Employment Law Update

5 legal updates employers need to know this April
Sat 1st Apr 2023

Increases to tribunal award limits

The Employment Rights (Increase of Limits) Order 2023 (SI 2023/318) has been laid before Parliament and will increase compensation limits for certain tribunal awards and statutory payments from 6 April 2023. The increases are based on the September 2022 retail prices index (RPI) which increased by 12.6% since the previous year.

The Order includes the following new figures:

  • The limit on a ‘week's pay’, used to calculate increases from £571 to £643.
  • The maximum compensatory award for unfair dismissal increases from £93,878 to £105,707.
  • The minimum basic award for certain unfair dismissals (including health and safety dismissals) increases from £6,959 to £7,836.

Increases to statutory pay rates

Through separate legislation, the following increases will also shortly be implemented:

  • The National Living Wage increases from £9.50 to £10.42 from 1 April 2023
  • The prescribed weekly rate of Statutory Maternity Pay and Statutory Paternity Pay increases from £156.66 to £172.48 from 10 April 2023
  • The weekly rate of Statutory Sick Pay increases from £99.35 to £109.40 from 10 April 2023

Consultation on holiday pay following Harpur Trust v Brazel

The Department for Business, Energy and Industrial Strategy (BEIS) has concluded its consultation in response to the Harpur Trust v Brazel case, which concerns the calculation of holiday pay for part-year workers. The ruling, which was made last year, affects workers with permanent contracts who work only part of the year, such as those on term-time contracts or zero-hour contracts. The "percentage method" of calculating holiday pay has been deemed unlawful, and employers must now provide a minimum of 5.6 weeks' holiday pay to all part-year workers without prorating.

Despite Harpur Trust providing a seemingly straightforward calculation (average weekly pay from the previous 52 weeks, excluding weeks not worked, multiplied by 5.6 weeks), its implementation has proved far from simple. This confusion, combined with the unfair disparity in holiday pay between certain workers, prompted the BEIS to launch a consultation considering the issue, with views of employers and employees required by 9 March 2023.

With that deadline now passed, the BEIS will now consider the responses received, before presumably legislating for any change it considers necessary. As part of the consultation, it confirmed its proposed method of doing so is to include, rather than exclude, weeks not worked in the 52-week reference period, and then multiply those hours worked by 12.07% to calculate the total holiday entitlement.

The Harpur Trust v Brazel judgment currently remains binding law and a failure to pay holiday pay accordingly may result in claims for unlawful deduction of wages. Employers who have not yet introduced the Harpur Trust method may decide to wait until the findings of the consultation are legislated for, but will remain at risk of tribunal claims in the meantime. In contrast, employers who amended contracts of employment to be ‘Harpur Trust compliant’ may soon find themselves in the difficult position of hoping to renegotiate those contracts.

Changes to look out for from the Spring Budget 2023

Getting people “back into work” is the main focus of Chancellor Jeremy Hunt’s Spring Budget announced on 15 March 2023. The reform will impact employees and employers alike, so here’s 5 key takeaways from the announcement:

1. Childcare for working parents

Mr Hunt announced an increase in the funding for childcare, encouraging parents to return to work. There will be 30 hours of free childcare available for every child over the age of nine months for every working parent in England. Changes will be rolled out in two stages:

- April 2024 will see 15 hours of free childcare for working parents of two-year-olds; and

- September 2024 will see 15 hours of free childcare for working parents of children aged nine months to three years.

Schools will also benefit from increased funding for wraparound care helping parents with school-aged children, return to work.

2. Helping the disabled into work

A new voluntary employment scheme, called Universal Support in England and Wales will be set up for disabled people with health conditions returning to work. Funds of up to £4,000 for each person will be available, for those who want to work with existing job vacancies.

Employers are advised to review their recruitment practices to ensure jobs in the workplace are available and inclusive of all. Wherever possible, positive action should be taken to appeal those who want to return to work, with their disability.

3. Apprenticeships for over 50s

The government will launch a new type of apprenticeship for the over 50s, in a bid to encourage “older workers” back into work.

The “Returnships” will be enable individuals to attend skills bootcamp and skills programmes designed to make it accessible to older workers, supporting them back into work. Employers will need to consider the terms of the employment for these candidates more carefully and differentiate them from Apprenticeships.

4. Lowering Pension Tax

In a bid to support people to remain in work for longer, there will be an increase in the tax-free pension annual allowance from £40,000 to £60,000. This will encourage highly skilled workers to remain in employment and not be tempted by early retirement.

The lifetime allowance charge which restricted the maximum amount of tax-relieved pension savings for an individual, will be removed and later abolished., saving many employers administration costs.

5. Occupational Health Support

SME’s to gain more support from the Government through a scheme which helps with the cost of purchasing Occupational Health services. Particularly encouraging employees with health conditions such as mental health, musculoskeletal conditions, and cardiovascular disease to remain in work or return to work with appropriate adjustments.

Employers are reminded to seek Occupational Health referrals wherever possible to understand what changes in the workplace are possible to keep employees at work and provide support with their health conditions. Failure to consider reasonable adjustments puts employers at risk of discrimination.

Tips for long-term working from home

The COVID-19 pandemic gave many employers the opportunity to reimagine the working environment for their organisations, rebalancing the costs and benefits of office-based and remote or hybrid working models. Regular working from home now looks likely to be a permanent feature of the professional lives of many formerly office-based professionals. While remote working can offer many benefits, it can also be challenging for both productivity and wellbeing, so it is important to think carefully about how to make it work best for you.

1. Create a designated workspace

This should ideally be separate from your personal living space. This can help you mentally separate work and home life, whilst also making it easier to focus on work tasks. Ideally, this workspace should be quiet, private, and comfortable with a suitable chair and desk.

A designated workspace should also make distraction less likely, for example, from household chores or family members. Creating a schedule can also help with this, as can closing the door to your workspace, and turning off your phone during work hours.

2. Establish good habits and routines

Without a traditional office environment, it can be hard to create structure in your day. Consider whether there are things that you can do to mark the change from work to home and to manage that transition, for example, does your working life involve a clear start and end to your day? How good are you at taking breaks without casual interruptions at your office desk and chats over the coffee machine? Do you need to find a way to get up and stretch for a few minutes every hour? Boundaries help you focus on your work and ensure that you rest properly when you are not working.

3. Communicate regularly with colleagues

Working from home can be isolating, but regular communication with colleagues can help you stay connected and engaged. One way to mitigate the challenges of working from home is to arrange a time when you will all be in the office and you can plan face-to-face meetings on that day. It is important to really consider why you are deciding to meet up in person and to think creatively about how to make the most of the time together.

4. Managing teams in a hybrid working world

If you manage people, you will need to work hard to ensure that your team remains connected, motivated and engaged. The key skill here is knowing your people and understanding how their needs are changing. Let your team know when you are available and how to reach you. Remember that there is a fine line between checking in with people to maintain good communication and connection, and checking up on people to make sure they are working.

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