Employment law updates - important changes for employers The Legal Partners

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 at the top lists the main headings.

Our handy employment law fact sheet summarises on one page all the annual increases to statutory payments and the tribunal award payments for April 2023 – 2024, with helpful explainer notes. Download it here

Employment Law Factsheet for 2023-2024 Download

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 for all these changes.

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. Breaching the flexible working regulations can bring penalty awards of up to 8 weeks pay and potentially leave the business open to a costly discrimination claim. Only turn down a request using one of the 8 statutory reasons, which are not changing, and if refusing be mindful of the discrimination risks. Get in touch if you need advice on this. Also make sure staff handbooks and HR policies dealing with flexible 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 employee 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 someone works.

The new measures in the act will be supported by an updated Acas Statutory code of practice in 2024 which was 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.

We are expecting more workplace disputes in this area. Employers should start reviewing their flexible working policies to be ready for July 2024. Employers will need to engage fully with flexible working requests. In particular to avoid as well a discrimination claim (for example for sex discrimination from a woman requesting flexible working for childcare reasons) it is usually better for employers to:

try the change requested by an employee for a trial period and then review it – if the new working arrangement is unworkable the employer will have gathered evidence to show that position, and
when deciding whether to accept or reject a flexible working request, state that the decision is provisional and subject to appeal by the worker.

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. 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 a summary 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 12 months 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.

Expanded redundancy protection is just one of a number of new family friendly provisions introduced by the Government this year, which are actually coming into force in 2024 and 2025. You can find an overview and all the detail explained by Ann Gibbon in her employer’s guide to the new laws supporting working parents.

New Employment Laws from April 2023 and into 2024

1 April: New National Minimum Wage, National Living Wage rates

In November 2022 autumn statement, the Government announced the annual increases in National Minimum (NMW) and National Living Wage (NLW) rates, 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 NLW rate per hour for those aged over 23 is now £10.42 . 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.

In the November 2023 Autumn Statement the Government announced the annual increases to the minimum wage and national living wage from 1 April 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 £19,290 (20 weeks pay subject to the limit on weekly pay above with a 1.5 multiplier if the employee is 41 or older)
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.

Annual increases to statutory payments 2023

Our employment law factsheet includes a summary of all the annual increases to statutory payments and tribunal award payments for 2023.

Legal-Partners-Employment-Law-Factsheet-2023-2024

Horizon scanning : further new laws and statutory codes of practice for 2023 and 2024

Each of these legislative changes is scheduled to come into force in 2023 or 2024, 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.

Workers (Predictable Terms and Conditions) Act 2023

On 18 September 2023, the Workers (Predictable Terms and Conditions) Bill received Royal Assent, becoming the Workers (Predictable Terms and Conditions) Act 2023 (Predictable Terms Act).

The Predictable Terms Act will amend the Employment Rights Act 1996 to give workers and agency workers the right to request a predictable work pattern.

This will apply where:

there is a lack of predictability for a work pattern (fixed term contracts of 12 months or less are presumed to lack predictability).
the change relates to their work pattern.
their purpose in applying for the change is to get a more predictable work pattern.

A worker can apply twice in a 12-month period. The employer can reject an application on statutory grounds (for example: the burden of additional costs or the insufficiency of work during periods when the worker proposes to work). It is expected that there will a 26 weeks minimum service requirement to access this right. Workers can bring claims for procedural failings by the employer, unlawful detriment and automatic unfair dismissal. Regulations will provide further details of the statutory regime.

The Predictable Terms Act and secondary legislation are expected to come into force by September 2024 so that employers have time to prepare.

Acas has produced a new code of practice to provide guidance on making and handling requests – see here.

3 month cap on non-compete clauses

As part of its policy paper “smarter regulation to grow the economy” in May 2023, the Government announced plans to limit the length of non-compete clauses in employment contracts to three months. This 3 month cap on non-compete clauses represents a major shift that could see employers making greater use of garden leave clauses and imposing longer notice periods to protect the business’ interests.

Our Trainee Solicitor Megan Bowen’s article 3 month cap on non-compete clauses, brings you the complete picture on this provision and its implications for employers.

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 Bill became law on 29 June 2023 and has the list of the EU statutory instruments that will be repealed on 31 December 2023 here. These include just a few minor and fairly obscure regulations relating to employment law.

The Act 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. Retained EU law will no longer be recognised or enforceable in domestic law unless it is already enshrined in UK law at 31 Decembers 2023 or if a new law in the future imports its application. 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 services, 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 amendments, 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 August 2023 the lawfulness of these regulations was reviewed by the High Court after various trade unions challenged them and was ordered to be unlawful so does not come into effect.

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 now replaces 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 covers topics including recruitment and selection, employment records, monitoring of workers, and information about workers’ health.

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 Worker Protection (Amendment of Equality Act 2010) Act 2023 became law on 26 October 2023.
The Act 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 Act reflects the commitments made by the Government in its response to the 2019 consultation on workplace sexual harassment). The duty would be enforced by Employment Tribunals who would 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. The Equality and Human Rights Commission will produce a statutory code of practice to provide guidance to employers to help them understand the sort of steps they need to take to meet the new duty.

Employers should remember that Employment Tribunals will expect an employer to show they took all reasonable steps to prevent sexual harassment by:

having a policy (usually in their Staff Handbook),
providing training,
taking steps to deal effectively with complaints, and
where there is proven sexual harassment as a result of a grievance, taking appropriate disciplinary action against the employee(s) who perpetrated the sexual harassment.

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 has introduced the Carer’s Leave Act 2023, which will give employees with care obligations a minimum of one week’s unpaid carer’s leave per year. Once implemented (expected after April 2024), 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.

For details and comment on both these family friendly provisions, and the implications for employers when they finally come into force , read our employers’s guide to new laws supporting working parents.

Tipping, gratuities, cover and service charges

The Employment (Allocation of Tips) Act 2023, 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 also makes an appearance in the Act. Employers will be expected to retain receipt and allocation records – and to share those records on request. The Act comes into force in May 2024.

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

A reminder: 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 business. 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 because of a dispute, 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, the remainder of 2023 and the General Election year of 2024 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.