As 2023 gets underway and businesses prepare for the year ahead, it is important for employers to be aware of changes in employment law that could impact them going forward. Here, Chris Kisby, employment partner at Gateley Legal takes a look at 10 areas of employment law that will impact businesses in 2023.
Statutory payment rates changes
On 2 April 2023 statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase from £156.66 to £172.48 per week. Statutory sick pay will also increase from £99.35 to £109.40 per week.
On 1 April 2023 the National Minimum Wage (NMW) rates will also increase as follows:
- Aged 23 and over – £10.42 (previously £9.50)
- Aged 21-22 – £10.18 (previously £9.18)
- Aged 18-20 – £7.49 (previously £6.83)
- Aged 16-17 – £5.28 (previously £4.81)
- Apprentices – £5.28 (previously £4.81). The apprentice rate applies where the individual is either aged under 19, or, aged 19 and over and in the first year of their apprenticeship.
Employers will need to comply with these increases when agreeing salaries for employees. Otherwise, they may be liable for HMRC penalties for failing to pay NMW.
Introduction of Statutory Neo-natal Leave and Carer’s Leave
The Government announced in July 2022 that it would back the Neonatal (Leave and Pay) Bill. The Bill is currently in the report stage in the House of Commons. If introduced, it would give both parents additional leave of at least a week and, if they qualify, pay for up to 12 weeks to spend time with their baby if born prematurely or ill.
The Carer’s Leave Bill is also in the report stage. If passed, the Bill would allow employees who are providing or arranging care the right to up to one week of unpaid leave per year. Employees would be eligible from the first day of their employment, regardless of how long they have worked for the employer. Employees taking this leave will be protected from detriment and/or dismissal which arises from taking the time off.
Flexible working requests – a ‘day one right’
After 26 weeks’ service employees have the right to make a statutory application to work flexibly. This includes changing start and finish times, requesting to work from home, working fewer hours / days, etc. The Government will legislate to make the right to request flexible working a day one right, rather than employees needing to have a minimum of 26 weeks’ service. Importantly, the legislation remains a right to request, rather than a right to work flexibly. Employees will also be able to make two flexible working requests in any 12 month period, up from one. The legislation removes the requirement for employees to set out how the effects of their flexible working request might be dealt with by their employer.
Employers are required to respond to requests within two months, down from three. Employers will also be required to consult with the employee on alternatives if they reject the request. These could be a range of alternatives such as a hybrid work from home arrangement or job sharing.
The Retained EU Law (Revocation and Reform) Bill
By the end of 2023, the Retained EU Law (Revocation and Reform) Bill aims to abolish all EU law that is not specifically reinstated or replaced. This may affect a number of EU-derived secondary legislations, including the Working Time Regulations, Agency Worker Regulations and Transfer of Undertakings (Protection of Employment) (TUPE), which all affect employers and employees alike.
Given the need to review a multitude of legislation, it is anticipated that the Bill may be delayed. Gateley encourages employers to keep updated on developments around the Bill, as if passed, it could have a serious impact for both employers and employees. Concerns have been expressed that the proposed legislation is likely to cause uncertainty and unpredictability. Where there is legal uncertainty as to procedures and definitions, this can undermine any plan employers may have for growth. This is because issues such as employers’ and employees’ rights on the sale of a business and working time issues such as holiday pay entitlement can affect investment into companies.
The Employment (Allocation of Tips) Bill
The Bill, which is in its third stage of hearing, proposes to make it unlawful for employers to withhold any of the tips left and service charges paid by customers. Workers would also be entitled to access tipping records. If the Bill achieves royal assent it would affect more than two million workers in the UK.
Encouraging the office comeback
Working from home has various benefits: improved work-life balance, reduced commuting costs and fewer distractions. These are all attractive benefits for employees and employers alike. Companies are increasingly opting for shorter commercial leases and favouring smaller, more affordable spaces which allow for hot-desking. However, with many companies still under long leases, this year has seen an increased drive to get employees back into the office, either Monday to Friday or under a hybrid arrangement. This appetite for getting back to the office is expected to continue to grow in 2023.
Employers pushing for a return to the office should be aware of the risks. Firstly, of indirectly discriminating against employees who have caring responsibilities or employees whose disabilities make the commute and/or working outside of their home more challenging. Employers should also be cautious of deterring strong candidates who place flexibility and the ability to work from home at the top of their priority lists.
It is possible that economic instability could sway the bargaining power back towards employers as employees will be more acutely aware of the need to retain their job or get all-important promotions. Additionally, rising energy bills and inflation are set to impact upon employees’ finances. Therefore, we may see employees returning to the office in 2023 – one to watch.
Redundancies
A new survey from ACAS found that 18% of employers are likely to make individual staff redundant or affect large-scale redundancies over the next year. Redundancies can be complex for employers and employees. Employees made redundant may be entitled to statutory redundancy payments and may also challenge their dismissal as being unfair if they have two or more years of service with the employer. While redundancy is one of the five potentially fair reasons for dismissal, this will be deemed unfair if the employer does not follow a fair process, taking into account the scale of the redundancies and the resources of the employer.
Where an employer is making 20 or more employees redundant in the same 90-day period, the employer must inform and consult appropriate employee representatives. If 100 or more redundancies are being proposed, the consultation must commence a minimum of 45 days before the first employee is dismissed and the Secretary of State must be notified. Where less than 100 redundancies occur, there is a 30-day consultation period and the notification to the Secretary of State must be received 30 days before the first dismissal. Failure to comply with the information and consultation duty may result in a tribunal awarding up to 90 days’ pay for employees implicated. Failure to notify the Secretary of State is a criminal offence and may result in an employer being fined.
Notwithstanding the importance of considering the correct legal procedures, employers would also be advised to be aware of the reputational damage which largescale redundancies can cause. As we saw in 2022 with P&O Ferries, mishandled largescale redundancies often attract negative media attention and in turn, damage to brand reputation.
Pressure to increase pay
In the current economic climate, organisations are under pressure to increase the value of their pay awards to counter the impact of inflation and keep up with the labour market. UK pay rises are forecast between five and 15% in 2023 in light of inflationary pressures.
Industrial action
Towards the latter stages of 2022, the UK has experienced a flurry of strikes, including NHS employees and civil servants. Already, public and private sector strikes have been announced in 2023 for rail workers, highway workers, teachers, airport staff and bus drivers. The Government responded by introducing legislation last year that permits agency workers to perform the duties of workers who are on strike. This new legislation has not gone unchallenged and hearings in respect of whether these changes undermine the right to strike are expected to take place in March 2023.
On a practical note, it is likely that strike action may have an impact on many workers in relation to whether they are able to commute to work or get childcare. Employers should be alert to these potential problems and consider what steps may be taken to assist employees facing difficulties.
New case law decisions expected in 2023
Several important decisions are expected in the course of the next year relating to key employment issues. These include Chief Constable of Northern Ireland and another v Agnew and others in which the Supreme Court will decide whether claims brought that relate to a series of outstanding payments are affected by a gap of three months or more; Fentem v Outform EMEA Ltd on whether cutting short the employee’s notice with pay in lieu turns a resignation into a dismissal; Mercer v Alternative Futures Group & Another on whether the legal protection given to striking employees is compatible with human rights laws and R (on the application of Palmer) v Northern Derbyshire Magistrates’ Court which will consider the criminal liability of company officers and administrators who fail to give advance notification of a mass redundancy in an insolvency situation.