Keeping you in the loop on UK payroll legislation changes and HR updates. Whilst also sharing government reforms and proposed 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.

This blog focuses on legislation announced before the Labour Government came in. You can read more about the upcoming employment law changes here.

We update this regularly so please check back for more updates or get in touch for HR support from Talk Staff.

Explore how the employment policies from the Election could influence your company here. Regardless of the outcome of the election parties may choose to bring their own policies into force or even take inspiration from other parties.

Legislation Changes relevant to HR and Payroll teams

Index of Upcoming Legislation Changes:

• Allocation of Tips
• Auto-enrolment pension
• The Carers Leave Act
• Childcare changes
• Equality Act Updates – Changes for indirect discrimination  
• Flexible Working Bill
• HR and Payroll Support
• Holidays for Irregular Hours and Part-Time Workers
• National Insurance Contributions
• Neonatal Care
• NMW/NLW
• NDAs
• Payrolling Of Benefits
• Protection from Redundancy Act
• Reporting salary advances
• Sick Note Changes
• Statutory paternity pay and leave
• Statutory Code of Practice on Dismissal and Re–engagement
• Student Loan Thresholds
• The Workers Act 2023
• Worker Protection Bill

Round up of the latest Payroll and HR Change Announcements

See the changes below. Typically these are in the order in which they came into force or are expected to come into force but we’ve added some of the most recent announcements at the top, you can use the index above to find the section you’re looking for. Any questions get in touch and we’ll be happy to help.

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The Code of Practice (Dismissal and Re-engagement) Order 2024 – Came into force 18th July 2024

The Code of Practice on Dismissal and Re-engagement comes into effect on 18th July 2024.

The government is acting on “fire and rehire” practices which have crept in following the pandemic. There are concerns that threats of dismissal are being increasingly used as a pressure tactic to implement changes to employment contracts and leave employees in a less favourable position as explained further here. 

This new code of practice hopes to improve communication between employer and employee and put further safeguards in place. 

The Code will apply in situations where employers: 

• are contemplating changing their employees’ terms and conditions, and 
• envisage that if the employees don’t agree to the changes, it may dismiss them and either re-engage them on the new terms or engage new workers on the new terms.

The Code stresses the importance of treating fire and re-hire as a last resort and stresses the important of early communication. The Code will not apply where the prospect of dismissal and re-engagement has been raised with employees or their representatives before 18 July 2024.

Get support with employee contracts and HR policies

Worker Protection (Amendment of Equality Act 2010) Act 2023 – Comes into force on 26th October 2024 

A new law requiring employers to take reasonable steps to ensure the prevention of sexual harassment of their employees, is due to come into force on 26th October 2024, amending the Equality Act 2010 in two regards: 

• This new duty means employers must take reasonable steps to prevent sexual harassment of their employees. Employers must take proactive steps in tackling sexual harassment with the focus in the legislation shifting from redress to prevention. 
• Employment tribunals will have the power to uplift sexual harassment compensation by up to 25% if the employer is found to have breached this new duty. In serious cases the compensation can exceed £50,000.  

However, it should be noted that this new duty doesn’t give rise to freestanding claims and must be attached to a sexual harassment claim. 

Examples for how employers can act now include: 

• Introducing a reporting register for complaints relating to all forms of workplace harassment with clear confidentiality in place. This allows companies to spot trends as they emerge and act faster.
• Review any anti-harassment HR policies, including dignity at work policies and ensure all staff have read and understood the new policy and understand the behaviour expected of them. 
• Put in place any anti-harassment training where required, this may apply to management training, team development or for HR teams. 

Equality Act Updates – Changes for indirect discrimination  – Effective from 1st January 2024

The government have amended the Equality Act 2010 to incorporate several discrimination protections based on EU law with a view to clarify that existing protection from unlawful discrimination was not lost following changes post-Brexit. 

It is recommended that employers take time to review policies regularly considering both points of view (for employer and employees) and seek HR support from internal teams or outsourced HR service providers. 

“Most indirect discrimination cases are won or lost at the objective justification stage. That is, an indirectly discriminatory policy can still be lawful if it can be shown to be a proportionate means of achieving a legitimate aim. Businesses should therefore ensure that they are clear in their decision making about the legitimate aim(s) the policy is advancing.” 

