Employment law changes are coming in 2024, each having a specific impact on employers and employees. These changes include increased wage standards, parental and carer rights, and the ever-complex holiday pay calculations – as an employer or HR manager understanding these changes is critical. Our HR consultants discuss the employment law changes coming in 2024 and what implications they may have on businesses.
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The National Living Wage Increase
On Wednesday 22nd November, the UK Government announced changes to the National Living Wage from April 2024. To break it down easier for you, we have created a comparison table 2023 v 2024. The changes are significant, our CEO Neil McLeese comments “In practical terms, as an example, an employer with 40 employees working a basic 40-hour week will see their basic wage bill increasing by £85k per annum which is the equivalent of starting approximately 4 new full-time employees at the current rate.”
Key points for the National Living Wage increase are the £1.02 more per hour and reducing the age limits from 23 to 21. The increase in National Living Wage amounts to nearly 10% extra with many employees having the potential to be £1800 better off YOY. This is a significant step for enhancing the earnings of lower-paid workers.
Comparison table:
|
April 2023 hourly rates |
April 2024 hourly rates |
Difference |
|
|
23 and over |
£10.42 |
£11.44 |
£1.02 |
|
21 to 22 |
£10.18 |
£11.44 |
£1.26 |
|
18 to 20 |
£7.49 |
£8.60 |
£1.11 |
|
Under 18 |
£5.28 |
£6.40 |
£1.12 |
|
Apprentice |
£5.28 |
£6.40 |
£1.12 |
Pensions (Extension of Automatic Enrolment) Act 2023
The Pension Act is changing significantly with automatic enrolment in workplace pensions age limit being lowered, including people under the age of 22. The UK Government has also lowered the minimum earnings threshold, meaning employers will need to contribute to workplace pensions for employees under the age of 22.
Previously employers didn’t need to contribute to employees’ pensions until earnings reached £6240 annually. This threshold has been reduced to £1 a year. This employment law change is to enable young workers to start saving for their retirement earlier an to benefit from employer contributions from a younger age.
The implementation date hasn’t been confirmed but our HR consultants expect this to significantly impact retirement savings. The main aim of this policy is to create higher security levels for retirement.
The Carer’s Leave Act 2023*
This employment law change grants employees the statutory
right to 1-week unpaid leave to care for a dependent. The act was developed to
address the needs of UK employees with caring responsibilities and give support
to employees trying to balance work and caring duties.
Whilst this law became effective in May 2023, we are
awaiting the UK Government to set out further regulations to facilitate the
full implementation when entitlements can be activated. The legislation
originated as a Private Member’s Bill from Wendy Chamberlain MP and secured
Government support followed by receiving Royal Assent in May 2023.
The Act allows employees with expected caring
responsibilities 5 days of unpaid leave to balance work and caring
responsibilities. It is slated to be fully enacted in 2024, giving employers
time to adjust to new requirements.
HR Consultant Deirdre highlights that this will be a day one
right for employees giving them access to essential support. Businesses will
need to review their existing policies on leave and amend them accordingly.
The Neonatal Care (Leave and Pay) Act*
This significant new piece of legislation gives rights to parents with new-born babies needing neonatal care. The legislation allows parents to take 12 weeks of paid leave, on top of their maternity and paternity
leave entitlements. Support to parents during a critical and often difficult time.
This employment law change will target a specific vulnerable group of parents and children, giving them time and financial support during neonatal care. Stuart C McDonald presented the law and received Royal Assent in May 2023. Whilst the act has been passed, it’s not expected to come into force until 2025 giving employers and parents 2024 to prepare the new entitlements.
COO Helen Hardy welcomes this Act and feels its introduction will bring much clearer guidance and clarity for business owners, as previously business owners had to decide for themselves what was fair and reasonable. Business owners will have access to support packages similar to other statutory payments, ensuring companies aren’t losing out with the additional financial costs. Whilst it’s essential to now include this new Act within the company policy and procedures, it is also very important to provide training to the line managers on how to deal with these sensitive situations delicately as they are almost always the first point of contact for the parent/s.
The employment law change marks a significant advancement in the support for parents within the UK workforce. Including a progressive step for balancing work and family life.
The Protection from Redundancy (Pregnancy and Family Leave) Act*
Further developments for parents in the UK include the enhancement of protections from redundancy to employees during and after pregnancy, or following periods of maternity, adoption, or shared parental leave.
