Employment Law changes happening in April 2023

As April approaches, employers should be aware of upcoming legislative changes that could impact upon both them and their employees. April is a significant time of year for legislative changes, as it coincides with the end of the tax year. The employment sector is due to experience a number of changes, including an increase in wage rates, tribunal compensation limits, and annual tax relief on pension savings.

Please see a snapshot below of key changes employers should be aware of in April 2023:

On 15 March 2023, ‘The Employment Rights (Increase of Limits) Order 2023’ was published. This sets out increases to certain compensation limits in Employment Tribunals, and will take effect on 6 April 2023 (i.e. for dismissals taking place on or after that date).

The key increases to compensation limits arising from this include:

• The ‘Compensatory Award’ cap (in relation to unfair dismissal) will increase from £93,878 to £105,707, subject to the maximum cap of 52 weeks’ gross pay
• The statutory minimum for a ‘week’s pay’ (for calculating the unfair dismissal basic award and redundancy payments) will be increased from £571 to £643.

The ‘Vento bands’ (which provide ranges for injury to feelings compensation awarded in successful discrimination claims) will be revised in April 2023 to the following:

• Lower band = £1,100 to £11,200 (less serious cases or one off incidents)
• Middle band – £11,200 to £33,700
• Upper band – £33,700 to £56,200 (the most serious cases), with the most exceptional cases capable of exceeding £56,200.

Pensions – The Lifetime Allowance charge will be removed from April 2023, and in April 2024, the annual allowance for tax relief on pension savings in a registered pension scheme will increase from £40,000 to £60,000.

In England and Wales, funding will be given to a new program which will be known as ‘Universal Support’. This is a voluntary employment scheme that aims to help disabled individuals to find employment and put in place appropriate support measures, by providing them with up to £4,000. This is designed to help participants to move quickly into suitable work and, with support, help them sustain employment for the longer-term. The government has also published a white paper on disability benefits alongside the Budget.

As announced in the Autumn 2022 Statement, the UK Minimum Wage and National Living Rates will rise as follows in April 2023:

• Aged 23 and over – will increase by 9.7% from £9.50 to £10.42 an hour (National Living Wage)
• 21 to 22 – increasing from £9.18 an hour to £10.18 an hour
• 18 to 20 – increasing from £6.83 an hour to £7.49 an hour
• Under 18 – increasing from £4.81 an hour to £5.28 an hour
• Apprentice – increasing from £4.81 an hour to £5.28 an hour.

As also announced in the Autumn 2022 Statement, statutory maternity, paternity, adoption, shared parental and parental bereavement pay will increase from £156.66 to £172.48 per week from April 2023.

Statutory sick pay increases from £99.35 to £109.40 per week from 6 April 2023.

Given inflation over the last year, it is no surprise that employment rates will increase by a much greater degree than most of us are used to. The increase in the minimum wage may mean that employers who previously paid workers well above the minimum wage now have to review wages. Both to ensure compliance and to remain competitive in a recruitment market in which there is still a significant demand for labour.