Mini-Budget changes the HR and employment law landscape

The Chancellor, Kwasi Kwarteng delivered a Mini-Budget statement last Friday, 23 September 2022. In this, he set out a number of measures to ease the cost-of-living crisis and drive economic growth. As with any major government announcement, there are knock-on impacts for employers, some of which will be significant.

An employee’s entitlements and an employer’s legal obligations are all now under review, following Kwarteng’s announcement of the Retained EU Law (Revocation and Reform) Bill. This new piece of legislation requires government departments to review, then retain or replace all EU derived law. Any laws which are not formally retained will automatically expire on 31 December 2023.

As a reminder, some of the laws which derived from the EU include the Working Time Regulations, TUPE, Part-Time and Fixed-Term Worker Regulations and Agency Worker Regulations. The upcoming review could see these laws go completely, or changes made to them. For example, the government could, in theory, decide to remove the 48-hour weekly working limit or change the scope of paid annual leave rules. The UK will have greater flexibility to change employment laws, meaning employers will have to keep up to date with related announcements over the next 15 months and prepare for communicating and implementing changes.

Also in his statement, Kwarteng reaffirmed the government’s plans to mandate minimum staffing during strikes. Employers may have to develop processes to decide who will continue working and apply this fairly and consistently during periods of industrial action. New legislation will also require unions to conduct a vote with members when a pay offer is made by the employer. A strike will only be allowed to proceed if a majority of union members refuse the offer. The hope is this will ensure strikes only happen if negotiations genuinely break down and give workers more say when settling a dispute.

Separately, it was confirmed that IR35 reforms, which were introduced in the public sector in 2017 and the private sector in 2021, will be removed. This will make it the contractor’s responsibility to determine their own employment status, and process tax and NI payments, rather than the organisation who engages them. The government hopes it will free up time and money for businesses that engage contractors and allow them to put this towards other priorities.

Finally, the National Insurance increase which took effect in April 2022 to fund health and social care will be reversed from 6 November 2022. At the moment, employers have to list this tax separately on payslips, so they should liaise with payroll teams and ensure they have the necessary training to remove it. Employers should also communicate the removal of the 1.25% NI increase to their workforce, and prepare them for changes to the look of their payslip and the impact on their take home pay.