These employment law updates bring you up to speed on the annual increases to statutory payments from April 2023, the important new laws that have come into force over the summer, as well as potential legislative developments to keep a close eye on during the final quarter of the year. The table of contents lists the main headings you can jump to. We start with the latest news.
Flexible working Act passed, but not in force until 2024!
After a year of deliberations, the Employment Relations (Flexible working) Act 2023 received its royal assent on 20th July 2023. It paves the way for the following changes to the flexible working regulations.
What is changing?
- employees will be able to make 2 flexible working requests a year, rather than the current one.
- employers must respond to requests earlier, within 2 months, rather than 3, if no extension is agreed
- there are new requirements for employers to consult with the employee before turning down their flexible working request, (stemming the practice of blanket refusals with no discussions). Though there is no minimum requirement setting out what the consultation should include.
- Employees will no longer be required to lay out how the flexible working request might impact the employer.
Notably, the Act doesn’t make flexible working a ‘Day 1 right’ just yet; employees still have to have built up 26 weeks service with their employer before they are able to make a request. This Day 1 right was the main and headline-capturing element of the Bill. The Government has maintained the Day 1 right to request flexible working would be delivered through secondary legislation. And the Government’s press release on the new flexible working measures seems to extend this to all the measures, saying that it expects [all] sic “the measures in the Act and secondary legislation to come into force approximately a year after Royal assent, to give employers time to prepare for the changes”. This means a coming into force date of July 2024.
The new changes will put more of the onus on employers to find the flexible working solutions. It will mean dealing with successive requests, engaging more effectively and responding more quickly to requests, with the biggest impact, and burden, being placed on SMEs who generally don’t have large HR resources. Do make sure staff handbooks and HR policies dealing with flex working requests are updated to reflect the new process before it comes into place.
What the Act doesn’t change
- The new Act doesn’t require employers to offer a right of appeal if a flexible working request is rejected, though offering a right of appeal is recommended in the Acas Code of Practice on handling flexible working requests.
- There is a new requirement to consult with the employee, but no requirement for the consultation to be substantive, i.e no obligation on the employer to ‘have a proper, all round discussion’ with the employe before refusing a request, nor that the consultation has to cover all the options available. In fact, there is no minimum standard of consultation set out at all.
- The 8 current statutory grounds on which an employer can reasonably refuse a request for flexible working haven’t changed, which is interesting given there was broad support for scaling these amongst those who responded to the consultation. The make up of those who responded, and what they said, makes for interesting reading.
The ability of organisations to accommodate requests varies hugely across sectors and roles. Employers are still able to refuse flexible working requests on one of the 8 current statutory grounds.
Flexible working is a broad term that can relate to working hours or patterns, including job-sharing, part-time, term-time, flexi-time, compressed hours (e.g working a 5 day week in 4 days), annualised hours, or adjusting start and finish times. It also includes hybrid working, which is flexibility over where somone works.
The new measures in the act will be supported by an updated Acas Statutory code of practice which is in consultation until 6 September. The aim of the Code is to provide employers, employees and representatives with a clear explanation of the law on the statutory right to request flexible working, alongside good practice advice on handling requests in a reasonable manner.
Redundancy protection extended to returning mothers & new parents
The Protection from Redundancy (Pregnancy and Family Leave) Act 2023 came into force on 24th July 2023. However, it requires further regulations from the government setting out precisely how the protection will work. These regulations are not expected to come into force before April 2024 (i.e they will be announced during the election campaign). But here is the detail of what’s coming.
The new law extends the priority right to new roles in a redundancy situation to pregnant women and recent returners from maternity leave (and shared parental, adoption leave). Essentially it introduces this protection from redundancy to a much wider group of people.
Besides those already protected, currently on maternity leave ( shared parental, adoption leave) the Act extends protection to:
- A pregnant employee in a ‘protected period of pregnancy’;
- An employee who has recently suffered a miscarriage;
- Returners from maternity leave;
- Returners from adoption leave, and
- Those returning from shared parental leave
From the Government’s press releases, the length of protection given is likely to be 6 months for those returning from maternity and adoption leave. (We wait to see the length of protection afforded those fewer number returning from shared parental leave). Meanwhile the ‘protected period of pregnancy’ is likely to begin once the employee informs her employer that she is pregnant.
Employees taking paternity leave are not offered any redundancy protection on the basis that the new law is to ensure that employers do not make an early judgment on performance in the first few months of someone returning to work after a long absence. Long absence not very often being the case with paternity leave.
