2022 was quite the tumultuous year, with the UK and many in the wider world facing food and fuel shortages, political change, extreme weather, significant inflation, mass redundancies and widespread industrial action at levels not seen for a considerable amount of time.
2023 will likely bring with it further challenges which will continue to heavily impact the world of work. On top of this, after a relatively quiet year from a legislative change perspective, 2023 appears to be a year of playing catch up; with a number of statutory changes to employment law expected.
Below, we have set out some of the most significant employment trends and changes People Managers can expect to see in 2023:
Recession
The UK is beginning 2023 on the brink of recession and economists have reported the UK faces a deeper recession than any of the world's most advanced economies. The recession will likely lead to increased levels of redundancies and other forms of termination, in turn leading to higher levels of unemployment, as organisations see even lower levels of consumer spending.
Research has shown that 44% of employers may consider restructuring or redundancies to cut costs in the coming year and that 30% of SMEs were contemplating freezing employees’ pay. Other cost-saving initiatives being considered by employers include reducing employees’ hours or pay by changing terms and conditions, with 13% of employers considering this option and 11% considering scaling back employee benefits.
Fraught industrial relations
We are in the midst of a period some are dubbing a ‘winter of discontent’ and this appears set to continue, at least in the first part of 2023. Last year we saw greater levels of strikes than we have seen for many years. Strikes have taken place and are continuing across a range of sectors across the country; from post workers, to barristers, to train workers, to nurses. Many current union leaders have been intent on shifting their focus away from the macro politics in order to insert influence and are instead building the strength of the union at the workplace. These same union leaders believe isolated trade union action is less effective and that there should in fact be some level of coordination and cooperation across the whole union movement. The approach appears to be having an impact in terms of the level of disruption being experienced in the economy and has caused the government to respond with the potential for new legislation to try to neutralise the impact of public service strikes. The government on 5 January 2023 announced that new legislation would be brought in within the next few weeks which mandates ‘minimum service levels’ which must be met by certain sectors during strike action, including the health, education, nuclear commissioning, fire, ambulance and rail sectors.
The Government have not yet been entirely clear on the detail of the legislation. However, the Government had already announced a plan for similar legislation in the House of Commons back in October 2022 in respect of the transport sector only; The Transport Strikes (Minimum Service Levels) Bill. If the recently announced anti-strike laws follow the same formula, then we can expect to see the legislation allowing employers to sue the unions or terminate the employment of the striking workers where minimum service levels are not met.
This proposed legislation may alleviate some of the pain in respect of the disruption to employers and to the public. However, it will not solve the underlying problems causing the pain. So, unless the issues in the economy which are driving the strike action are abated in some form, it is likely this wave of industrial action will continue in 2023.
Quiet Quitting and The Great Resignation
In 2021/2022 key themes have emerged such as The Great Reflection, Quiet Quitting and The Great Resignation. There can be some debate about whether these will continue into 2023 and beyond or not in themselves, but the one thing driving these themes is a reappraisal of the relationship between life and work and that reappraisal is continuing across a wide section of the workforce. Ultimately the UK has a two tiered workforce made up of those workers who have choices and those who do not and the reappraisal looks different depending on which of these two categories a worker falls into. For those with little choice, there is a desperation to maintain standards of living, due to long periods of wage stagnation. For those workers with greater levels of choice there is a drive to reappraise the relationship between work and living and to improve quality of life. These two dynamics are manifesting themselves in a number of ways: from increased grievances where workers are trying to take back control and reshape the environment around them; to the withdrawal of discretionary effort; to workers changing jobs and quitting. This creates a difficult balancing act for employers in 2023. The employers that are best set are likely those that have a level of understanding about and empathy for what their workforce and potential workforce is experiencing and those that are actively putting in place a multifaceted strategy which looks at motivation, attraction, engagement and retention of talent, to help change the dynamics for employees.
New Legislation due
Retained EU Law (Revocation and Reform) Bill
The purpose of this Bill is to automatically remove any retained EU Law, by the ‘sunset’ deadline of 31 December 2023, of which there are currently 2,400 pieces. Should the UK government wish to keep the EU derived legislation, it will need to introduce specific legislation to reinstate it. The government also has the option to replace specific pieces of legislation. Given the vast number of retained pieces of legislation, there will be a significant amount of documents to review by the end of the year. However the deadline may be extended to June 2026 if necessary. It has been suggested that we may be saying farewell to unpopular legislation such as TUPE, the Agency Workers Regulations or parts of the Working Time Regulations.
The Employment Relations (Flexible Working) Bill
The aim of this bill is to enhance the current right to request flexible working in a number of ways. First, it would because a day one right and workers would be entitled to make two statutory flexible working requests each year. Currently workers may only make one request each year. Employers will now also be required to provide a decision within two months of receiving the request and to consult with the employee if they intend to reject a flexible working request. Finally, employees will no longer be required to explain what effect, if any, the flexible working change would have on the employer and how that effect might be handled.
