Legal changes in October 2022 and what they mean for employers
Updated: 20/10/2022
Various legal changes, including updates to the mini-budget, have been introduced from October 2022 and beyond which will affect employers. The main ones to look out for are set out below.
Right to work checks should be carried out on all employees to ensure they have the right to work in the UK. Failure to establish a statutory excuse for a right to work checks can result in a fine amounting to £20,000 and in the most serious cases a criminal conviction carrying a prison sentence of 5 years and an unlimited fine.
In April 2020, in reaction to the Covid-19 pandemic, the government adjusted the requirements for an employer carrying out right to work checks. This relaxation of the rules, which allowed Employers to carry out checks virtually, ended on the 30 September 2022. From the 1 October Employers can carry out right to work checks in the following three ways:
A manual right to work check by meeting the employee in person and checking and copying their original documents.
A right to work check (for British and Irish citizens who hold a valid passport) using Identity Document Validation Technology via the services of an Identity Service Provider.
A Home Office online right to work check.
For clarity, any checks carried out virtually between April 2020 and 30 September 2022 do not need to be backdated.
In addition to ensuring that all right to work checks are compliant, on 23 September 2022 Liz Truss announced a mini-budget which set out both immediate and planned changes. However, many of the proposals have now been reversed by the new Chancellor, Jeremy Hunt, in response to significant pressure following market turmoil. Following this U-turn, employers should be aware of the following changes and the impacts (for the time being!):
National insurance: From the 6 November 2022 the government will reverse the 1.25% increase in NI which was implemented on 6 April 2022. Employers must ensure that their payroll systems are up-to-date.
Income tax: It was originally announced that the basic rate of income tax was to be cut to 19% from April 2023, however this will now remain at 20%. There will also be no cut to the higher rate of income tax of 45%.
Corporation tax: It was initially announced that the rise in corporation tax would be cancelled and the rate was to remain at 19%. However, it has now been confirmed that this will be going ahead, with corporate tax increasing to 25% in April 2023.
IR35: The planned reform of the rules which govern off-payroll working (contractors) will no longer be going ahead and IR35 will remain.
Unions: Proposed new legislation looks to help employers by making it harder for unions to bring strike action (ballot thresholds will be raised to 50% and all offers will have to be put to members for a vote) and giving employers more warning that strike action will happen (minimum notice will increase from two to four weeks). In some industries a requirement for minimum staffing levels will be introduced to ensure critical infrastructure keeps running during a strike.
The day before the Mini-Budget was announced the government introduced the Retained EU Law (Revocation and Reform) Bill. This Bill revokes all current EU law with effect from 31 December 2023 (with the option to extend to 2026). The key components to be affected by the Bill include the Working Time Regulations, Transfer of Undertaking (Protection of Employment) Regulations, Part-time and Fixed-term Worker Regulations and Agency Worker Regulations.
This means that we are likely to see numerous updates over the next 15 months and employers should be aware of any changes to ensure they are not following outdated law.
The Living Wage Foundation has increased the voluntary ‘real living wage’ to £11.95 in London and £10.90 per hour in the rest of the UK. This 10% increase will impact the 11,000 employers who elect to pay their staff this voluntary wage which is higher than the Government-set National Living Wage and may forecast a rise in the national living wage for all employers in the future.
If you have any questions about any of the current or future changes, please contact Tom Martin. Alternatively, click here to view our employment law page.
Contact Tom to discuss this further.