New Employment Laws from April 2023
1 April: New National Minimum Wage, National Living Wage rates
In last November’s autumn statement, the Government announced the annual increases in National Minimum (NMW) and National Living Wage (NLW) rates, set to take effect on 1st April 2023. They are:
In doing so, the Government accepted fully the recommendations of the Low Pay Commission (LPC) to ensure the NLW remains on track to reach the Government’s target of two-thirds of median earnings by 2024. The LPC has said that the increase to the National Living Wage will support the wages and living standards of low-paid workers when many are feeling the pressure from inflation and the rising cost of living. Alongside the NLW, the Commission recommended significant increases in the National Minimum Wage (NMW) rates for younger workers. The 21-22 year old rate will increase to £10.18, narrowing the gap with the NLW and leaving this age group on course to receive the full NLW by next year 2024.
Ensure you update the wages you are paying your employees, and pay special attention that any employees who have moved into the 23 yrs+ age bracket are receiving the top rate National Living Wage.
Apprentices are entitled to the Apprentice Rate if they’re either:
- under 19 or
- aged 19 or over and in the first year of their apprenticeship.
So an apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £5.28.
Apprentices are entitled to the National Minimum Wage for their age if they :
- are aged 19 or over AND
- have completed the first year of their apprenticeship.
So an apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £10.18.
Use the minimum wage calculator to double check that you are paying the appropriate wage rate. With the cost of living rising, it’s helpful to reference, but don’t confuse, the Living Wage Foundation’s published advisory rates for the real cost of living, found here.
6 April: increases to annual tribunal limits and statutory redundancy payments
The Government has announced the 2023 increases to the compensation and the maximum week’s pay for the purposes of calculating redundancy payments and basic tribunal awards.
- The maximum week’s pay for calculating statutory redundancy payment and unfair dismissal basic award increases to £643 (previously £571)
- So the maximum basic award for statutory redundancy payment and unfair dismissal awards
increases to £19,920 (30 weeks pay subject to the limit on weekly pay above) - Maximum compensatory award for unfair dismissal (unlimited for certain automatically unfair dismissals such as health & safety or whistleblowing)
increases to £105,707 (previously £93,878).
Be mindful of these new amounts especially for dismissals taking place on or around 6 April. Double check all redundancy pay calculations on gov.uk’s redundancy pay calculator. Remembering of course that your staff employment contracts may make provision for enhanced redundancy payments and, in addition to any statutory or contractual redundancy payment, employees are also entitled to work their notice period or be paid for it instead of working their notice (known as Pay in lieu of notice or PILON).
Remember also that where an employee brings a successful case of unfair dismissal on the grounds of Discrimination, there can be levels of compensation awards for injury to feelings (with the ET assessed Vento bands depending upon severity) and in extreme cases these are not capped.
10 April : annual increases to statutory family-related pay and statutory sick pay
The Department of Work and Pensions has also published its annual rate increases to family-friendly pay and statutory sick pay for 2023/24:
The rate for statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase to £172.48 per week (up from £156.66).
The rate for statutory sick pay meanwhile, will increase to £109.40 per week (rising from £99.35).
Ensure all staff on maternity, paternity, adoption, shared parental leave and parental bereavement leave, as well as staff on sick leave, are paid the relevant statutory minimum rates.
Horizon scanning : potential legislative changes & new statutory codes of practice for 2023
Each of these legislative changes is scheduled to come into force in 2023, but given the nature of their route through parliament (via private member’s bills in some cases) this isn’t certain. Employers need to know about them, so hold them on your radar and if you haven’t already, subscribe to our Legal Updates e-newsletter below, and we will keep you up to speed.
Retained EU Law being revoked
In May the Government abandoned the sunset clause in the Retained EU Law (Revocation and Reform) Bill, i.e the automatic removal of all EU-created legislation unless expressly retained on 31 December 2023. In short, abandoning the sunset clause means there will be no major changes to current employment laws as a result of the Retained EU Law Bill. We can expect consultations on the Working Time Directive, possibly on TUPE, and on cutting red tape around holiday pay calculations. The Government is pushing through the Bill, and has published a list of the EU statutory instruments that it intends to repeal on 31 December 2023 here. These include a just few minor and fairly obscure regulations relating to employment law.
The Bill as a whole allows for significant changes to the status, operation and content of retained EU law, including through amendments to the European Union (Withdrawal) Act 2018 (EUWA). It gives the Government power to restate secondary retained (or assimilated) EU law as domestic law or to replace it completely. In addition retained EU law will no longer be recognised or enforceable in domestic law. The Courts will default back to interpreting UK law above any EU law.
