Keeping you in the loop on imminent payroll and HR legislation changes as well as upcoming bills so you can stay up-to-date and compliant. What’s more you can forecast ahead for any budgetary impacts for your organisation, based on confirmed and pending changes, from NMW to the allocation of tips.

Here’s the index of all the upcoming legislation changes:

• Allocation of Tips
• Auto-enrolment pension
• The Carers Leave Act
• Childcare changes
• Flexible Working Bill
• HR and Payroll Support
• Irregular Hours and part-time workers
• National Insurance Contributions
• Neonatal Care
• NMW/NLW
• Protection from Redundancy Act
• Reporting salary advances
• Statutory paternity pay and leave
• Student Loan Thresholds
• The Workers Act 2023
• Worker Protection Bill

Legislation Changes relevant to HR and Payroll teams

National Insurance Contributions cut by 2% from 6th January 2024

From January 2024 Employee National Insurance will be cut from 12% to 10%. It’s hoped this will lead to 94,000 more full-time workers in the UK; with 27 million workers set to benefit in principle. Explore this Autumn Statement article for more on self-employed changes with Class 2 National Insurance being axed.

Draft legislation for holiday for irregular hours and part-year workers from Jan 2024

This legislation announces a new method to calculate holiday accrual for both irregular hours workers and part time workers.

The new payroll legislation will calculate holiday pay for effected workers as 12.07% of the hours worked in a pay period. The aim is to create better transparency and close some of the gaps between these workers and full-time workers in terms of employee benefits.

In addition rolled up holiday pay will now be allowed but only for some agency workers, irregular hours workers and part-time workers. This isn’t being rolled out to full time staff currently, due to the mixed response with 45% of respondents worried that this will lead to reduced pay or missed leave.

For TUPE (Transfer of Undertakings Protection of Employment) there will also be reforms to allow for small businesses to consult with their new employees directly, in cases where there are no worker representatives.

Statutory paternity pay and leave changes – 7th April 2024 Onwards

Paternity Pay and Leave (PPL) entitlement will change from 7th April 2024 (In Great Britain, not Northern Ireland) to introduce greater flexibility for fathers.

The following changes will take effect:

Employed fathers will be entitled to take their PPL (Paid Parental Leave) across two non-consecutive periods in a 1- or 2-week block, with a 52-week window from the birth of the child or from the first date of adoption placements.

Employed Fathers-to-be will now provide 28 days’ notice to confirm when they wish to take their chosen leave.

Employers will be able to use the online PPL calculator on Gov.uk and other sources to assist with this. Outsourced payroll providers can also support with this.

25% of new dads, and partners, experience depression in the first year after birth which can effect their wellbeing at work. A recent NCBI study stated “While fathers are entitled to take leave, the leave is significantly insufficient to allow them to forge a meaningful bond with a newborn or adapt to the change in routine brought about by the birth of a baby.” There are many ways as an employer that you can support new fathers through flexible working, wellbeing conversations and other methods.

Auto-enrolment pension expected changes – Date TBC 

The Pensions (Extension of Automatic) Enrolment (No.2) Bill has made its way through the House of Commons unopposed. If this Bill is enacted this will extend auto-enrolment entitlement to workers aged 18 and over (a reduction of 3 years from the current age of 21+)

This bill would also abolish the lower earnings limit threshold if it comes into effect.

Student Loan thresholds announced – 6th April 2024 onwards

The student loans threshold has been confirmed by the Department for Education for 6th April 2024 for both Plan Type 1 and 2. 

• From 6th April 2024 the repayment threshold for pre-2012 loans (Plan 1) will rise to £24,990. 
• From April 2024 the income threshold for post-2012 (Plan 2) will remain frozen at £27,295. 

It has yet to be announced if the income thresholds for Doctoral Loans and Postgraduate Masters will change in April 2024 but may remain frozen at £21,000 and the Scottish plan type 4 is also due to be confirmed. 

For Plan 5 the threshold will be £25,000 with deductions beginning in April 2026. 

The changes to Plan 1 and 2 will ease some cost-of-living pressure on new employees entering the job market for the first time, in a post graduate setting, who will find themselves under strain and experiencing financial stress.  

NMW/NLW – Changes from April 2024

This was confirmed in the Autumn budget. The Autumn Statement was on the November 2023 with Jeremy Hunt following the recommendations of the Low Pay Commission to raise the hourly rate.

The National Minimum Wage has risen to £11.44 per hour.

Employers need to budget accordingly whilst keeping a close eye on the legislation. What’s more with the high band applying to 21-22 year olds for the first time employers will want to plan payslips accordingly or work with their outsourced payroll providers to stay compliant. Customised reporting in payroll can help with this.

This move could help many low paid workers but will have additional repercussions for squeezed employers especially those who have a high employee head count in sectors such as manufacturing.

Meanwhile the Real Living Wage rises to £12 an hour with some areas of the country (London for example) at £13.15 an hour. Almost half a million UK workers will be effected (this is when employers are voluntarily signed up to the Real Living Wage scheme).

The Carers Leave Act – Expected 2024

This will be enacted in law in 2024 and the new law will allow:

The introduction of one week of unpaid leave per year for employees who are providing or arranging care for a relative or dependant, designed to be flexible.

This leave will be available from the first day of employment

Have the same levels of protection of associated forms of family-related leave including protection from dismissal or detriment due to the time off being activated by the employee.

Many carers feel uncomfortable talking about their circumstances to their direct managers which makes it difficult for them to admit they are struggling.

