Employment update: What to expect in 2023

Retained EU Law (Revocation and Reform) Bill 2023

If enacted, the Bill could radically reshape employment law and wipe away long-established rights and protections. A key feature of the Bill in its current form is the ‘sunsetting’ (or automatic revocation) of EU-derived subordinate legislation at the end of 2023, unless the government takes specific steps to preserve it.

This could affect workers’ rights relating to rest breaks, maximum working hours and holiday pay, (under the Working Time Regulations 1998), agency workers’ right to pay parity (under the Agency Workers Regulations 2010) and protections for employees under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), to name just a few. The Bill gives the government the power to restate these laws as domestic law or replace them completely – but there’s a very short amount of time remaining for the government to do that.

The Bill also provides that other principles of EU law are removed, meaning the way in which legislation has been interpreted by the courts will no longer apply. The overall effect is legal uncertainty, with the potential that we reach 1 January 2024 with the state of employment legislation unclear – leaving the workforce in disarray and resulting in a likely increase in litigation.

Attracting and retaining staff

With the cost of living crisis showing no signs of abating, employers are facing demands for pay increases from employees struggling to meet financial commitments as their salaries fail to keep pace with inflation. 2022 saw the largest increase in the history of the real living wage, by 10.1% (8.1% in London) to reflect the rise in the cost of living. While employers are also feeling the financial squeeze caused by higher costs, some companies are supporting workers with a one-off cost of living payment or staff benefits, such as corporate store discounts, season ticket loans and the option to sell back unused annual leave.

As employers across many sectors continue to struggle with recruiting the skills they need from within the UK, we expect to continue to see an increased demand for overseas recruitment and international remote working, both of which will impact the make-up of workforces going forwards.

ESG and diversity, equity and inclusion

Diversity, equity and inclusion (DEI) will remain an important focus for employers as they seek to foster a more diverse and inclusive culture, and to attract and retain talent.

There is a growing awareness of the impact of socio-economic background and ‘intersectionality’ (where inequalities based on protected characteristics combine to create overlapping and interdependent systems of disadvantage). As regards diversity pay reporting, the government confirmed in March 2022 (following a consultation launched in 2018) that it would not be launching mandatory ethnicity pay reporting.  Employers should still consider whether to collect data in order to track progress.

Gender identity and gender recognition

Gender identity is a highly charged issue with polarised views about, on the one hand, a transgender person’s right to have their identity recognised, and, on the other hand, so called ‘gender critical beliefs’ that a person’s sex is an immutable biological fact, and that someone’s gender is different from their sex.

Recent case law has recognised gender critical beliefs as being capable of protection under the Equality Act 2010 (EqA 2010) as a philosophical belief:

• In the case of Forstater v CGD Europe [1], a belief that sex was biologically immutable was a philosophical belief capable of protection under the EqA 2010.  CGD Europe’s refusal to re-engage Mrs Forstater following her expressing her belief on social media was discriminatory.
• In Mackereth v DWP [2][1], Dr Mackereth’s gender critical belief was protected, but the Employment Appeal Tribunal drew a distinction between the belief itself and the way in which it was manifested.  Dr Mackereth had not suffered discrimination after he left his employment following a refusal to use the preferred gender pronouns of service users.

This important issue is likely to remain prominent. The key message for employers is to ensure that they do not have a knee-jerk response to employees expressing their beliefs.  This doesn’t mean that individuals can misgender people with impunity, and it doesn’t prevent action from being taken when beliefs manifest in a way that impacts others’ rights.

Trade unions and industrial action

The turbulent economic situation has seen an increase in trade union membership, industrial action and requests for trade union recognition in traditionally non-unionised sectors. Industrial action in relation to pay and conditions looks set to continue in 2023.

The government is seeking to introduce measures to reduce the disruption caused by industrial action.

Legislation was introduced in July 2022 which permits employment businesses to supply agency workers to replace striking staff [3]. However, in March 2023 the lawfulness of these regulations will be tested in judicial review proceedings brought by various trade unions.

On 10 January 2023, the Strikes (Minimum Service Level) Bill was passed.  It will allow the government to set minimum levels of service in crucial public services such as rail, ambulances, and fire services, which must be met during strikes to ensure the safety of the public and access to public services. The Bill faces opposition from trade unions and will no doubt be subject to judicial interpretation within the coming months.

