There has been a flurry of changes in employment law announced, particularly in the past few months that will impact employers in 2024. We have outlined the top ten changes and what employers should do to prepare for the year ahead.
1. National Minimum Wage
With the Chancellor’s Autumn Statement we had confirmation of significant increases and changes to the National Minimum Wage (NMW) and National Living Wage (NLW) rates. See our article here for details.
For the first time, the top rate (NLW) will apply to workers aged 21 and over. Previously that rate applied to those aged 23 and over. The new rates will take effect from 1 April 2024.
These are the largest ever cash increases we have seen to the minimum wage. While they are undoubtedly going to be welcome for the lowest paid workers in society, they will also hit businesses at a time when the economy remains uncertain.
Employers may feel a knock-on effect and wish to review and increase the wages of those near the rate of the NMW and NLW in order to maintain a clear differential in their workforce between the minimum payment rate.
Employers must ensure the correct minimum wage payments are made. Not doing so risks claims from staff, paying arrears, significant penalties and reputational damage.
2. Rolled up holiday pay permitted for certain workers
Rolled up holiday pay has been unlawful since a European Court of Justice case ruling in 2006 on this point, on the basis it would discourage workers from taking their statutory holiday entitlement. Nevertheless, some employers have continued with this practice, in particular, for workers with occasional or irregular hours of work where doing otherwise might be impractical or complicated.
Rolled up holiday pay means an employer pays workers an additional sum on top of their hourly rate of pay, so that the additional sum is intended to represent their holiday pay, instead of the worker taking time off work at the time they receive their holiday pay.
As a welcome change for employers, the government is introducing new legislation which will give employers the option to use rolled up holiday pay. But, this will be limited only to workers with irregular hours or who work part of the year.
This change will apply to employers with holiday years that start from 1 April 2024. See our article here for further detail.
Employers who wish to make use of this should verify the eligibility of their staff and review what processes could be introduced to ensure legal compliance.
3. New accrual system to calculate holiday pay at 12.07%
The recent case Supreme Court ruling in the case of Harpur v Brazel made the calculation of holiday pay for irregular and part-year workers more complicated and expensive for employers. In effect the government is overruling this decision and re-instating the principle previously used by many employers, introducing new legislation permitting holiday pay to be calculated at the hourly rate of 12.07%. This applies to holiday years from 1 April 2024 and is subject to a maximum of 28 days each year. See our article on holiday pay for more information.
4. The right to request flexible working arrangements
Changes to the right to request flexible working arrangements are due to come into effect during 2024. Under a flexible working request an eligible employee can ask for their terms and conditions to be changed. The request could include a variety of practical solutions such as working from home, job sharing, part-time work, altered working hours, term time working.
The key changes will include for this right to apply from day one of employment. This change is due to take effect for flexible working requests made on or after 6 April 2024. Currently, an employee needs to have 26 weeks’ continuous employment to make a flexible working request. A further change is that employees will be allowed to make two flexible working requests in each 12-month period. At the moment they are limited to one statutory request a year. It is likely that these legislative changes will all come into force on 6 April 2024. See our article on flexible working for more detail on these changes.
We advise employers to have a flexible working policy in place to ensure that the correct process is followed when requests are made. If you already have a policy in place, make sure that it is up to date when the new regime comes into effect.
5. Predictable working
A new statutory right for workers (to include agency workers) to request a more predictable working pattern is due to come into effect around September 2024. It will be relevant for workers whose existing working patterns are uncertain in terms of the hours or times they work, e.g. casual workers and workers on annualised contracts, and to those on a fixed term contract of 12 months or less. The government has indicated the qualifying period for this right will be 26 weeks’ service, but workers will not need to have worked continuously.
The procedure to make a such request will be similar to the process of making a flexible working request. It will be in writing and can be refused on specific grounds. Acas has launched a draft Code of Practice which addresses the handling of such requests and there is currently a consultation on the Code that closes on 17 January 2024. The Code will be taken into consideration by employment tribunals and courts in relevant cases, but will not be legally binding.
