2023 Employment Law Changes (Updated)

This is an update of our previous article on the 2023 employment law changes, updated to take account of the final announcements relating to the April 2023 rate changes, and other recent developments

Whilst the much anticipated Employment Bill is now unlikely to materialise and form part of the 2023 employment law changes, some of the measures that had been expected to be included have already appeared in separate legislation. Others may also yet do so at some future point and form part of the 2023 employment law changes.

2023 Employment Law Changes: Rate Changes

The 2023 employment law changes will include the usual set of april rate changes. They include the following:-

• The National Minimum Wage and National Living Wage: The new rates were announced in the Autumn Budget, and will come into force on the 1st April 2023. The rates will be as follows: (i) For workers aged 23 and over (i.e. the National Living Wage), the rate will increase by 9.7% from £9.50 per hour to £10.42 per hour (ii) For workers aged 21-22 inclusive, the rate will increase by 10.9% from £9.18 per hour to £10.18 per hour (iii) For workers aged 18-20 inclusive, the rate will increase by 9.7% from £6.83 per hour to £7.49 per hour (iv) For workers aged 16-17 inclusive, the rate will increase by 9.7% from £4.81 per hour to £5.28 per hour (v) The apprentice rate will increase by 9.7% from £4.81 per hour to £5.28 per hour (vi) The daily rate for the accommodation offset will increase by 4.6% from £8.70 to £9.10. However, unlike the National Living Wage, the Real Living Wage and London Living Wage increase in November each year. However, as we highlighted in an earlier article, the announcement and implementation of this years Real Living Wage and London Living Wage changes was brought forward to the 22nd September 2022 due to the cost of living crisis. The Real Living Wage was increased by £1.00 per hour from £9.90 per hour to £10.90 per hour, an increase of 10.1%. The London Living Wage was increased by 90p per hour from £11.05 per hour to £11.95 per hour.
• Statutory Maternity Pay, Statutory Paternity Pay, Shared Parental Pay, Adoption Pay, Maternity Allowance, and Statutory Parental Bereavement Pay: The new rates were announced on the 23rd November 2022, and will come into effect on the first Sunday in April, which in 2023 will be the 2nd April 2023. The maximum rate (i.e. the cap) for all of these family friendly payments will increase from £156.66 to £172.48 per week, which means that those eligible will be entitled to the smaller of £172.48 or 90 per cent of their average gross weekly earnings per week. The average gross weekly earnings required to qualify for all of the family friendly payments, except for Maternity Allowance, will remain at £123.00 or more. With respect to Maternity Allowance, where an employee earns less than £123.00 per week on average, but was employed for 26 of the 66 previous weeks earning at least £30 per week (averaged over any 13 week period during the said 66 weeks), then they are entitled to the same.
• Statutory Sick Pay: The new rate was announced at the same time as the new rates for family friendly payments (i.e. the 23rd November 2022), and will come into force on the 6th April 2023. The rate will increase from £99.35 to £109.40 per week
• The statutory cap on a weeks pay for the purposes of calculating the basic award and statutory redundancy pay: The new rate was announced via the release of The Employment Rights (Increase of Limits) Order 2023, and will come into effect on the 6th April 2023. The statutory cap on a weeks pay will increase from £571.00 to £643.00. Hence, the maximum in terms of the basic award and statutory redundancy pay is now £19,290.00 (i.e. 20 x £643.00 x 1.5). The maximum amount that can be awarded for the unfair dismissal compensatory award will also increase from £93,878.00 to £105,707.00 on the 6th April 2023.
• The Vento Bands: Following the latest annual re-evaluation, the increases in the Vento bands will take effect from the 6th April 2023. The new rate for the top band of the Vento bands is £56,200.00 plus for exceptionally serious cases. For cases presented before the 6th April 2023, the band is £49,300.00 plus. In relation to the upper band, the band increases to £33,700.00 to £56,200.00 for serious cases. As regards cases presented before the 6th April 2023, the band is £29,600.00 – £49,300.00. The middle band will increase to £11,200.00 to £33,700.00. In relation to cases presented before the 6th April 2023, the band is £9,900.00 – £29,600.00. In terms of the lower band, it will increase to £1,100.00 to £11,200.00 for less serious and one-off cases. For cases presented before the 6th April 2023, the band is £990.00 – £9,900.00.

Strike Related Legislation

Back on the 21st July 2022, the Government enacted legislation which allows employers to bring in agency workers to fill in for staff who go on strike. Now as part of the 2023 employment law changes, the Government has introduced The Strikes (Minimum Service Levels) Bill, which once enacted, will impose a requirement to provide minimum service levels at the very least during a strike within the following sectors: health, transport, and education services, border security, the decommissioning of nuclear installations, and the management of radioactive waste and spent fuel.

The Strikes (Minimum Service Levels) Bill supersedes The Transport Strikes (Minimum Service Levels) Bill, which had been introduced back on the 22nd October 2022.