Indirect discrimination happens when a HR policy, rule or working practice aims to be the same for all people equally but may: 

• Put people who share a protected characteristic at a disadvantage 
• Put someone personally at a disadvantage 
• Have elements where the employer cannot justify the course of action 

Examples of indirect discrimination include:

• Gender based indirect discrimination example – A women is forced to leave her job due to a shift pattern that she can’t comply with due to childcare commitments, women are shown to be more effected by childcare obligations so the employer will have indirectly discriminated against the woman unless the practice can be shown to be justified.
• Religious based indirect discrimination example – A observant Jewish engineer seeking an advance diploma doesn’t apply to a specialist training company, despite being qualified to do so because it undertakes the selection exercises for the relevant courses only on Saturdays. the company will have indirectly discriminated against the engineer unless the practice can be shown to be justified.

Thinking of updating your HR policies? – Get in touch for support

Example of indirect discrimination 

An example of indirect discrimination could be if a company has a policy of core hours between 9am and 5pm this will have a particular effect on parents. 

Or if a workplace has a rule that each employee must take a Saturday shift each month, this could be an example of indirect discrimination for religious reasons. 

It should be noted that this kind of discrimination can appear in job advertisements too and should be explored as part of hiring practices. 

Reforms to non-disclosure agreements – Announced March 2024

In order to crackdown on victims being silenced new reforms have now been clarified from the government around non-disclosure agreements (NDAs). 

Victims will no longer be prevented from seeking and accessing support or legal advice or reporting crimes under NDAs. The government is cracking down on misuse of NDAs. In brief: 

• Victims are now never prevented from reporting crimes under NDAs 
• Victims can seek vital support or advice without fear of retaliation and see justice done 
• Builds on launch of campaign to raise awareness of the Victims’ Code 

Lord Chancellor and Secretary of State for Justice, Alex Chalk, said:    

“We are bringing an end to the murky world of non-disclosure agreements which are too often used to sweep criminality under the carpet and prevent victims from accessing the advice and support they need.” 

Rishi Sunak to strip GPs of right to sign people off sick – Expected date TBC

On 19th April 2024 there were announcements that GPs are set to be stripped of the right to sign people off sick. This is set to try and tackle ‘sick note’ culture and there has been a mixed reaction to the news. More updates on this are set to follow.

Other Payroll Changes and HR Updates for 2024-2025 and beyond

National Insurance Contributions cut by 2% from 6th January 2024 and further 2% cuts from 6th April 2024

From January 2024 Employee National Insurance was 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.

On April 6 the National Insurance cuts will take NICs from 10% to 8%, and self-employed workers will see this go from 8% to 6% as announced in the Spring Budget 2024. The average worker will see a saving of £900 per year from the combined cuts cuts since the Autumn Statement 2023, equating to 27 million employees.  

Looking to switch payroll provider? – Talk Staff’s Payroll Switch Guarantee keeps things simple

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 likely recommend calculating holiday pay for affected 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 regarding 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 would 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.

Read more holiday legislation and how to calculate holiday entitlement.

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.

What’s more the statutory pay rates are also rising. We’ll be sharing the 2024-2025 rates shortly. These changes effect SSP (Statutory Sick Pay), SMP, SPP and more.

Auto-enrolment pension expected changes – Date TBC Expected 2025

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.

The IPE recently reported that auto-enrolment changes could add £105bn to young adult’s pensions.

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.

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 is rising too. Almost half a million UK workers will be effected (this is when employers are voluntarily signed up to the Real Living Wage scheme).

Explore National Minimum Wage Rates 2024-2025 here

The Carers Leave Act – From 6th April 2024

This was 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.

Need support from a people-focused team for outsourced payroll? – Speak with Talk Staff

Flexible Working Bill – Employment Relations (Flexible Working) Act 2023 – From 6th April 2024

We’ve published two blogs on the flexible working bill came into force in April 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.

Download a free resources on accessing a job role for hybrid working and creating an effective hybrid working policy below:

Hybrid Working Resources

Employment (Allocation of Tips) Act 2023 – Expected to come into force on 1st October 2024

An important update for employers in hospitality, leisure and services which is expected to come into force on 1st October 2024.

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 – 6th April 2024 and consultation for 2025

The Income Tax (Pay As You Earn) (Amendment) Regulations 2024 (SI 2024/305) aim to simplify the real time information (RTI) reporting process where employees receive advances of salary. Coming into force from 6 April 2024, the reporting of salary advances to HMRC via RTI by employers will be delayed until the payment of the remainder of that salary instalment.

