The UK government has announced new, increased statutory rates and limits that will be in place in England and Wales from April 2023. The updates impact a range of employment payments including, among others, national minimum wage rates and statutory sickness, parental and redundancy payments.

These rates are reviewed on an annual basis but, in 2023, given recent economic and inflationary pressures, they are set to increase considerably. For some employers, these increases could have a material impact on their overall wage bill and the cost of some types of operational change. We discuss some of the main changes below. Please see a list of the key new rates and limits and how they have changed.

National minimum wage (from 1 April 2023)

National minimum wage rates are set to materially increase at all levels and age categories. By way of example, the national living wage (for workers aged 23 and over) is set to rise from £9.50 per hour to £10.42 per hour.

Steps will need to be taken to increase pay for workers currently below these limits from 1 April 2023. Attention will also need to be given to workers whose pay is close to the new threshold to confirm that, when their hourly pay is calculated in accordance with national minimum wage legislation, it continues to meet statutory minimum requirements. Not doing so risks costly penalties for non-compliance (up to £20,000 per worker) as well as payments of arrears and being named and shamed on government lists.

Where changes are made to some workers’ pay for compliance with these changes but not others, employers may also want to consider the impact on overall pay structures. Is there now a smaller gap / increased pressure between the lowest paid roles and slightly higher paid roles? Will there be increased pressure from other workers to also receive an inflationary pay rise? Employers should review contracts and pay review practices to assess how these type of issues will be managed and be ready to answer employee questions. Some employers may consider one-off payments/bonuses to employees to support them during the cost of living crisis but targeting such measures at employees at the lower end of the pay scale can create its own problems in terms of justifying an arbitrary cut off point. Continue Reading Are you ready for the new employment rates and limits in England & Wales?

As reported on our blog in November, the idea of a four-day working week is gaining momentum in the UK. Last month, the not-for-profit organisation, 4 Day Week Global, reported the results of its six-month UK trial. With 92% of reporting companies confirming they will continue with the four-day week, the trial has been reported as a resounding success. In this article, we review where the four-day working week movement may go from here and what employers should be thinking about now.

What is a four-day working week?

The UK trial typically involved working hours being reduced to 80% (or full time employees working 4 out of 5 days a week) crucially without any drop in pay. The expectation is that productivity matches or even exceeds usual standards.

There are numerous ways to structure a four-day working week depending on what best suits a particular business, including a whole business shut down on one day, staggered days off or different sets ups for different teams or times of the year (e.g. to meet seasonal demand).

Why is a four-day working week becoming increasingly popular?

Coming out of the pandemic there has been an increased focus on work life balance, mental health and wellbeing, and employers’ roles in supporting employees on these fronts. Employers in some industries have also seen a talent war emerge as they find it harder to recruit and retain the best talent.

These conditions have arguably assisted the four-day working week in gaining momentum. Happy employees enjoying a healthy work life balance are less likely to fly the nest and join the so-called “great resignation”. For the moment at least, offering a four-day working week is also sufficiently unusual that it is likely to give a competitive advantage when recruiting new talent.

If it is correct that productivity is not negatively impacted, a four-day working week provides a way to recruit and retain without the cost burden of increasing salaries. It also offers cost savings in terms of recruitment costs and, potentially office running costs and, for some employees, potentially childcare costs. Of course, the more companies that make the move, the more pressure other employers in the same industries may feel to do the same.

Other benefits include reducing carbon footprint due to less frequent commuting and a potential social impact if employers use their time off for voluntary work. There is also a view that a four-day working week could improve equality by better enabling employees with caring responsibilities to manage those responsibilities around work and therefore remain in the workforce.

What were the conclusions of the trial?

The UK trial involved just under 3000 employees across 61 organisations. The headline results were as follows:

• Company revenue stayed broadly the same over the trial period, rising by 1.4% on average
• There was a 57% drop in staff leaving over the trial period
• There was a 65% reduction in absenteeism (i.e. sick and personal (non-holiday) days)
• 54% of employees said it was easier to balance work with household jobs
• 39% of employees were less stressed
• 60% of employees found an increased ability to combine paid work with care responsibilities
• 62% of employees reported it was easier to combine work with social life

However, it is important to note that these statistics are based on a relatively small pool. The survey response rate from the participating employees was only 58% by the end of the trial and in some cases, the no/negative change was greater than the positive story. For example, whilst 39% of employees reported being less stressed by working a four-day week, 48% reported no change in their stress levels and 13% reported increased stress. The retention and absenteeism statistics may also be skewed by the small populations involved.Continue Reading What now for the four-day working week?

The National Union of Teachers has announced industrial action across England and Wales during February and March over disputes concerning pay, with national strikes on 1 February and 15 – 16 March, and several other regional dates. Scotland is also facing a rolling programme of teaching strikes until April.

With over 23,000 schools affected across England and Wales, the potential disruption for working parents and their employers should not be underestimated, especially as we do not know how long the strike action will continue. The Strikes (Minimum Service Levels) Bill is currently making its way through parliament which, if enacted, will allow minimum service levels to be required in certain sectors (including education) during periods of industrial action. This could reduce the impact of teaching strikes on working parents and their employers, but it is not law yet and will not completely eradicate the disruption even if or when it is.

Instead, employers should prepare for disruption over the coming months and consider the effects on their parent employees and other staff. Employers who anticipate the challenges faced, engage early to facilitate a solution, and plan for the longer term rather than simply the currently announced strike dates, will be best placed to minimise the impact in the workplace. Employers should also keep in mind that employees may only receive very short notice of school closures or adapted arrangements, with teachers not required to inform their employer if they intend to strike, making advanced planning more difficult in some cases. Teachers’ own childcare issues during the strikes may also impact the ability of certain schools to stay open which again, may be an issue that arises at the last minute.

Of course, occasional school closures do happen (snow days, for example, are not uncommon in winter months), and employers will be well versed with managing the knock-on impact on working parents and managing requests for, for example, emergency leave, unpaid leave, annual leave, time off in lieu (TOIL), and flexibility (such as working at home or adjusted hours of work). Strike days are, in many ways, no different but there are a few particular points to remember, plus the regular and widespread nature of the planned action provides both employees and employers with an opportunity to plan ahead.Continue Reading Teacher strikes: How UK employers can mitigate workplace disruption