Health And Social Care Levy

In addition to the usual 2023 employment law rate changes that will be taking effect in April 2023, it was originally intended that there would be further changes as regards the Health and Social Care Levy, which came into effect on the 6th April 2022.

When the levy was introduced back in April 2022, it involved a 1.25% increase in national insurance contributions (NICs), with dividend tax rates increasing by the same percentage rate. It was payable by both employers and employees who are subject to Class 1 NICs, and by the self-employed who pay Class 4 NICs.

The levy was ultimately intended to be a new tax, separate from NICs. However, as it takes time for HMRC to set up on their IT systems, the tax was initially raised through an increase in NICs. Nevertheless, once HMRC had updated their IT systems, then the intention was that from the 6th April 2023, the new tax in the form of a 1.25% surcharge, would replace the NICs increase.

Nevertheless, when Liz Truss took over as Prime Minister, the health and social care levy was scrapped, with the 1.25% rise in National Insurance reversed with effect from the 6th November 2022.

Gender Pay Gap Reporting

At the same time as the 2023 employment law rate changes are taking effect, the usual gender pay gap reporting deadlines need to be met by those organisations with a headcount of 250 or more employees (with small and medium-sized enterprises (SME’s), that being businesses with less than 250 employees, being exempt from the reporting requirements). Accordingly, the deadline for public sector employers to report their data will be the 30th March 2023, with a snapshot date of the 31st March 2022. And for private sector employers and voluntary organisations, the deadline will be the 4th April 2023, with a snapshot date of the 5th April 2022.

Nevertheless, on the 2nd October 2022, it was announced that with effect from the 3rd October 2022, the definition of SME’s had been extended to businesses with less than 500 employees and that those businesses newly defined as SME’s would be released from certain reporting requirements. However, there has been no confirmation from the Government as to whether this change will eventually be applied to gender pay gap reporting. Thus far, it has not

Now that Liz Truss has been replaced as Prime Minister, it is unclear as to what the new Prime Minister’s (Rishi Sunak’s) ultimate intentions are in this area.

The Retained EU Law (Revocation and Reform) Bill

The objectives behind this bill and where they fit in to the 2023 employment law changes are set out here. Whilst the bill seeks to end the legal status of retained EU law by the 31st December 2023 and form part of the 2023 employment law changes, there is scope to extend the time to complete the process to the 23rd June 2026.

Primarily, the bill is designed to abolish all EU law that is neither reinstated nor replaced, and it may ultimately impact EU-derived secondary legislation such as the Fixed Term Employees Regulations 2002, TUPE, and the Working Time Regulations 1998.

Other Potential 2023 Employment Law Changes

The following are additional 2023 employment law changes that may potentially be enacted. Some of these however may not be enacted in time to form part of the 2023 employment law changes, but instead of later changes beyond the 2023 employment law changes:-

• “Fire and rehire”. The Government has published a draft statutory code which is now subject to consultation, and the consultation is open until the 18th April 2023.
• Legislation in relation to what the Government describes as the “crack down on misuse of Non-Disclosure Agreements in the workplace“
• Employment Tribunal & EAT Composition: A consultation has been launched to determine whether the number of tribunal cases that are heard by a judge alone, as opposed to a panel which includes a judge and non-legal members, can be increased. The aim behind the potential reforms is to reduce the length of hearings. The consultation closes on the 27th April 2023.
• Holiday Pay Relating To Part-Time Workers: The Supreme Court ruled in the case of Harpur Trust v Brazel (2022) on the 20th July 2022, that both full-time and part-time workers on permanent contracts have an entitlement to 5.6 weeks of holidays per annum, and that employers should not engage in pro-rating. That is, holiday pay for part-time workers must be calculated on the basis of workers average earnings over the full year (ignoring any weeks in which they did not work), and not on the basis of the actual hours worked during that year. Following the ruling, the Government launched a consultation on the 12th January 2023 stating that it was "keen.....to ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working." The consultation closed on the 9th March 2023. The Government response is awaited.
• The “Edinburgh Reforms“

Beyond The 2023 Employment Law Changes

With an Employment Bill unlikely to form part of the 2023 employment law changes, those proposals which were expected to form part of the Employment Bill may now be the subject to separate legislation. Whilst this legislation is unlikely to produce changes in time to form part of the 2023 employment law changes, they could take effect shortly afterwards.