Regardless of additional legislation, employers will still need to consider how to navigate difficult discussions with unions and employees.

Employee data protection

The government has announced its intention to replace the UK GDPR with a British data protection system. It’s not currently clear exactly what the reform would look like, but the government is working with businesses and other stakeholders to ensure a new, bespoke British data protection framework that is business- and consumer-friendly and keeps people’s personal data secure [4]. This will no doubt bring with it logistical hurdles for employers seeking to ensure compliance..

We also expect to see updated data protection and employment practices guidance in 2023 from the Information Commissioner’s Office (ICO). The current ICO approved employment practice codes will be replaced with a web-based hub of guidance organised by topic and issue.  It will aim to increase accessibility for employers seeking to understand data protection requirements and compliance [5].

Two pieces of guidance, one on monitoring at work and the other regarding information about workers’ health, were published for consultation in October 2022. For each, the deadline for responses was in January 2023.  It’s expected that other pieces of draft guidance which will contribute to the new hub will be published for consultation in 2023.

Human Rights Act 1998

In June 2022, the government introduced the Bill of Rights Bill 2022-23, which aims to repeal the Human Rights Act 1998 and create a new domestic human rights framework around the European Convention of Human Rights (ECHR), to which the UK will remain a signatory.

After being dropped by Liz Truss’s government, the Bill of Rights Bill is now reported to resume its passage through Parliament. The passing of the Bill of Rights Bill and repealing of the Human Rights Act 1998 will undoubtedly require employers to reassess their compliance with any new provisions. Employment law will face challenges and changes in relation to employee rights, recruitment and in a recent example, whistleblowing [6].

Draft Code on Dismissal and Re-engagement

The government is taking strong action against unscrupulous employers using the controversial practice of ‘fire and rehire’. There are plans for a new statutory code which will crack down on employers that use the controversial dismissal tactics. The courts will be given power to apply a 25% uplift to an employee’s compensation in certain circumstances if an employer doesn’t follow the new Code. The Business Secretary, Grant Shapps, said “Our new code will crack down on firms mistreating employees and set out how they should behave when changing an employee’s contract” [7]. In the main, the Code sets out good practice for making changes, which are unlikely to be a surprise to conscientious employers.  It does, however, raise the possibility of employees being able to delay, or at least, slow down the process.

Menopause leave

Proposals, set out by the Women and Equalities Committee, to change UK legislation to protect the rights of women experiencing menopause have been rejected in part by the government due to fears such a move would discriminate against men.  The Committee published a report in July 2022 which included a recommendation to make menopause a protected characteristic under the Equality Act. The government has firmly rejected that recommendation, and/or the possibility of menopause leave being introduced. The government is “focusing… efforts on disseminating best practice and encouraging employers to implement workplace menopause policies and other forms of support such as flexible working, which can play a vital role in supporting people to remain in work”.[8]

Amendments to the Equality Act 2010 are unlikely to evolve further in the short term in relation to menopause leave.  The view is that menopause is already adequately protected under other protected characteristics such as age, sex and disability.

Employment update and advice/support for employers: How Walker Morris can help

As well as keeping you abreast of key legal and regulatory developments in this employment update and our regular employment-related briefings, our team of Employment & Immigration specialists provide advice on all types of complex employment, HR and business immigration matter.  We support private and listed companies operating in a broad range of sectors, including manufacturing, food and drink, technology, sport, retail, real estate, healthcare and education.  For advice, assistance or training on any employment or immigration issue, please contact any member of the Team.

[1]  Dr David Mackereth v The Department for Work and Pensions [2022] EAT 99

[2] Dr David Mackereth v The Department for Work and Pensions [2022] EAT 99

[3] Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (Regulations)

[4] House of Commons Written Questions

[5] ICO consultation on employment practices

[6] Gilham v Ministry of Justice: A new chapter in employment law

[7] Government cracks down on fire and rehire practices

[8] Women and Equalities Committee Report, Menopause and the workplace: Government Response to the Committee’s First Report of Session 2022-2023, 24 January 2023