Employment law: What to look out for in 2023

2023 is set to be full of big changes in employment law, so let's take a look at what we are expecting to see in terms of developments, consultations and legislation.

April 2023 rate changes

The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2023. The rates which will apply from 1 April 2023 are as follows:

Rate from April 2023Annual increase (£)Annual increase (percentage)
National Living Wage£10.420.929.7
21-22 year-old rate£10.181.0010.9
18–20 year-old rate£7.490.669.7
16–17 year-old rate£5.280.479.7
Apprentice rate£5.280.479.7
Accommodation offset£9.100.404.6

There will also be an increase in:

  • Statutory maternity, adoption, paternity and shared parental pay from £156.66 to £172.48 a week with effect from 2 April 2023.
  • Statutory sick pay will also rise from £99.35 to £109.40 per week with effect from 6 April 2023.

New legislation

The Retained EU Law (Revocation and Reform) Bill

The aim of the Retained EU Law (Revocation and Reform) Bill is to remove any retained EU law by 31 December 2023 (the sunset date). The Bill was introduced to the House of Commons on 22 September 2022 and moved to the House of Lords on 19 January 2023. So, unless specific legislation is introduced to retain any EU derived law (or an extension of time is agreed), it will be removed by the end of the year. The Bill is expected to also make it easier for courts and tribunals to depart from existing EU-derived domestic case law.

As a reminder, affected employment law would include:

  • The Working Time Regulations 1998
  • The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000
  • The Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002
  • The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)
  • The Agency Workers Regulations 2010

Whilst a wide range of legislation could be caught by the Bill's revocations, the extent of any change will very much depend on government policy decisions about how far to reform or preserve retained EU law. The extent of potential change is currently uncertain.

The Carer's Leavers Bill

This Bill is set to introduce provision of up to five working days of unpaid leave for employees with long term caring responsibilities for a dependant, for the purposes of providing or arranging care for them. This right would be a “day one” right and employees exercising this right would be protected from dismissal or detriment as per the protection afforded to other statutory rights to paid/unpaid leave. It is currently progressing through the final stages of Parliament and looks set to be implemented in 2023.

Worker Protection (Amendment of Equality Act 2010) Bill 2022-23

This Private Member’s bill promoted by Wera Hobhouse MP has had its second reading in the House of Commons. It will now progress, with Government support, to the committee stage. Under the proposed changes:

  • Employers would have a specific legal duty to take all reasonable steps to prevent sexual harassment of their employees in the workplace (which the Equality and Human Rights Commission can also separately enforce against employers).
  • Employers can potentially be liable for harassment of employees by third parties (e.g. customers or clients), whether the employer has approved, or is even aware of, the actions of the third party.

Other legislation

The following bills are all due to enter the report stage in early 2023, where the bills will be separately examined in detail and the House of Lords will vote on any amendments. This will likely be followed by a third reading and if there are no amendments, each bill is expected to be sent to the monarch for royal assent to become a new law:

  • The Neonatal Care (Leave and Pay) Bill, which makes provision for up to 12 weeks statutory leave and pay for employees whose children are admitted to neonatal care for at least 7 days.
  • The Protection from Redundancy (Pregnancy and Family Leave) Bill, (which aims to extend the redundancy protections that currently apply to employees on maternity, adoption and shared parental leave to employees who are pregnant or who have recently returned to work from such leave).

The Government's response to the consultation on flexible working confirmed that the right to request flexible working will become a "day one right" for employees. Various other measures will also be introduced, including:

  • Requiring an employer to consult with the employee if it is considering rejecting a request.
  • Permitting employees to make two requests in a 12-month period instead of one.
  • Reducing the period in which an employer must respond to a request from three months to two months.
  • Removing the requirement for employees to specify how the employer might deal with the effects of the flexible working request.

Legislation will be introduced when Parliamentary time allows (and there is already a Private Member's Bill which has passed a second reading and contains much of the measures endorsed in the Government's response).

Other developments to watch out for in 2023

The UK Government will consult on a new legal obligation for employers to provide basic references for all employees to avoid the threat of no reference being used to force a settlement.

The Government will respond to its consultation on whether non-compete clauses should be unenforceable, or enforceable only when compensation is provided during the term of the clause. Consultation closed on 26 February 2021.

Michelle Donelan, Secretary of State for Digital, Culture, Media and Sport, addressed the Conservative Party Conference 2022 on plans for growth in the digital, cultural, media and sport spheres. One suggestion made by the Government is to replace the GDPR with a British data protection system which could have a big impact on how employers process employment-related information.

We heard back in 2019 of the Government’s plans to create new employment laws covering flexible working reform, changes to service tips and other issues. Despite delays and private members’ bills progressing some policy commitments that were expected to be in this legislation, an Employment Bill is still on the government’s agenda “when Parliamentary time allows”.

In Spring 2023, look out for the updated announcements on:

  • Updated rates and coming into force of the statutory cap on a weeks' pay for the purposes of calculating the basic award and statutory redundancy pay.
  • Vento Bands
  • Health and Social Care Levy
  • Gender pay gap reporting deadlines for organisations with 250 or more employees.