Key employment law developments expected in 2023

• a 47p, or 9.7%, increase for those aged 16–17 (from £4.81 to £5.28 per hour); and

• a 47p increase in the apprentice rate (from £4.81 to £5.28 per hour).

• In addition the following statutory payments will increase with effect from April 2023:

• Statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase to £172.48 per week (from £156.66 per week).

Many employers will be glad to say goodbye to 2022, given the difficult economic circumstances which have been challenging for many businesses to navigate, hoping for more positivity in the year to come. 2023 is lining up to be a busy year for employment law, with various new laws and guidance expected to come into effect, and some important cases due to be determined in the senior Courts. It is also possible that significant changes will be made to employment law, as the so called Brexit Freedoms Bill will “sunset” many EU laws which are currently in force in the UK.

In this article we have summarised the expected changes and developments which are likely to be of interest to employment lawyers.

Increases in employment related payments

The Government has announced that from 1 April 2023 there will be an increase in the National Living Wage and National Minimum Wage as follows:

• a 92p, or 9.7%, increase to the National Living Wage for those aged 23 and over (from £9.50 to £10.42 per hour);

• a £1, or 10.9%, increase for those aged 21–22 (from £9.18 to £10.18 per hour). (This increase is intended to narrow the gap with the NLW and put this age group on course to receive the full NLW by 2024);

• a 66p, or 9.7%, increase for those aged 18–20 (from £6.83 to £7.49 per hour);

• Statutory sick pay will increase to £109.40 per week (from £99.35 per week).

The current cap on a week’s pay for the purposes of calculating an employee’s statutory redundancy pay or unfair dismissal basic award is £571. This cap is expected to increase from 6th April 2023, however the amount has not yet been published. Additionally the statutory cap on unfair dismissal compensation is expected to increase from £93,878 at this time.

“Brexit Freedom Bill” – potential repeal of EU Law

The Retained EU Law (Revocation and Reform) Bill will ‘sunset’ (revoke) any piece of retained EU Law by 31st December 2023 unless specific legislation is introduced to retain it. There is provision to extend the ‘sunset’ date to 2026 in certain cases. Laws which are retained may be amended. This Bill potentially has far reaching implications for employment law taking into account that some important employment law rights such as under the Working Time Regulations, Agency Workers Regulations and TUPE are derived from EU Directives. At present it is entirely unclear what changes the Government may make to employment laws.

New Statutory Code on “fire and rehire”

On 30 March 2022, in the wake of the mass redundancies announced by P&O

Ferries without consultation or notice, the Government announced that it would be issuing a statutory Code of Practice to address "fire and rehire" practices. Tribunals and courts will be required to take the code into account when considering relevant cases. They will have the power to apply an uplift of up to 25% of an employee's compensation where the code applies, and the employer unreasonably fails to follow it. Whilst no date has yet been fixed for the Code to come into force, during a Parliamentary debate on 3 November 2022, it was stated that a draft code will be published in the near future.

New ICO guidance on workplace monitoring and health information

The ICO is currently consulting on new draft guidance relating to workplace monitoring and health information, which closes in January 2023. The new guidance is expected to come into force, replacing the existing Employment Practices Code later this year. Employers will need to review their practices in this area to ensure compliance with the new requirements.

Overhaul of law on tips and gratuities

Currently, if a worker/employee receives a tip from a customer, the employer is able to distribute and/or retain the tips using the method which they find most suitable. Many tips are not passed on to workers. The aim of the Employment (Allocation of Tips) Bill, a Private Members Bill backed by the Government, is to ensure that workers receive the benefit of tips that are intended for them. Through this Bill, a new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed. On top of this, workers will receive a new right to request more information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal if they feel there are grounds to do so.

New duties to prevent sexual harassment

The Worker Protection (Amendment of Equality Act 2010) Bill will bring back previously abolished employers’ liability for harassment of their employees by third parties, introduces a duty on employers to take all reasonable steps to prevent sexual harassment of their employees, makes provision for the enforcement of that duty and provides for a compensation uplift in sexual harassment cases where there has been a breach of the employer duty. At the second reading of the Private Member’s Bill on 21 October 2022, the Government advised that it was supporting the Bill. This Bill is scheduled to have its report stage and third reading on 3rd February 2023.

The provisions of this Bill are significant for employers who will have to consider taking active steps to address the protections afforded under the legislation which may include updates to policies, procedures and additional training for staff. The intention of the Bill is to shift the focus of some parts of the Equality Act 2010 from “redress” to “prevention”.

Family Friendly changes

A number of Private Members Bills backed by the Government will make changes to family friendly rights if passed in 2023. Although there is no fixed timescale for when the various Bills may come into force, it is expected that significant progress will be made in 2023. The Bills include:

1. The Carer’s Leave Bill - this bill will introduce a flexible entitlement of one week’s unpaid leave per year for employees who are providing or arranging care. As per other types of family related leave, the employee will be protected from dismissal or any detriment as a result of having taken time off. This right will be available from the employee’s first day. It may be advisable for employers to introduce policies dealing with this type of leave in due course.