Trade Union and strike action
The Strikes (Minimum Service Level) Act became law on 20 July following months of parliamentary scrutiny. The Government have stated that they will now “proceed with plans to implement minimum service levels for passenger rail servies, ambulance services and fire and rescue services“.
Faced with continuing strikes and entrenched pay disputes across the public sector, in January 2023 the Government presented the Bill, which requires minimum service levels in key services during industrial action (proposed as 20% minimum services). After a protracted battle with the Lords over its impact and expectedly fierce opposition from Unions and opposition parties in Parliament, the Lords finally relented, and offering no ammendments, paved the way for the Bill to pass back to the Commons and into Law. Labour has pledged to repeal the law if it wins the general election in 2024.
The Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (SI 2022/852) were introduced in July 2022 and permit employment businesses to supply agency workers to replace striking staff. However, in March 2023 the lawfulness of these regulations will be tested in judicial review proceedings brought by various trade unions. Expect this area to be hotly contested by Unions in the coming months as it progresses to what seems to be a new act of Parliament.
Employee data protection updates
We are also expecting to see updated data protection and employment practices guidance in 2023 from the Information Commissioner’s Office (ICO). In October 2022, the ICO confirmed that its employment practice codes will be replaced with a web-based hub of guidance organised by topic and issue. The new guidance will finally replace the ICO’s employment practices code, supplementary guidance and the quick guide, which have not been updated since the Data Protection Act 2018 came into force. The new guidance will cover topics including recruitment and selection, employment records, monitoring of workers, and information about workers’ health.
Two pieces of guidance, one on monitoring at work and the other regarding information about workers’ health were also published for consultation in October 2022. For each, the deadline for responses was in January 2023 and it is expected that other pieces of draft guidance which will contribute to the new guidance hub will be published for consultation in 2023.
The Government has announced its intention to replace the UK GDPR with a British data protection system, which will be introduced by means of amending the Data Protection and Digital Information Bill. There will be a public – wide consultation process and is not likely to be in force in 2023 but will shape the new data protection laws from 2024-25.
New duty to prevent sexual harassment
The Government is supporting the Worker Protection (Amendment of Equality Act 2010) Bill which would create employers’ liability for third-party harassment (this means general harassment related to any protected characteristic, e.g sex, race, age, disability) i.e from clients, suppliers, customers, members of the public. Yes, you read that right.
A separate clause in the Bill introduces a duty on employers to take all reasonable steps to prevent employees from sexual harassment “in the course of their employment”. (This latter part of the Bill reflects the commitments made by the Government in its response to the 2019 consultation on workplace sexual harassment). The duty would be enforced by the EHRC but employment tribunals would also be allowed to apply an uplift of up to 25% to employees’ compensation in sexual harassment cases where the employer had failed to take all reasonable steps to prevent this.
This separate clause in the Bill has understandable broad support. However on the main purpose of the Bill, Peers and MPs who seem to have been asleep at the wheel when they passed it unopposed back in October 2022, in April 2023 have woken up to the implications of making employers liable to be sued by employees who take offence at an act of harassment committed by a third party,
This element of the bill goes significantly further than a measure in the original Equality Act 2010, which made employers liable for third-party harassment after three separate incidents – known as the “three strikes rule”. The third-party provisions were stripped out of the legislation by the Coalition Government back in 2013. It’s felt they are now effectively being reintroduced but without equivalent safeguards for employers. It will also apply to public sector organisations such as hospitals, schools, and police forces, placing a significant new burden on taxpayer-funded bodies to protect themselves from being sued by their staff.
Ministers are coming under mounting pressure to ditch or change the wide-ranging harassment clause or withdraw their support for the legislation altogether. Perhaps the Government support on this will be dropped to protect employers from becoming swamped with harassment claims from employees. What can we say.
Neonatal leave and pay
The Neonatal Care (Leave and Pay) Bill will entitle parents to each take up to 12 weeks of paid leave, in addition to other leave entitlements such as maternity and paternity leave, to spend more time with their baby who, having been born prematurely or sick, is receiving intensive care. Neonatal leave will be a day one right and give parents protection from dismissal or detriment. The estimated time for the implementation is around 18 months following Royal Assent. However, the Government is exploring ways to decrease this length of time while still allowing sufficient notice for employers and payroll providers to update their systems
Leave for unpaid carers
The Government committed to introducing the Carer’s Leave Bill, which will give employees with care obligations a minimum of one week’s unpaid carer’s leave per year. Once implemented, this unpaid leave will be available as a day one right as well as giving those who exercise the right protections from dismissal or detrimental treatment.