Protection from Redundancy (Pregnancy and Family Leave) Bill
This Bill would extend enhanced protection against redundancy, which currently only applies during maternity leave, to also apply from the date the employee announces their pregnancy to the employer, until a period lasting 18 months after the date the maternity leave starts. Similar rights would be extended to employees taking adoption and shared parental leave.
Neonatal Care (Leave and Pay) Bill
The purpose of this Bill is to ensure that those who are responsible for caring for a child who is receiving neonatal care are entitled to 12 weeks additional paid leave. The specifics have not yet been confirmed, however, it is thought that the bill will apply to parents whose infants are admitted to hospital up to 28 days after birth and who stay at the hospital for 7 days or more. The right to leave will be a day one right but there is going to be a qualifying period for the right to neonatal care pay.
Bill of Rights 2022/23
This Bill was scrapped under Liz Truss’ tenure but current Prime Minister Rishi Sunak has promised to bring it back. The Bill of Rights is designed to give legal supremacy to the UK Supreme Court by repealing the Human Rights Act 1998, which currently makes the rights contained in the European Convention of Human Right enforceable in domestic courts. If the Bill is introduced, the UK courts would no longer be obliged to interpret legislation in a way that is compatible with convention rights. The Bill will also introduce new restrictions on how human rights can be relied upon in claims against the UK government. For example, individuals would need to prove they have suffered a disadvantage due to a breach of their rights before they can bring a claim.
Carers Leave Bill
This Bill is progressing through the final stages of Parliament and is therefore likely to be implemented this year. The Bill proposes to create a new right for employees to take at least a week of unpaid leave every year where they have long term caring responsibilities for a dependant. The leave would be for the employee to provide care for the dependent and would be a day-one right. Any employee exercising this right will be afforded protection from dismissal or detriment due to taking the leave. The employee can take the leave as partial or full days and it can be taken flexibly to suit the caring responsibilities.
Worker Protection (Amendment of Equality Act 2010) Bill
The aim of this Bill would be to increase the protection of workers from harassment. The Bill would impose a new duty on employers to take all reasonable steps to prevent sexual harassment in the workplace and reinstates employer liability for all types of third-party harassment. If an employee brings a successful employment tribunal claim for sexual harassment and the tribunal rules that the employer was in breach of their preventative duty, the Bill will give the tribunal the power to award an uplift in compensation of up to 25%.
Increases to statutory pay entitlements
All 2023 increases can be found here.
Employment (Allocation of Tips) Bill
This Bill will change the way employers are allowed to allocate tips and gratuities. The changes include a prohibition on employers making any form of deductions from the tips their workers receive, other than any deductions required by tax law. Tips will need to be distributed amongst workers fairly and transparently and a written policy on tips will be required, as well as a record of how tips have been managed. Finally, the Bill will likely be accompanied by a Code of Practice, which will offer guidance on which workers should benefit from the tips in different situations.
Greater levels of menopausal awareness
In 2022 there continued to be an increased focus on the topic of the menopause. It may be because in July, the Women and Equalities Committee published their Menopause and the Workplace report paper which put forward suggestions as to how the government and employers should support women in the workplace and elsewhere in relation to topics such as period pains, fertility, endometriosis, miscarriage and menopause. October 2022 also marked Menopause Awareness Month, which shone a light on the significant impact menopausal symptoms can have on women’s professional lives.
2023 is likely going to see continued focus on this issue, in part due to changing demographics: the global population of menopausal and postmenopausal women is projected to grow by 47 million women a year, to 1.2 billion by 2030. According to The Faculty of Occupational Medicine, 8 out of 10 of menopausal women are currently in work, and about 18% of women look to leave their job due to the menopause and about a third are trying to hide menopausal symptoms when they are in the workplace. There was a 44% increase in menopause related claims last year, so employers would be well-advised to keep this high on their priorities lists.
The skills shortage
The skills shortage will most likely endure throughout 2023. Currently, a record 78% of employers are having difficulty filling jobs due to the lack of skilled talent. We have a skills mismatch in the UK which is being driven by on the one hand rapid technological changes and changes in the ways of doing business, and on the other hand, the education system and the learning systems within the world of work simply not keeping up with the pace of change. Successful organisations will be those that focus on and prioritise learning and development. Learning should be seen as something that happens within the organisation consistently.
The cementing of hybrid working
Hybrid working is here to stay and it is very unlikely work will go back to the way it looked pre-pandemic. Hybrid working is being driven by the reassessment of factors such as quality of life, living standards, cost of living concerns and of course by a generational shift in that we are now seeing workers entering the workplace who are entirely comfortable living and working in a virtual environment. This generation is fluent in all things ‘virtual’; they meet partners virtually, socialise virtually, shop virtually and have studied virtually.
Mechanical approaches to hybrid working, whilst they will be preferred by most to no option of hybrid working, will not be as sustainable for an organisation in the long term, particularly with a growing audience who have at their core the question “why do I need to come into the work place?” The way an organisation chooses to embrace hybrid working needs to stem from a fundamental re-appraisal of the nature of work and work activity, and how work best gets done in the interests of the company and in the interests of workers. Certainly something to be added to the company to-do list in 2023.