Flexible Working Bill – Expected Spring 2024

We’ve published two blogs on the flexible working bill expected to come into effect in 2024, what the flexible working bill means for employers and how to stay ahead to be progressive to attract great talent and retain your staff.

Workers will have more flexibility over where and where they work and able to request flexible working from day one.

Employment (Allocation of Tips) Act 2023

An important update for employers in hospitality, leisure and services.

From 2024 employees will be banned from withholding tips from staff, with an estimated £200 million held back by companies not passing tips onto their staff, this practice will now be unlawful.

This move is expected to improve staffing issues within these sectors, but employers should be aware of how these changes may affect their own balance sheet. Employers will need a written tips distribution policy and staff can place a complaint within 12 months after a perceived issue.

Your payroll department or management should maintain records of tips as part of their role to ensure compliance.

Reporting salary advances – Consultation closes Autumn 2023

HMRC has published a consultation on proposed amendments to regulations which will allow employers to delay reporting advance salary payments made to an employee, a proposed new reg which would be inserted into the Income Tax (Pay As You Earn) Regulations.

This means employers can delay reporting until the remainder of that salary instalment has been paid and conditions have been met. The proposals are intended to simplify the process, allowing employers more clarity and helping them to create smoother payroll processes.

These changes are not expected to impact PAYE and RTI processes or apply where an employee’s normal payment interval is either less than a week or more than a month.

Neonatal Care (Leave and Pay) Bill – Expected from April 2025

Expected from April 2025 this bill aims to provide additional leave and pay for employees with dependents in neonatal care, providing them with an additional 12 weeks of leave and associated pay.

In order to qualify claimants must:

• Be employed
• Meet the minimum service and earning requirements
• Their child/dependant must be cared for in a health setting for more than a week before they reach 28 days of life.

The leave will be available from day one of employment, but Statutory neonatal pay will be subject to 26 week’ service and earning above the lower earnings limit (currently £123 per week).

This will ease the pressure on parents already dealing with the emotional strain of premature birth, or sick babies, without losing time with their child and worrying about returning to work.

A recent study found that parents of babies born at 30 week gestation or earlier are 10 times more likely to experience depression compared to parents of full term babies.

The Protection from Redundancy (Pregnancy and Family Leave) Act – Came into Force 24th July 2023

This act aims to add extra protections from redundancy during or after pregnancy or shortly after periods of maternity, adoption or share parental leave and is in its final stages having reached royal ascent.

• Aside from those already protected, currently those on maternity leave, the Act extends protection to:
• A pregnant employee who is in “a protected period of pregnancy”;
• An employee who has recently suffered a miscarriage is also under this protection
• Employees returning from maternity
• Adoption leave returners
• Shared parental leave employees returning to work

We’ve also shared some tips on redundancy alternatives too.

Childcare changes – Useful for your employees – Staggered changes from April 2024

We’ve been talking about the effects of financial stress on employees lately and therefore this useful extra support for your employees with young children or dependents will come as a huge relief.

From April 2024 – Working parents of 2 year olds will be able to access 15 hours of free childcare.

From Sept 2024 – This entitlement will be extended to all children from the age of 9 months.

Sept 2025 – Working parents under the age of 5 will be entitled to 30 hours free childcare per week.

Worker Protection (Amendment of Equality Act 2010) Bill: Underway 

The Bill will now go to the Commons, for consideration of Lords amendments, on Friday 20 October.

In brief the amendments are as follows:

Removal of employer liability for third party harassment of employees.

Employers must take “reasonable steps” to protect employees from sexual harassment rather than “all reasonable steps”.

Third party harassment removed

This Bill originally sought to create new legal liabilities in cases of harassment in the workplace. For example, in cases where an employee is harassed in the course of their employment by third parties (including by customers and clients) and the employers fails to take ‘all reasonable steps’ to prevent this. Had this remained the same it would have made the employer liable for third party harassment.

However, after much discussion, this was changed after concerns that the threshold was too high and the more wide-ranging debate around free speech.

Therefore, the law will remain the same and employers will NOT be liable for third-party harassment, unless this is related to a protected characteristic.

Reasonable steps 

In addition, employers must take “reasonable steps” to prevent sexual harassment against their employees at work (it was originally proposed that this should be “all reasonable steps.”)

This extra duty should add extra layers of protection for employees with 45% of women alone saying they have experienced sexual harassment at work and 16% of men have experienced at least one form of harassment.

This bill may be revisited in the near future, so employers should keep an eye on this and review their HR policies on harassment and workplace conduct.

The Workers (Predictable Terms and Conditions) Act 2023: Expected September 2024 

A welcome change for workers experiencing irregular hours, this new act reached Royal Ascent on 18th September 2023. This act gives workers who don’t have regular days, or hours, of work, and workers on fixed term contracts of 12 months or less, the new right to request a more predictable work pattern. 

Employers must respond to requests within a month, with permitted reasons for denying the request reflecting those in the new flexible working bill.

The right to request more predictable working schedules will apply to:

• Workers whose existing work patterns lack certainty (irregular shifts)
• Workers on fixed-term contracts of 12 months or less (seasonal workers/supply teachers etc)
• Agency workers (requests can be made to the agency or the employer)

Sectors that will find this of interest will be retail, hospitality and healthcare who often use more irregular shift patterns.

These changes are expected to take effect in roughly a years’ time and will provide many employees with a better work life balance through great predictability in their work patterns.