2. Neonatal Care (Leave and Pay) BillCurrently, parents of a baby in neonatal care must rely on their existing statutory leave entitlements to enable them to be off work while the baby is in hospital. This Bill would enable employees to take leave from Day 1 of their employment where they are the parent of a baby in neonatal care (defined a baby of 28 days old or less being admitted to hospital for at least 7 continuous days). It is also expected that employees with at least 26 weeks’ continuous service would also be entitled to be paid statutory neonatal pay. The precise scope of the rights to leave and pay would be set out in future regulations. Although the Bill provides that the right would be to take at least one week’s leave, there may be scope to extend this under future regulations, and the original intention was for parents to be given up to 12 weeks’ of leave. The level and duration of statutory neonatal pay will also be dealt with in future regulations. Parents who qualify for neonatal leave will be afforded the same employment rights and protections as parents taking other relevant family-related leave, i.e. protection from detriment or discrimination arising from them taking, or seeking to take, neonatal leave.

3. The Protection from Redundancy (Pregnancy and Family Leave) Bill - This Bill extends the protection for women and new parents against redundancy “during or after” an individual takes the relevant period of family leave. Under current rules, before making an employee on maternity leave, shared parental leave or adoption leave redundant, employers are obliged to offer them a suitable alternative vacancy where one exists in priority to anyone else who is provisionally selected for redundancy, failure to do means that any subsequent dismissal will be automatically unfair. The new bill will extend protection to apply to pregnant women before they start maternity leave and after they return to work. It will also protect new parents returning to work from adoption or shared parental leave. The Government believes this Bill will “shield new parents and expectant mothers from workplace discrimination, offering them greater job security at an important time in their lives”.

4. Employment Relations (Flexible Working) Bill - The aim of this Bill is to extend the right for employees to request flexible working. Contrary to some reports in the press, it is not the intention of this Bill to introduce an entitlement to work flexibly and employers will still be able to reject requests for the current statutory reasons. If this Bill is passed, the main changes to the current framework will be removing the pre-requisite for an employee to have 26 weeks’ of service before they can make a request for flexible working. As a result, employees will be able to make a request for flexible working on the first day of their employment. Employers will also be required to consult with the employee prior to the rejection of their flexible working request rather than the current requirement to deal with the request reasonably and the time limit for the employer to respond to the request will be reduced from 3 months to 2. Employees will also be able to make two requests in a 12 month period if they wish to do so, rather than 1.

Extra bank holiday

In celebration of the coronation for King Charles III on Saturday 6th May 2023, it has been announced that there will be an additional bank holiday on Monday 8th May 2023. Staff may or may not be entitled to the additional bank holiday, depending on the terms of their contract.

Other possible developments

Several other Bills are currently making their way through Parliament, most of which are not currently backed by the Government but may lead to changes in some areas:

• In 2019 the Government announced plans to create a new, single labour market enforcement agency to better ensure that vulnerable workers were aware of and could exercise their rights, as well as support employer compliance. The Government has indicated its intention is to proceed with the necessary legislation when Parliamentary time allows and developments may be made this year now that all relevant consultations have concluded.

• Employment (Application Requirements) Bill - aimed at regulating the use of minimum qualification or experience requirements in job applications to make recruitment a fairer process.

• Fertility Treatment (Employment Rights) Bill - to require employers to allow employees to take time off from work for appointments for fertility treatment.

• Miscarriage Leave Bill – providing for an entitlement for three days of paid leave for people who have experienced miscarriage before 24 weeks.

• A draft Bill is expected to be published in spring 2023 making changes to rights for individuals affected by surrogacy.

Significant cases to look out for Unlawful deductions/holiday pay - The decision of the Supreme Court in Chief Constable of the Police Service of Northern Ireland v Agnew should be handed down during 2023. The case, which was heard between 14-16 December 2022, will determine whether a series of unlawful deductions from pay is broken if the deductions are more than 3 months apart. Whilst this is a decision of the Court of Northern Ireland, it is likely to be followed by employment tribunals in the UK and may significantly affect claims for back dated holiday pay where there have been gaps of more than 3 months between periods of holiday.

Pay in lieu and dismissal - In the case Fentem v Outform EMEA Limited, the Court of Appeal will consider issues relating to payment in lieu of notice. In this case, the employer invoked a clause in the employee's contract enabling it, once the employee had resigned, to terminate their employment immediately by making a payment relating to the unexpired period of the employee's notice. The Employment Appeal Tribunal found that in these circumstances the employee had not, as a matter of law, been dismissed by the employer so a claim for unfair dismissal failed. The outcome of this case could have significant implications for how employers utilise pay in lieu of notice clauses where the employee has resigned.

Nicola Smyrl Taylor Walton LLP