Top of the list of many employers at the start of the year will be the difficulty of finding and keeping enough skilled staff.
Others are wondering how to reduce headcount in the fairest and most legally compliant way. All employers will face the challenge of balancing budgets and meeting pay demands as prices shoot up for organisations and their staff alike.
Alongside these wider factors are five knotty issues that we predict will repeatedly cross the desks of HR professionals in 2023.
Employee health and wellbeing
The role of employers in protecting and promoting the health and wellbeing of employees was thrown into stark relief by the pandemic. The challenges will continue in 2023 as many employers come to terms with managing employees with long covid and other, potentially serious conditions such as cancer whose diagnosis and treatment was delayed by the pandemic.
Employers are also recognising the need to understand and have good policies for managing issues such as menopause, pregnancy loss, infertility and a range of mental health conditions such as anxiety and depression, irrespective of a lack of specific proposals for new laws from the UK Government (see, for example, its Response to the House of Commons Women and Equalities Committee confirming that it will not introduce statutory protection for menopausal women).
An increased awareness of neurodiversity in the population is further challenging employers to understand and get the best from all of their staff. Employers are recognising in greater numbers the complex connection between health and wellbeing and equality, diversity and inclusion.
Belief, freedom of expression and the workplace
A number of cases in 2022 show that the courts are endorsing the need for tolerance when religious and philosophical beliefs come into conflict with each other in the workplace, whilst granting protection to an increasing number of philosophical beliefs such as those of gender critical feminists.
The courts have also sought to draw a line between the holding of a belief and the manifestation of that belief in a manner that impinges unreasonably on the rights and freedoms of others. These issues will continue to find their way into the workplace in 2023 and employers will need to consider how to manage employees who in the eyes of colleagues overstep the mark, but in their own eyes are simply exercising the right to speak freely.
Hybrid and flexible working
The role of hybrid and flexible working will continue to be consolidated in 2023, with increasing numbers of employers trialling and adopting a four-day working week and the Government having committed (although without setting a date) to making flexible working a day one right.
According to recent research, flexible working is regarded as a performance-enhancing tool by 71.2% of line managers and 65.6% of senior managers 1. Employers may see the potential to trade-off demands for higher pay against demands for a better work life balance. But in contrast to the last financial crisis in 2008, employers who are looking for ways to reduce the salary bill may increasingly find that staff are ready and willing to accept reduced working hours in favour of more flexible options.
Employers for whom the main challenge is attracting and retaining skilled staff, may find themselves wooing the staff they need with promises of flexibility and shorter working hours without loss of pay.
The status of an individual – employee, worker, or self-employed – and the impact of status on employment rights will continue to present challenges to employers across all sectors.
The issue is a particular challenge for start-ups and businesses in novel sectors of the economy such as crypto assets. Some are seeking innovative ways to engage and retain talent, but may find that remuneration structures designed to incentivise are incompatible with UK employment rights.
The subject of employment status remains stubbornly fact specific. Tools put in place to assist businesses make the right judgment such as the HMRC status determination tool and the recent UK Government's guidance on employment status have not provided effective methods of removing uncertainty and cases will continue to turn on their own precise facts.
It is also likely that the courts will be asked to look again at the status of agency workers in light of the Supreme Court's decision on the status of Uber drivers, testing the idea that an agency worker could in some cases be an employee or worker of the end user, not just the agency itself.
One of the risks of making the wrong call about status is that a claim for arrears of holiday pay may arise. Two significant cases last year – Harpur v The Brazel Trust and Smith v Pimlico Plumbers have caused employers to revisit their holiday pay arrangements, although the Government is consulting on changing the law to address the effects of the Harpur case. The entire subject of holiday pay could be significantly affected if parts of the Working Time Regulations are revoked, as the Retained EU Law (Revocation and Reform) Bill may make possible, if it becomes law.
If asked, employers will usually say that they welcome whistleblowing and want to treat employees who blow the whistle fairly, although they may also find the management of whistleblowers difficult.
The Court of Appeal's decision in 2022 in the case of Ling Kong v Gulf International Bank has been seen as significantly undermining the protection of whistleblowers, but we are nevertheless seeing an increased number of allegations from senior executives that the real reason for their dismissal is because they were a whistleblower, and not because they are genuinely redundant or the subject of legitimate performance or conduct issues. A whistleblowing allegation immediately raises the stakes as the compensation for a dismissal caused by whistleblowing is uncapped. Aggrieved employees who have been forced out of the workplace and who have lost their livelihood as well as lucrative bonuses therefore have a clear incentive to point to the role of whistleblowing in the decisions that have affected them.
The Retained EU Law (Revocation and Reform) Bill, which has now reached the House of Lords in its passage through Parliament, has the capacity to transform the landscape of employment rights very significantly, if passed in its present form. It is difficult at present to predict how employment law could be affected – the Government has as yet given no clear indication of which parts of the current framework it intends to leave in place. It is certainly possible that the effects will be dramatic, whether or not that is the Government's intention. All sectors of the economy are expressing their concern at the potential impact of such wide-ranging changes in the law across so many areas in so short a space of time, but there is no sign at present that the timetable will be extended. We will keep you updated.
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