The act was backed by Dan Jarvis, Labour MP for Barnsley Central, and Baroness Bertin a Conservative Life peer, highlighting this is a cross-party support for the initiative. The developments in employment is a further safety net for employees during crucial family-related periods.
Similar to the above two acts, this received Royal Assent in May 2023 with a commencement date of 24th July 2024. Making a clear timeline for both employers and employees for the employment law changes to be implemented.
From July 2024 pregnant employees and those returning from parental leave will be given priority for suitable alternative work within the business during redundancy situations. They are boosting their job security during vulnerable periods.
Holiday pay calculations
In the case of PSNI v Agnew, the key issue centred around the calculation of holiday pay and how far back claims for underpayment could extend. This stemmed from a European Court of Justice decision in Williams V British Airways Plc, which required holiday pay to include regular allowances, overtime, and commission.
The Police Service of Northern Ireland (PSNI) accepted they had incorrectly paid holiday pay but questioned the extent of retrospective claims. The Supreme Court ruled that liabilities could extend back to 1998, the inception of the Working Time Directive (1998), potentially costing PSNI between £30-40 million for 3,380 police officers and 364 civilian employees.
This ruling has significant implications for other employers, especially those who had been awaiting the outcome to gauge their financial risk. In Great Britain, the Deduction from Wages (Limitation) Regulations 2014 limits claims to two years for cases post-July 2015.
However, for Northern Ireland, retrospective claims may be challenging due to a seven-year limit on financial record retention. Further clarity is expected from Tribunal cases in Northern Ireland, though appeals are likely.
A key aspect of the ruling is that the “three-month gap” rule cannot be used in claims about underpayments. Continuity is not broken by a three-month gap between holidays or by a holiday without overtime in the preceding 12 weeks, as the series of deductions are linked by a “common fault.”
Additionally, the Supreme Court’s stance that workers view holidays as a composite whole, without distinguishing between Working Time Directive leave, UK statutory leave, and contractual leave, complicates matters.
Different rules for carryover and pay for various leave types add to this complexity. Employers who differentiate between leave types may continue to do so, provided it’s clearly stated in contracts or policies.
Government Proposals for GB (Effective 1st January 2024):
- Maintain two rates of pay for holidays.
- Allow rolled-up holiday pay for irregular hours/part-year workers.
- No requirement for employers to record daily working hours as per WTR.
- Calculate entitlement for irregular hours/part-year workers as 12.07% of hours worked, addressing ambiguities from Harpur Trust v Brazel.
These proposals do not extend to Northern Ireland.
Helen O’Brien our Senior HR Consultant advises employers on what they should do;
- Do an audit of holiday pay and how it has been calculated.
- Pay correctly going forward from now. Employees still have to claim within 3 months of the last unlawful deduction.
- Any employer wishing to continue to pay differing rates for different types of holiday i.e. normal pay for 4 weeks and basic pay for the rest, should outline this in the contract or in the handbook.
Additional Employment Law Changes for 2024
Alongside these key changes, other reforms and new statutes are also on the horizon, including:
- Flexible Working Laws: The reforms in flexible working laws will enable more employees to request flexible working arrangements. Check out our blog on flexible working.
- EU Discrimination Case Law: This will be codified into UK legislation, ensuring continued protection of rights developed under EU law.
- Employment (Allocation of Tips) Act 2023: This Act prevents businesses from withholding tips from employees, ensuring a fairer distribution of tips in sectors like hospitality.
Implications and Recommendations for the Employment law changes
The employment law changes will have far-reaching implications for employers. Businesses must adapt their policies and practices to comply with the new regulations.
How employers should respond to the changes;
- Employee handbook review looking at HR policies to align with the new legislation.
- Staff Training to ensure HR teams and managers are well-informed about these changes.
- Update payroll and HR systems to incorporate new leave entitlements and pay calculations.
- Seek advice from HR consultants to fully understand the implications of these changes.
The employment law changes in 2024 represent a significant change to the UK workforce by proactively adapting to these changes, businesses can ensure compliance and foster a supportive work environment.
As we navigate the employment law changes, staying informed and prepared will be key to successfully adapting to the new legal landscape.
*Important to note that these new employment laws only apply in England, Wales, and Scotland. For Northern Ireland once the assembly is back up and running, they will decide if similar employment law changes will be enforced in NI.