Tipping, gratuities, cover and service charges
The Employment (Allocation of Tips) Bill, will require that employers allocate all qualifying tips between workers with no deductions (other than those which are required by tax law). Employers will also be required to have a written policy explaining their allocation process. This ensures that tips are distributed in accordance with a new statutory Code of Practice on Tipping, which will also make an appearance in the Bill. Employers will be expected to retain receipt and allocation records – and to share those records on request.
Dismissal and re-engagement, fire and rehire
In the wake of the mass redundancies at P&O Ferries in March 2022, which occurred without notice or consultation, the Government announced that it would introduce a new Statutory Code of Practice on ‘fire and rehire’ practices. The draft Statutory Code of Practice is now published, and requires employers to hold “fair, transparent and meaningful consultations” with employees where changes are proposed for employment terms and conditions.
Acas latest advice on hybrid working
In June 2022, Acas published updated advice to employers about hybrid working after a survey found 60% of employers have seen hybrid working increase post pandemic.
For more information on the contractual changes employers need to make when switching to hybrid working, check our article on the employment law implications of hybrid working.
Government’s new suite of guidance clarifying employment status
Back in July 2022 the Government published a new suite of online guidance to provide a ‘one-stop shop’ for businesses and individuals to understand which employment rights apply to them. There is a check list aimed at helping employers of all sizes to assess the employment status of people they engage to work for them and whether they are employees or workers or self employed. Our article here lays it out simply, and has a helpful one page check list on the main rights and protections afforded to all categories (as the Government’s check list ignores self employed contractors).
In other matters..
An important reminder on settlement negotiations with employees
Prompted by a recent case, a quick but vital point to remember on Pre-Termination Negotiations, also known as ‘Protected Conversations’, and when you should use these to protect the business.
In a situation where there isn’t a dispute but you are looking to discuss with an employee bringing their employment with the Company to an end, for example if things are just not working out, then the normal “without prejudice” badging in communications with them won’t protect the busines. Why? because there is no dispute at this point. (Without Prejudice is shorthand for saying “whilst I’m trying to reach a settlement with you, none of what I say can be used in a claim or an Employment Tribunal).
Instead you must use the phrase “pre-termination negotiations under Section 111A of the ERA 1996” in all settlement communications in order to protect the business.
As the ACAS code of practice on settlement agreements, emphasises below by using section 111A, the pre-termination discussions between an employee and employer are treated as confidential.
Section 111A of the ERA 1996 provides that offers to end the employment relationship on agreed terms (i.e. under a settlement agreement) can be made on a confidential basis which means that they cannot be used as evidence in an unfair dismissal claim to an employment tribunal.
Under section 111A, such pre-termination negotiations can be treated as confidential even where there is no current employment dispute or where one or more of the parties is unaware that there is an employment problem.
You can’t use the Section 111A protection in all situations; issues relating to whistleblowing, union membership, asserting a statutory right and discrimination are not covered by the confidentiality of section 111A. Do take advice on this if you are unsure.
In case you are wondering, Section 111 A can also be used in offers of a settlement agreement where there is a dispute, but in this scenario the ‘without prejudice’ principle applies also.
In a recent 2022 case of Mrs S Garrod v Riverstone Management Ltd the Employment Appeal Tribunal (EAT) dismissed Mrs Garrod’s appeal to allow references to the contents of a discussion between her and her employer which was labelled as “without prejudice” in her discrimination and harassment claim. This case went all the way to an EAT because the company hadn’t protected itself by using Section 111A in discussions. Take note.
Update on the gig economy and workers’ rights:
On 25th April 2023 the Supreme Court heard the appeal against a Court of Appeal’s decision in Independent Workers Union of Great Britain (IWGB) v Central Arbitration Committee (CAC). Back in 2021 the Court of Appeal held that Deliveroo riders do not have the right to be part of a trade union, under Article 11 of the European Convention on Human Rights, because they are not employees of Deliveroo. This decision matters because it reinforces the importance of personal service and rights of substitution (sending another person to do the work) when looking to determine an individual’s employment status. For more on the employment status of workers read our article, Gig economy and Workers’ rights: latest updates and implications for employers and download our helpful one page check list on the main rights and protections afforded to each category.
Remember the HMRC’s online tool Check Employment Status for Tax (CEST), which you can use as a quick check to find out if a worker on a specific engagement should be classed as employed or self-employed for tax purposes.
With the myriad of employment law updates bringing important changes for employers, 2023 is going to be another busy year. Keep up to speed and on top of things by signing up to our Legal Insights newsletter. And we are of course here to and guide you through and keep you ahead of the curve. Please get in touch, our details are below.