What to expect in employment law in 2023

We are expecting a year of major change in employment law during 2023. On the agenda are post-Brexit reforms, a series of private members bills, holiday pay consultation and case law, increases in the National Minimum Wage and other developments.

Nearly 10% Increase to National Minimum Wage and Increases to Payment Rates

The National Minimum Wage and National Living Wage rates will be increasing on 1 April 2023. There are also increases to other statutory payments, including statutory sick pay, maternity pay and paternity pay. See our article here for information.

The statutory cap on a week’s pay used to calculate redundancy payments and for calculating basic awards for unfair dismissal claims is usually reviewed and increased annually. The new rate is anticipated to be announced in March 2023 and come into effect on 6 April 2023.

Similarly, there is an anticipated re-evaluation of the guidance from the Presidents of the Employment Tribunals in England and Wales and in Scotland on the sums of compensation awarded by tribunals for injury to feelings awards in discrimination cases. This is referred to as the Vento bands, which are increased in line with inflation and case law. A review is expected to take place in March and come into effect on 6 April 2023.

Extra Bank Holiday for the King’s Coronation

The coronation will take place at Westminster Abbey on Saturday 6 May 2023. The bank holiday will fall on Monday 8 May 2023. This will take place across the United Kingdom and is in addition to the early May bank holiday on Monday 1 May 2023. Read our article to find out if your staff will be entitled to an extra paid day of holiday.

Holiday pay consultation and case law

Holiday pay continues to be a hot topic. The Judgment of the Supreme Court in Brazel v Harper Trust, challenged the way in which organisations had often been calculating holiday entitlement for part-year workers and workers with irregular hours. As a consequence, part-year workers are entitled to greater holiday entitlement than part-time workers who work the same number of hours across the year. See our previous article for further information. On 12 January 2023, the Government launched a consultation that closes on 9 March seeking views on holiday pay calculation. It is recommending a return to the 12.07% method. See our article on the consultation and you can access the Government consultation using this link.

We are expecting a decision from the Supreme Court on Chief Constable of the Northern Irish Police v Agnew on the calculation of holiday pay and if more than a three month gap between underpayments ends a claim. A decision from the Supreme Court would be binding throughout the UK and if in favour of the claimant would substantially increase the value of holiday claims from workers.

“Brexit Freedoms” Bill

This is the most important change ahead in 2023. The Government presented the EU Law Revocation and Reform Bill to Parliament last year to speed up the replacement and reform of EU law. The Bill includes a “sunset clause” meaning certain retained EU legislation would disappear on 31 December 2023, unless preserved or replaced by the Government. This includes many important employment regulations.

There is an opportunity for Government to make changes to holiday pay, TUPE, agency worker rights, fixed term and part-time workers. The problem is there are thousands of pieces of EU law that require review by 31 December 2023 and so it seems reasonably likely the deadline will be extended. Nevertheless, we anticipate this Bill will lead to reforms being proposed, a series of consultations on new UK laws and a reduction of the impact of the current employment legislation for employers.

Private Members’ Bills

The Government is supporting a number of private members’ bills, which means it is more likely they will progress rapidly through Parliament to become law. The proposed reforms are:

  • Employment Relations (Flexible Working) Bill – the Government has committed to introducing legislation to make flexible working a day one right (instead of 26 weeks of employment being a qualifying requirement as currently) along with other changes to the right to request procedure. It is supporting a Private Members Bill currently going through Parliament, which contains these provisions. See our article on flexible working for more information on the proposed reforms.
  • Worker Protection (Amendment of Equality Act 2010) Bill – the Government has backed this bill which expands employer liability for harassment and includes a new proactive duty for employers to take all reasonable steps to prevent sexual harassment of their employees, along with reviving employer liability for harassment of staff by third parties, such as customers. It provides for an uplift in compensation in cases of sexual harassment if there has been a breach by the employer of this duty.
  • Protection from Redundancy (Pregnancy and Family Leave) Bill – currently employers are obliged to offer an employee on maternity leave, shared parental leave or adoption leave an alternative role (if one is available) being prioritised over other employees who are provisionally selected for redundancy. The Government intends to extend this right to pregnant employees from the time they inform the employer they are pregnant for a period of up to 18 months. Extended protection would also apply to those on adoption leave or shared parental leave, although the details of proposed new rights under this Bill are yet to be confirmed.
  • Neonatal Care (Leave and Pay) Bill: gives a new right to employees who have babies admitted to neonatal care for at least seven days to take up to 12 weeks of paid leave in addition to other leave entitlements such as maternity and paternity leave.
  • Carer’s Leave Bill – provides employees with caring responsibilities a right to one week of unpaid leave each year to provide or arrange care.
  • Employment (Allocation of Tips) Bill – provides for fair distribution of tips, gratuities and service charges to workers and a new statutory code to apply. Employers in the hospitality sector, in particular, may need to adjust their practices accordingly. We predict this legislation will take effect in 2024.

‘Fire and Rehire’ Code of Practice on dismissal and re-engagement

A draft Statutory Code of Practice on dismissal and re-engagement was due to be published in 2022. It is now expected in early 2023. Employment tribunals would be able to take this into account when assessing the fairness of a dismissal and include an uplift of 25% to compensation for an employer’s non-compliance. This is a difficult issue, particularly when employers may have economic needs to vary employees’ terms and conditions of employment. See our article for current advice on this practice.

What else is on the horizon?

What are expecting some running themes in 2023 with an emphasis on how the current economic downturn and recruitment struggles are affecting the workplace.

Trade unions, reform and industrial action – industrial action has significantly increased across various sectors and looks set to continue in 2023. The government has taken steps to limit the effect of union action. This includes regulations introduced last year to remove a previous ban on employers hiring temporary cover for striking staff. Unions have challenged this with judicial review, which will be heard in March 2023. The Government is proposing a Bill for minimum service requirements including in the fire, ambulance and rail services during strike action. We are expecting further Government action seeking to limit the scope for unions to take action.

Immigration law and recruitment – Sponsor license holders increased by 65% from the end of Q4 2020 to the end of Q3 2022. This upward trend is likely to continue for the year ahead. This demonstrates the increasing popularity for employers to sponsor migrants to work in the UK to counteract the difficulties in recruitment. Our Immigration team is advising many employers in sponsor licence acquisition and management.

Redundancies – with some employers struggling with the economic climate and the increasing cost of running a business, there may be plans to restructure or make redundancies in 2023. To retain remaining staff we anticipate employers seeking to demonstrate their ethical credentials and values that chime in with their employees. See our article with advice on Ethical redundancy – is there a good way to make employees redundant?

Cost of living crisis – in seeking to recruit and retain their staff, employers will also be looking to how to support their staff through the cost of living crises. For further information – see our article on Should employers be helping employees with the cost of living crisis?

The year ahead in 2023 is set to be eventful with key changes to employment law, the extent of which we haven’t seen for sometime. Our Employment team is helping employers navigate the way ahead. Do contact us.