7 employment law changes in 2023 you need to know about

Small business owners can expect to see significant changes in 2023 with the implementation of new and revised employment laws.

So, what are the key legislative developments you should be aware of as a small business owner? We’ll cover them all in this blog.

1. Minimum wage increases

Following the Government’s announcement last November, there will be increases to the National Living Wage and National Minimum Wage, effective from 1 April. This will see the largest increase in the National Living Wage (the statutory minimum wage for workers aged 23 and over) and the National Minimum Wage (for workers aged 16-22) since 2016.

The revised rates will apply as follows:

• For those aged 23 and over – £10.42 an hour (up from £9.50)
• 21-22 years old – £10.18 an hour (up from £9.18)
• 18-20 years old – £7.49 an hour (up from £6.83)
• 16-18 years old – £5.28 an hour (up from £4.81)
• Apprentices – £5.28 an hour (up from £4.81)

Failure to comply on time can result in fines of up to £20,000 per employee, as well as bans on directors, and a public listing on HMRC’s website, which can be hugely detrimental to business – so it’s crucial to ensure staff are receiving the correct rates of pay.

2. Maternity and sick pay changes

Statutory maternity, paternity, adoption, shared parental and parental bereavement pay, as well as sick pay, are also set to rise by 10%.

This will see increases effective from 2 April, as follows:

• The weekly payment will rise from £156.66 to £172.48
• Statutory sick pay will increase to £109.40 per week

3. King’s Coronation Bank Holiday

In addition to the standard eight bank holidays in the UK, there will be an extra one this year to mark the King’s coronation. This will take place two days after the ceremony on Monday 8 May, meaning that there will be two consecutive bank holiday Mondays at the start of May.

Many are already aware of this date, so it’s a good idea to communicate your plans for this day with your team as soon as possible, to ensure expectations are managed diligently.

Whether or not your team is entitled to time off on this day will all depend on what’s stated within your employment contracts. If a contract specifies a set number of bank holidays, then you are not obliged to grant the day off, or for it to be paid if you do. However, we would encourage employers to grant this additional paid holiday as a goodwill gesture, to promote a positive working culture.

4. Fire and rehire procedures

The Government has also announced plans to release a new code of practice relating to the dismissal and rehiring of employees, at a date in the near future yet to be confirmed.

It’s anticipated that Employment Tribunals could be given new powers to apply a 25% increase in compensation if an employer fails to follow the code.

5. Retained EU Law (Revocation and Reform) Bill

Potentially the biggest change in law for small business owners this year could come from the Retained EU Law Bill.

As of now, EU law supersedes UK law in the case of conflicts between the two, but that’s all set to change at the end of this year when the Government is expected to gain the control to alter EU laws still in place since Brexit.

This could mean substantial shifts in employment rights, many of which originated from the EU; such as TUPE, paid annual leave, holiday entitlements, discrimination and equal pay, limits on hours, and protection for fixed-term workers – amongst others.

That said, details of any changes are yet to be disclosed, but we will undoubtedly hear more about this and its potential impact over the coming months.

6. Flexible working requests

After calls to make flexible working more accessible for UK employees, workers will soon be able to request flexible working arrangements from their very first day of employment – as opposed to having to wait six months into their job before being able to make a request, as currently stipulated.

At present, employers have three months to review and respond to any flexible working requests; however, under the new laws, this will change to a shorter timeframe of two months.

Employees will also be able to make two requests within a 12-month period, in contrast to the current single request.

7. Zero hour contracts

Finally, the Government has put forward legislation that would require employers to provide holiday pay based on a 52-week reference period, excluding any weeks where no work was undertaken. This would ensure that all staff receives paid leave irrespective of their contract type or the hours they’ve worked.

This is a cause for worry for some employers, as it indicates that some part-year workers might be entitled to more holidays than part-time workers who work the same number of hours annually.

However, the Government’s upcoming consultation will address this and look for ways to tackle any imbalances.

Thanks for reading

We hope you found this post useful. We’ll be sure to bring you any developments concerning the above as and when they unfold.

In the meantime, keep an eye on our central blog page for more updates and news stories like this one.