The Income Tax (Pay As You Earn) (Amendment) (No. 2) Regulations 2024 (SI 2024/355) relates to the off-payroll working rules (IR35). The regulations provide for a mechanism by which HMRC, when recovering tax from a deemed employer following noncompliance with the IR35 rules, would be able to account for taxes already paid by the relevant individuals or intermediaries.

Draft legislation: Improving the data HMRC collects from its customers – Expected April 2025

This legislation is aimed at requiring businesses to change the information they provide to the HMRC. The Finance Act 2024 introduced powers to enable the collection of this additional data and for HMRC to specify this. The draft legislation specifies the additional information which will be required from relevant taxpayers from April 2025 if this consultation completes:

• Employers must provide more detailed information on employee’s hours paid via Real Time Information (RTI) PAYE reporting
• Directors within owner-managed businesses will be required to provide the amount of dividend incomes received from their own companies, to be provided separately to other dividend income. Plus the percentage share they hold within their own companies – Via their self-assessment return.
• Self-employed workers will need to provide information on start and end dates of self-employment via their self assessment return.

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

Expected to come into force in 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 with changes from 6th April 2024

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.

“From 6 April 2024 this redundancy protection is extended to employees who are pregnant, but have not yet gone on maternity leave. Also, the protection is extended to those who have recently returned to work from maternity leave, as well as those who have recently returned from adoption leave and a period of six weeks or more shared parental leave.” NHS employers

In addition: A new final rule from the Equal Employment Opportunity Commission clarifies the provisions of the Pregnant Workers Fairness Act

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.

Child Benefit System Reform 

The child benefit system is being reformed, aimed at removing the single-parent wealth penalty and make it fairer. The government are introducing a household-based system in 2026 but has introduced earlier changes to bring in faster relief.  

From April, the high-income child benefit threshold will be raised from £50-60K and raising the level at which Child Benefit is fully repaid to £80,000 – worth £1260 per family on average. This will take 170,000 parents out of paying the child benefit change together. 

Expected Mandatory Changes to Payrolling of Benefits April 2026

HMRC recently published a tax simplification update which confirmed that the payrolling of benefits is likely to become mandatory from 2026, most likely around April that year. This will include the reporting and paying of Income Tax and Class 1A National Insurance Contributions (NICs) on Benefits in Kind via payroll software.

Currently, employees can payroll all benefits with a couple of exceptions:

• Living Accommodation (Employee Provided)
• Low interest and interest free (beneficial) loans

These upcoming changes are meant to simplify process, mitigating the 1.1 million claims for tax relief which are received by HMRC each year. This also allows HMRC to automatically process claims too, and it is expected to impact up to 4 million people annually.

The government is designing a new online service that will allow employees to claim tax relief all in one place, for their expenses, which means they’ll receive tax relief sooner. These details will be announced by HMRC later in the year.

Explore Payrolling of Benefits here

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.

However just because the third-party harassment provisions in the Worker Protection (Amendment of Equality Act 2010) Bill (the Bill) have been removed recently doesn’t mean employers can’t still be caught out under additional HR legislation or by suffering reputational damage, not to mention companies have a duty of care to their employees. Here are some tips:

1. HR Policies – Make it clear that third-party harassment is not tolerated

2. External communication – Share these policies with third parties through the most appropriate means based on your relationship with them

3. Visibility – Display your policies via clear signage citing zero-tolerance policies to deter unwanted behaviour

4. Action – Avoid reputational risk and employee relation based work conflict escalations by acting swiftly in the event of any form of harassment.

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. 

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How our HR and Payroll teams can support you

Our outsourced payroll and HR teams work with you to provide support and advice to keep you compliant and help you to stand out as a progressive employer.  

Speak to us if you’d like support on the coming legislative changes or would like to discuss hiring and retention techniques or explore how our outsourced payroll and HR services can support you in your plans in 2024 and beyond. 

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Please note that the information in this blog was created based on the integrity of reputable links at the time of publishing. These blogs should be used for guidance only, you should always check information further before taking action as sources may update over time. Talk Staff holds no responsibility for implementation or loss

Last Updated on 3 months by Hannah Ingram