easy to navigate the fundamental difference in values or beliefs that emerge between colleagues, particularly where there are strong feelings on both sides. If not carefully handled, these can often lead to disciplinaries, grievances, and Employment Tribunal claims. 

Workers have an absolute right to hold protected beliefs, but do not have the same absolute right to express those beliefs. Employers can impose restrictions on what workers can say, but only if it's appropriate to do so and they can justify their approach. This is a difficult balance to strike.

Over the last few years, we’ve seen a sharp increase in the numbers of claims brought by staff who allege they have been dismissed, undermined and/or treated unfairly for expressing, so called, gender critical beliefs ‘GC’ (the belief that sex is immutable and can't be changed). This issue has been prevalent in the retail, leisure and hospitality sector, with both employers and consumers increasingly becoming conscious of the need for diversity and inclusion in all aspects of business operations. 

Consumers expect businesses to reflect the diversity of the communities they serve and to create inclusive environments for both their workers and customers. Failure to do so can be seen as discriminatory or exclusionary, leading to public backlash and a loss of trust. Many claimants crowdfund to pay for legal advice and representation. Journalistic organisations live tweet tribunal tweets of cross examination of parties involved in many cases to a huge audience. This further complicates matters for employers, as it exacerbates an already tricky situation and bringing further reputation risks. 

Particular cases to note include: 

• Higgs v Farmor’s School concerned a Christian employee who was dismissed after expressing views on her own social media profile that can broadly be described as GC. The school said that it had dismissed her because of the way she expressed those beliefs which, it said, suggested that she was homophobic and transphobic. However, last year the EAT allowed Mrs Higgs appeal because the tribunal had not considered whether the school's decision had arisen out of Mrs Higgs' belief (which was protected) or by a justified objection to that belief (which wasn't). The school has asked for permission to appeal to the Court of Appeal. 
• Bailey v Stonewall Equality Ltd & ors concerned a lesbian barrister was discriminated by her chambers because of her GC beliefs and views about Stonewall. Her argument that Stonewall had instructed, caused or induced her chambers to discriminate against her failed and that part of the decision has been appealed. On 14 May 2024 the EAT will consider whether Stonewall crossed a line between lawful protest and unlawful inducement. This will put the spotlight on the Stonewall diversity scheme which many organisations are part of.
• Randall v Trent College & ors involved a school chaplain who was dismissed after he delivered a controversial sermon on an LGBT issue. The ET found that the chaplain had not been dismissed because of his beliefs but because of the way he had manifested those beliefs. The chaplain has appealed and the EAT will consider it later this year.

Why does it matter? 

Employers are finding it increasingly difficult to know how to deal with complaints made against or by workers whose beliefs conflict with those of their business, other workers, or its customers. It is difficult to draw firm conclusions because each case is fact sensitive. However, the decision in Higgs is important because the EAT set out basic principles that apply to all employers who wish to restrict what their staff can say about their protected beliefs both inside and outside work. If the Court of Appeal do hear the appeal, we may get further guidance.

2. Holiday Pay and Entitlements 

Significant changes to holiday pay and entitlement came into force on 1 January 2024. Nevertheless, some of the changes take effect for holiday years that start on or after 1 April 2024.

The key changes are:

• Defining a new class of workers: “part-year workers” and “irregular-hours workers”. New rules set out how holiday accrues for these workers and employers will now also be able to roll up their holiday pay if they want to; 
• Providing clarity on when workers can carry holiday from one year to the next; 
• Defining “normal pay” to include overtime, commission, and other payments; and 
• Changes to record keeping rules.

Why does this matter?

Businesses in the retail, leisure and hospitality sector may want to pay particular attention to irregular hour workers. These are workers whose working hours are ‘wholly or mostly variable’ in each pay reference period, which is inclusive of zero hours workers and similar casual hours contracts, which may make up a significant portion of their workforce. Nevertheless, these changes will apply to all members of staff.