Private Members Bills

Some MP’s have brought forward Private Members Bills in an attempt to bring elements of the now likely defunct Employment Bill into force. These include the following:-

• Neonatal Care (Leave and Pay) Bill: As we highlighted in a previous article, Stuart McDonald MP introduced a Private Members Bill on the issue of neonatal care leave and pay which attracted cross party support and Government backing. The bill is now likely to become law in 2023, and should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• As we also reported recently, Liberal Democrat MP, Wendy Chamberlain, brought forward a Private Members Bill to try to introduce a statutory right to 1 weeks unpaid carer’s leave. The Bill had its second reading on the 21st October 2022 and received Government backing. The bill is now likely to become law in 2023, and should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• The Employment (Allocation of Tips) Bill is a Private Members Bill which has been sponsored by Virginia Crosbie MP with the objective of creating a new legal obligation on employers to allocate tips, gratuities and service charges to workers without deductions. It has received Government backing and has already had its 2nd Reading, passed through the Committee Stage, and has now reached the Report Stage. The bill is now likely to become law in 2023, and should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• The Employment Relations (Flexible Working) Bill is a Private Members Bill which has been sponsored by Yasmin Qureshi MP with the objective of making the right to request flexible working a day one right (as opposed to the current position of 6 months). The bill had its second reading on the 28th October 2022, and has received Government backing. Hence, the bill is likely to become law in 2023, and should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• The Protection from Redundancy (Pregnancy and Family Leave) Bill is a Private Members Bill which has been sponsored by Dan Jarvis MP. The bill has received Government backing. Currently, those on maternity leave, adoption leave or shared parental leave get priority over other employees in a redundancy situation under Regulation 10 of the Maternity and Parental Leave Etc Regulations 1999 (MAPLE), in terms of suitable alternative employment. However, under the Protection from Redundancy (Pregnancy and Family Leave) Bill, the protections afforded by MAPLE would be extended to run from the point at which the employer is notified of the pregnancy, until 18 months after the birth. Similar rules will apply to those who are taking shared parental leave or adopting a child. The bill has now reached the Report Stage, and is now likely to become law in 2023. It should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• The Worker Protection (Amendment of Equality Act 2010) Bill is a Private Members Bill which has been sponsored by Wera Hobhouse MP, The bill has received Government backing and has reached the Report stage. Hence, the bill is likely to become law in 2023, and should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• The Workers (Predictable Terms and Conditions) Bill is a Private Members Bill which has been sponsored by Scott Benton MP. Under the bill, where workers hours vary in terms of the number of hours employees work and/or when they work, or they are in a fixed term contract of less than a year’s duration, then they would be permitted to apply for a more predictable working pattern after 26 weeks of continuous service. The Bill has now received Government backing and is now therefore highly likely to become law in 2023, and should come into force sometime in 2024 or 2025. Hence, it will not form part of the 2023 employment law changes, but of later changes.
• The Fertility Treatment (Employment Rights) Bill is a Private Members Bill which has been sponsored by Nickie Aiken MP. It aims to give employees the right to paid time off work to attend fertility treatment appointments. The partners of such employees would also have the right to unpaid time off work to accompany them to such appointments. The bill has not received Government backing, and has not yet had its second reading
• The Miscarriage Leave Bill is a Private Members Bill which has been sponsored by Angela Crawley MP. Its aims to provide employees with the right to 3 days of paid bereavement leave where they have had a miscarriage, molar pregnancy, or ectopic pregnancy prior to 24 weeks. The bill has not received Government backing, and has not yet had its second reading

Accordingly, in sum, whilst many of the above mentioned bills have received Government backing and are now likely to become law, none are likely to become law in time to form part of the 2023 employment law changes. Those bills that have not received Government backing are unlikely to become law.

Other Potential Post 2023 Employment Law Changes

Other potential post 2023 employment law changes include:-

• Ethnicity pay gap reporting
• The extension of the right of shared parental leave to grandparents
• Legislation following on from the consultation on non-compete clauses. The Government introduced a ban on exclusivity clauses in relation to low paid workers with effect from the 5th December 2022
• Replacement of the General Data Protection Regulation (GDPR)
• Further legislation on modern slavery
• Legislation following on from the consultation on disability workforce reporting

Shelved And Unlikely To Form Part Of The 2023 Employment Law Changes

One measure that is highly unlikely to form part of the 2023 employment law changes is the idea of a new single enforcement body to oversee and enforce employment rights, which had been a key part of the proposed Employment Bill, but which appears to have now been effectively shelved by the Government.

Speaking before the House of Commons Business, Energy and Industrial Strategy Committee on the 13th December 2022, the Secretary of State for Business, Energy and Industrial Strategy, Grant Shapps, stated: “We’ve spent two years plus of this parliament fighting Covid. It may well be with two years left to go that we’re still able to address some of that. But what we’re more interested in is making sure that the bodies that are already there are operating effectively.”

During his appearance before the Committee, Shapps also confirmed that the Employment Bill itself had now also been effectively shelved, as it was not “on the cards”. Accordingly, it is now all but certain that the Employment Bill itself will also not form part of the 2023 employment law changes.

Further 2023 Employment Law Changes May Be Announced

Given the total shambles that the Conservative Party and the Government have degenerated into over the last year, literally anything could happen in the months to come. Hence, further 2023 employment law changes may yet be announced, and any further 2023 employment law changes will be detailed in future updates to this article.