10 key employment law developments in 2023

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What significant employment law changes could impact companies in the year ahead? We take a look at the top 10 developments businesses should keep an eye on this year.

1. A change to statutory payment rates

Statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase on 2 April 2023 from £156.66 to £172.48 per week. There will also be an increase in statutory sick pay which will go from £99.35 to £109.40 per week.

From 1 April 2023 the national minimum wage will also go up:

  • 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 is applicable to individuals either aged under 19, or, aged 19 and over and in the first year of their apprenticeship.

When agreeing salaries for employees, employers will need to comply with these increases to avoid being liable for HMRC penalties for failing to pay the national minimum wage.

2. The introduction of statutory neonatal and carer’s leave

In July 2022 the Government announced that it would support the Neonatal (Leave and Pay) Bill which is currently in the report stage in the House of Commons. If introduced, this will grant both parents at least a week of additional leave and, if they qualify, pay for up to 12 weeks to spend time with their baby if born prematurely or ill.

Similarly the Carer’s Leave Bill is also in the report stage. If passed, it will allow those employees who are providing/ arranging care up to one week of unpaid leave per year. Employees will 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 any detriment and/ or dismissal which arises from taking the time off.

3. Flexible working requests from day one

Employees have the right to make a statutory application to work flexibly after 26 weeks’ service. This includes requesting to work from home, changing start and finish times, and working fewer hours or days, etc.

The Government will legislate to make the right to request flexible working patterns a ‘day one right’, doing away with the minimum of 26 weeks’ service requirement. It is important to note that 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 previously. The legislation also 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 alternative arrangements if they reject the flexible working request. These alternatives could include options such as a hybrid work from home arrangement or job sharing.

4. The Retained EU Law (Revocation and Reform) Bill

The Retained EU Law (Revocation and Reform) Bill aims to abolish all EU law that is not specifically reinstated or replaced by the end of 2023. This may affect a number of EU-derived secondary legislations which affect employers and employees alike, including:

  • the Working Time Regulations;
  • Agency Worker Regulations; and
  • Transfer of Undertakings (Protection of Employment) (TUPE).

It is expected that the Bill may be delayed due to the large amount of legislation requiring review. We would encourage employers to keep up-to-date on developments around the Bill, since it could have a serious impact for both employers and employees if passed. Concerns have been expressed that the proposed legislation is likely to cause uncertainty and unpredictability; legal uncertainty as to procedures and definitions, can undermine any plans 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.

5. The Employment (Allocation of Tips) Bill

The Employment (Allocation of Tips) Bill, which is currently 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. It also proposed that workers be entitled to access tipping records. If the Bill achieves royal assent it would affect more than two million workers in the UK.

6. Back to the office?

Working from home has numerous benefits for employees and employers alike. Employees enjoy an improved work-life balance, reduced commuting costs and fewer distractions. Companies are increasingly opting for shorter commercial leases and choosing smaller, more affordable spaces which allow for hot-desking. However, with many companies still subject to 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 desire for getting back to the office is expected to continue to grow in 2023.

Employers encouraging 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.

7. Redundancies under consideration

A recent ACAS survey found that 18% of employers are considering individual or large-scale redundancies over the next year. Redundancies can be complex for employers and employees alike. 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.

As well as the importance of adhering to the correct legal procedures, employers should be aware of the reputational damage that large-scale redundancies can cause. As we saw in 2022 with P&O Ferries, mishandled large-scale redundancies often attract negative media attention and in turn, damage to brand reputation.

8. Pressure to increase pay

In the current challenging economic climate, organisations are under pressure to increase pay to offset the impact of inflation and to keep up with the labour market. In light of inflationary pressures, UK pay rises are forecast at between 5% and 15% in 2023.

9. Public and private sector strikes

Towards the end of 2022, the UK experienced a bout of strikes, including civil servants and NHS employees. Public and private sector strikes have been announced in 2023 for rail workers, highway workers, teachers, airport staff and bus drivers. The Government responded to the industrial action by introducing legislation last year that permits agency workers to perform the duties of workers who are on strike. This legislation has not gone unchallenged and hearings on whether these changes undermine the right to strike are expected to take place in March 2023.

It is also likely that strike action may have an impact on many workers in relation to whether they are able to commute to work or access childcare. Employers should be aware of these potential issues and consider what steps they can take to support employees facing difficulties.

10. Important cases to be decided this year

Several key decisions are expected in 2023 relating to important 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.

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