What legal changes should employers be preparing for in 2023?

24 January 2023

As a result of the pandemic many employment law commitments made by the government in recent years, and promised under a long-awaited Employment Bill, have been delayed.

Whilst there is still no sign of the Employment Bill, the government has confirmed its support for several employment law reforms. These were previously expected under the Employment Bill, which will now be progressed via Private Members’ Bills.

In this article, we cover the employment law reforms the government has confirmed it will support and the actions we recommend employers should take to prepare for the changes.

Flexible working

The government has confirmed they will introduce a ‘day one’ right for all employees to request flexible working. Currently, only employees with 26 weeks’ service have the right to make a flexible working request.

They have also committed to implementing additional measures to support employees with securing a flexible working arrangement. They are reflected in the Employment Relations (Flexible Working) Bill and include the following:

  • requiring employers to consult with their employees prior to rejecting a flexible working request;
  • allowing employees to make two flexible working requests in a 12-month period (instead of one);
  • reducing the period in which an employer must respond to a flexible working request to two months (currently three); and
  • removing the burden on employees to account for how their employer might deal with the effects of their flexible working pattern.

The government has not yet given a timeframe for the introduction of secondary legislation to put this into effect although it has stated that legislation will be introduced when ‘parliamentary time allows’.

Actions for employers

The pandemic has largely shifted cultural attitudes towards flexible working which is now an expected entitlement in most businesses. As a result, employers are facing pressure to offer their workforce flexibility in both where and when they work in order to attract and retain talent. Changes to flexible working legislation will provide employees with the legal framework to make flexible working demands from day one, and may make it even more difficult for employers to reject flexible working requests where there is no clear business reason for it.

It would be sensible for employers to review their flexible working policies and practices ahead of this proposed change and consider what changes may be necessary if the bill is enacted. Employers should also be mindful of cultural changes in how employees prefer to work post-pandemic, particularly where this does not impact the business. However, flexible working will not be appropriate for all industries although it is important for employers to have clear business grounds for refusing a request which should be explained to the employee.

New duty on employers to prevent sexual harassment

The government has confirmed that it will support the Worker Protections (Amendment of Equality Act 2010) Bill to introduce a duty on employers to take all reasonable steps to prevent sexual harassment of their employees and create employers’ liability for third party harassment in the workplace.

This Bill reflects the government’s commitment made in July 2021 in response to a consultation on sexual harassment in the workplace. As with other employer liability offences in the workplace, it is likely that a defence will be available where employers can show that they have taken ‘all reasonable steps’ to prevent the harassment taking place.

Currently there is no timeframe for this new duty on employers although the Bill is expected to have a further reading in February 2023.

Actions for employers

Whilst this is a new duty, employers are already expected to create a safe working environment for their workforce, which implies protecting them from sexual harassment. Any workplace sexual harassment claims are usually brought against the employer as well as the individual perpetrators.

Therefore, employers are already at risk of liability for harassment at work and measures should be in place to avoid sexual harassment in the workplace. A failure to do so can lead to expensive litigation, costly settlements, and reputational harm.

There will now be more scrutiny on employers in this area. Employers should review their end-to-end processes to ensure anti-harassment policies are effective and fit for purpose, that their workforce know how and with whom to raise complaints, that those complaints are properly investigated, and if necessary, appropriate action is taken. Employers should be arranging anti-harassment training for all staff, particularly their management team on how to deal with reports made and the process they should follow. Third parties such as customers and suppliers will also need to be made aware of the company’s zero-tolerance policy to harassment and the actions that will be taken if reports are made.

Extending redundancy protection for women and new parents

The government has now confirmed that it is supporting the Protection from Redundancy (Pregnancy and Family Leave) Bill. This Bill proposes to give redundancy protection to pregnant women and new parents returning from maternity, adoption, or shared parental leave.

Currently, women on maternity leave and new parents on adoption or shared parental leave are entitled to priority for suitable alternative vacancies, whilst they are on leave, ahead of their colleagues also at risk of redundancy. If an employer fails to comply with this legal requirement, the employee will have a claim for automatic unfair dismissal. Under this new Bill, the government is now proposing to extend this entitlement to apply during pregnancy (once the employer has been notified) and for a period of six months following an employee’s return from family leave.