You may wish to update your ‘leave policies’ and to review your contracts of employment with your workers to determine whether you have “part-year workers” and “irregular-hours workers” to see whether you have pre-existing clauses which entitle workers to their entire holiday entitlement at the start of the holiday year. This will ensure you remain compliant. 

If you do, you must honour this and continue providing holiday entitlements in this way. If this is the case, you may wish to amend your contracts to reflect this new method. Finally, if your contracts are silent on the matter, you will have the discretion to decide whether workers are entitled to book more holiday than they have accrued so far within that holiday year. It is important to remind and encourage your workers to take their holiday entitlements as to avoid them carrying over unused leave entitlement. 

Get more information about these changes they will implement here.

3. Dismissal and Re-Engagement 

If an employer can’t persuade a worker to accept new terms and conditions, it has the option of dismissing them and offering to re-engage them on new terms. This will, usually, only be done as last resort because of the risks involved. You must follow a fair dismissal process to avoid an unfair dismissal claim and be able to evidence a clear business reason for the change.

In 2021, Tesco gave notice to all staff in receipt of a particular benefit (Retained Pay), offering a lump sum in exchange for removing it. If a worker did not accept this offer, Tesco threatened to dismiss them and offered to re-engage them on new terms.

Retained Pay was an enhanced pay package that had been offered to workers facing redundancy, as an incentive for them to relocate rather than take redundancy. It was referred to by Tesco in negotiations with its recognised union USDAW, and in a subsequent collective agreement, as a “permanent” entitlement and could only be changed through mutual consent, promotion, or due to a contractual change in working patterns.

USDAW brought a successful claim against Tesco in the High Court to stop the “fire and rehire” process via an injunction. The High Court found that the parties’ intended to keep Retained Pay for as long as each worker was employed in their role. As such, the High Court concluded a term should be implied into the contract preventing Tesco from giving notice to terminate it.  

The decision was appealed and subsequently overturned by the Court of Appeal. The Supreme Court will hear the appeal on 23 and 24 April 2024.

Why does this matter?

If the Supreme Court agrees with the High Court’s original decision, employers will need to be very careful about threatening to dismiss employees where the benefits they want to remove are permanent (or could have acquired that status).

Employers will also need to use clear language when offering any benefits as an incentive (or otherwise), to avoid those benefits being interpreted as “permanent” if you don’t intend them to be. For example, by clearly stating that benefits could be subject to change or withdrawal at a future point in time.

More generally, the case is of interest due to increasing criticism of fire and rehire as a practice. Although there have been calls to ban the practice outright (particularly following the 2022 P&O ferries headlines), it currently remains lawful in the UK and can be a useful mechanism in the right circumstances. Nonetheless, large employers looking to make changes to terms and conditions via a dismissal and re-engagement route may want to think carefully about the risks of adverse publicity. The potential introduction of the Labour Government in 2024 might further create more issues for the practise, as the Labour Government are looking to ban firing and rehiring. 

4. Equal Pay Tribunal Claims 

Irwin Mitchell found that equal pay tribunal claims were up by 37% in 2023. This number is likely to only grow in 2024. The retail industry was found to be in the top three for equal pay disputes, alongside logistics/transportation and manufacturing. 

Employers such as Co-op, Sainsbury’s, Tesco, Morrisons and Asda have all been involved in equal pay disputes. In particular, Asda has been dealing with over 32,000 shopfloor workers bringing equal pay claims against the Employer. The majority of these cases consider whether workers in Asda stores do work of ‘equal value’ to workers who work in distribution centres. 

Why does this matter?

The rise of equal pay disputes is something that will increasingly become more problematic in the retail, leisure, and hospitality sector. It is a concerning trend which cannot be ignored. Therefore, it is important that employers recognise the value of fair compensation and take immediate action to address any discrepancies. This can be done by implementing transparent pay structures and conducting regular pay audits, businesses can foster a more inclusive and equitable work environment.

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