Every so often, the payroll world sees a flurry of activity in the U.K. and this year has been one of those times. Several new bills have been passed that will enact change across a range of topics and issues, some of which could impact payroll.
The legislative process can be a long and arduous journey for some of these bills. However, many of those that could significantly impact payroll have worked their way through the system over the past year and are now ready to be implemented.
Another thing to note with these bills is the powers of the Northern Irish government. Employment law is devolved in Northern Ireland and care should be taken to ensure compliance with the correct legislation when operating in this jurisdiction.
Some of the bills affecting upcoming U.K. law and regulations include paternity leave, the Carer’s Leave Act, the Neonatal Care Act, employment, pensions, and more.
Paternity (Leave and Pay) Bill
This private member’s bill (the proposals were initially introduced by a member of parliament, not necessarily the sitting government) seeks to make taking paternity leave easier and the notice requirements more proportionate to the amount of leave taken. The changes being introduced are as follows:
- New parents will be able to take leave in two non-consecutive periods of one week or a single two-week block. Currently, if one week is taken, a second week cannot be taken at a later date.
- Leave can be taken within 52 weeks of the birth, or placement in the case of adoption, rather than the current limit of 56 days.
- Notice of entitlement will be required 15 weeks prior to birth or placement. This is the current notice period for declaring when leave will be taken, however, only four weeks’ notice will be needed prior to taking paternity leave.
Carer's Leave Act 2023
This is another private member’s bill. This bill introduces a week of unpaid leave, which can be taken in full or in half day increments. This will be a day one right. There’s no indication of when this is will be implemented. This new entitlement will give workers who have a responsibility for arranging or providing care to a dependent some additional flexibility and peace of mind. As a statutory day one right, this would ensure workers can exercise their right to the leave as and when it is needed, even when in new employment.
Neonatal Care (Leave and Pay) Act 2023
Reaching Royal Assent (the last stage in a bill becoming part of U.K. statute) on 24 May 2023, the neonatal care bill brings in some slightly more complex parental leave. The government understands that the arrival of a new family member can be a stressful time, and it can be made more stressful when the newborn requires neonatal care. This can mean parents end up spending some of their valuable parental leave in a hospital instead of at home getting used to family life as the statutory leaves are intended for.
This new leave entitlement will do the following:
- Allow up to 12 weeks of leave for employed parents where a child needs neonatal care. This will be in addition to other leave entitlements, such as maternity and paternity leave.
- Be given when at least one week of uninterrupted care is required
- Be taken within 68 weeks of the child’s birth
- Be a day one right with limited evidence requirements
There will be a pay element for eligible parents. Entitlement to pay will mirror the entitlement to maternity pay and the usual earnings triggers in the U.K. It’s likely to be paid at the statutory amount.
Employment (Allocation of Tips) Bill
The U.K. is also considering new rules to protect workers who receive tips. The allocation of tips legislation will do the following:
- Make it unlawful for employers to withhold any tips from staff
- Give employees the right to request information on their employer’s tipping records
For companies where tipping is common, this new right will require robust and accurate tipping data to be collected. It will also need to be readily available to provide employees with information to ensure they’re paid the tips they’re due.
The government has committed to developing a statutory code of practice to provide businesses and staff with clear advice or guidance on how tips should be handled and distributed.
Pensions (Extension of Automatic Enrolment) Bill
This bill has very recently made its way through Parliament, completing its journey on 18 September 2023. Again, this is a private member’s bill that allows the government to make two main changes:
- Abolish the lower earnings limit (LEL) for being automatically enrolled into a pension scheme.
- Reduce the age for being automatically enrolled to 18 years old.
These changes will bring many more people into automatic enrolment and should help many young savers on their way to reaching a good living standard in retirement. The abolition of the LEL will also allow those with multiple part-time jobs to be enrolled where previously they may have been excluded.
This is fantastic news for savers. However, employers are understandably concerned about the increased costs they may face. As a result, the Department for Work and Pensions (DWP) has committed to a further consultation on the implementation of these changes. Additionally, the Northern Irish government may also consider implementing the same changes. Ideally, the implementation of these changes would align so we don’t end up with a disparity in pension entitlement across the U.K.
Employment Relations (Flexible Working) Bill
It’s been four years since workers in the U.K. began flexible work schedules and many people have become used to this new way of working. But have flexible working request rules kept pace? This private member’s bill makes the request process easier and less rigid for employees by introducing the following changes:
- Flexible working will be a day one right (currently, employees must wait 26 weeks before making a request)
- Two requests can be made in a 12-month period, rather than one request
- Employers have two months to respond—a decrease from the current three-month timeframe
- Employees must be consulted before rejection to try and reach a mutually beneficial arrangement (rejection reasons have changed)
- Employees will no longer need to provide the negative impacts of their request. This is for the employer to consider themselves.
These changes strive to create a collaborative process and eliminate the employer versus employee approach. It encourages discussion and middle ground where a request cannot be accepted. Employers are encouraged to understand these changes ahead of their implementation as the processes involved may not be as prominent in day-to-day work.
Workers (Predictable Terms and Conditions) Bill 2023
Flipping flexible working completely on its head, the final private member’s bill to be discussed seeks to bring some predictability to workers. Predominantly for workers on zero-hours contracts, this new process will allow requests for a predictable working pattern or number of hours.
This is to provide workers the peace of mind that they’ll receive enough work to get enough pay. This will not be a day one right as time is needed to assess the working pattern given before a change can be requested. Employers will have one month to respond when a request is submitted, which is a shorter response time than that of the flexible working requests. Like the flexible working requests, workers will be able to make two such requests in a 12-month period.
Clearly, private member’s bills have a profound impact on the advancement of workers’ rights in the U.K. As previously stated, these changes can have a huge impact on payroll professionals, so our processes will need to be on the periphery until they come into law and can be incorporated into our processes.