Actions for employers

The proposed change of law could present practical challenges for employers undertaking a redundancy exercise as they will need to keep track of all employees that are returning from family leave and entitled to additional redundancy protection. It is unclear whether employees will need to have taken a minimum period of leave to qualify for the enhanced protection or if it will apply even when an employee has taken a short period of shared parental leave, for example.

For the time being employers should be aware of this proposed change to redundancy law when planning workforce restructuring in 2023 and keep an eye on any developments in this area - which will require a review and update of redundancy polices and processes, and training for HR and managers involved in redundancy exercises.

Neonatal leave and pay

The government has confirmed its support for the Neonatal Care (Leave and Pay) Bill and forms part of its commitment to support families. The bill aims to introduce statutory neonatal leave and pay for up to 12 weeks for parents of babies requiring neonatal care.

Currently the government estimates that it could take up to 18 months to implement this bill as it will require changes to HMRC systems, and payroll providers will require notice to update pay systems. However, it is considering ways to introduce legislation sooner.

Actions for employers

Once new legislation is in effect to give employees this new right to paid leave, employers will need to implement a new family leave policy to make employees aware of their right to paid leave and any related processes.

Leave for unpaid carers

The government has confirmed its commitment to introduce the right of up to a week’s unpaid leave per year for employees providing or arranging care. This is being progressed via the Carer’s Bill. It is proposed that statutory carer’s leave will be available to all employees from the start of their employment to care for a spouse, partner, child, or parent that lives in the same household or reasonably relies on them for care and has a long-term care need. Employees taking their carer’s leave entitlement will also be protected from dismissal or any other detriment because of taking time off.

There is currently no timescale for this new entitlement although we expect it to come into force in the next 18 months.

Actions for employers

Once new legislation is in effect employers should review their family leave policies to include this right to unpaid leave.

Tips, gratuities, cover and service charges

The government has recently confirmed that it is backing the Employment (Allocation of Tips) Bill that will require employers to pass on 100 per cent of tips to workers with no deductions, except for tax. The bill also introduces a statutory code of practice that aims to promote fairness and transparency over the allocation of tips and services charges. We cover the impact of this bill in detail in our article ‘Tipping point reached for discretionary service charges’.

Currently there is no date for the introduction of legislation to bring into effect the bill although the remaining stages of the bill are due to be considered by the government early this year so we expect legislation will follow in the next 12 months.

Actions for employers

The expected legislation is due to have a significant impact on many employers in the hospitality industry that add a discretionary service charge to their bills yet may not allocate it fairly between their workers. Affected employers should keep an eye on the development of legislation in this area, and its accompanying guidance, to ensure that the necessary preparatory steps are made in good time before the expected changes.

The Retained EU Law (Revocation and Reform) Bill

This bill is potentially the most significant of all as it could considerably change the status of employment law by removing long and well-established employment law rights and protections derived from EU law, including the Agency Worker Regulations, Working Time Regulations and TUPE.

Pursuant to this bill all EU-derived secondary legislation and direct EU legislation will automatically expire on 31 December 2023 unless extended.

What does this mean for employers?

As present we don’t know what legislation the government will choose to retain, and whether the expiry date of 31 December 2023 will be extended. For the time being we recommend that employers monitor the progress of the bill and look out for developments which may impact its workforce. We will of course keep a close eye on developments relating to this bill and update you in future articles.

Other key employment law developments

  • The National Living Wage will increase by almost 10 per cent in April 2023 to £10.42, the greatest increase since 2016. This is largely in response to the rise in inflation and the cost-of-living crisis. Employers who employ low paid workers should be planning for this change now to ensure they remain compliant with the National Minimum Wage Regulations and avoid potential financial penalties and reputational harm. Payroll and HR systems should also be updated to account for the changes.
  • Statutory Sick Pay will increase to £109.40 (currently £99.35) per week in April 2023 and the weekly statutory rate for maternity and other types of family leave will increase to £172.48 (currently £156.66).
  • There is an extra bank holiday on Monday, 8 May 2023 to mark the Coronation of King Charles III. Whether workers will be entitled to an extra day of holiday will depend on the wording of their employment contract.

In our Employment Law Bulletin earlier this month we also cover off some employment law trends we’ve predicted for 2023. The article can be accessed here.

If you are an employer and would like support on any of the planned proposals discussed in this article, please contact Jennifer Mansoor.