6. Reduced TUPE consultation obligations for smaller scale transfers
For smaller scale TUPE transfers occurring on or after 1 July 2024 employers will no longer be required to allow employees to elect employee representatives for the purpose of complying with obligations to inform and consult about the transfer. This applies where there are no current employee representatives in place and to TUPE transfers in the following circumstances:
- Where an employer has less than 50 employees, irrespective of the size of the transfer; or
- Where the proposed transfer includes less than 10 employees, irrespective of the size of the employer.
The government could have chosen to make further changes to the TUPE Regulations to help simplify this complex area of law for employers, but has not done so. See our article here for further detail.
7. New duty to take reasonable steps to prevent sexual harassment
New legislation has been passed to introduce a duty for all employers to take reasonable, proactive steps to prevent sexual harassment of employees in the course of their employment. This comes into force in October 2024, applying to protect workers against unwanted conduct of a “sexual nature” and to all genders. Claims for breach of this duty may be made in the Employment Tribunal, but must be attached to a claim for sexual harassment, this is not a free-standing claim.
Employers breaching the new duty could be subject to enforcement action by the Equality and Human Rights Commission and/or an uplift of up to 25% in any compensation awarded if a tribunal finds that an employee has been subjected to sexual harassment and the employer failed to take reasonable steps to prevent it.
Employers should be introducing and updating where necessary policies and procedures dealing with harassment and supporting staff to speak up about it, along with providing relevant training to staff members.
For further information on this new duty read our article here.
8. Employers to ensure tips and service charges are allocated fairly
New legislation is expected to come into effect in May 2024 requiring employers to ensure all tips, gratuities and service charges are allocated fairly and transparently between their workers. It requires an employer to have a written policy on how it deals with tips, gratuities and service charges. Employers will need to keep records of such payments received for three years.
It is notable that there is a 12 month limitation period for related claims to brought by a worker (in employment law this is often three months). An employment tribunal can require an employer to review their tip allocation policy. Employers can be required by an employment tribunal to pay tips, gratuities and service charges not just to the worker who has brought a claim for this, but also to any workers employed by the employer. Compensation of up to £5,000 per claimant can be awarded to reflect additional financial loss caused by non-payment.
9. New right to leave for carers
Currently there is no specific right for carers to take leave. The new legislation giving effect to new rights for carers is due to come into effect on 6 April 2024.
Carers will be entitled to at least a week of unpaid leave in each year, as a day one right. The leave can be taken by employees to provide or arrange care for a dependant with a long-term care need. A “dependant” for these purposes will mean a spouse/civil partner, child or parent, someone who lives in the same household as the employee (other than as a tenant or lodger) or someone who reasonably relies on the employee to provide or arrange care. See here our article here for detail on the changes due to take effect.
Employers should consider putting their own policies in place to address the needs of unpaid carers taking into account the new developments in this area and training their managers to deal with such leave requests.
10. Extending redundancy protection for pregnant women and new parents
From 6 April 2024 there will be extended protection from redundancy during pregnancy and for 18 months after birth or placement of a child for employees taking maternity, adoption or shared parental leave. These employees will have prioritised rights to be offered suitable, alternative employment vacancies.
The new law extends the priority already granted to those on maternity and adoption leave to now include an extended “protected period” of pregnancy along with 18 months from the first day of the estimated week of childbirth. This protected period can be amended to be 18 months from the precise date of birth, if the employee gives their employer notification of this date before the end of their maternity leave. Similar protection will also be given to parents taking adoption leave for a period of 18 months from placement for adoption. For employees taking shared parental leave, the protected period will be 18 months from birth, subject to the parent having taken a period of at least six consecutive weeks of shared parental leave. See our article here for further detail.
The year ahead in 2024 is set to be eventful with key changes to employment law, with wide reaching impact the like of which we haven’t seen for sometime. Our Employment team is helping employers navigate the way ahead. If you require any assistance please get in touch.