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KLG December 2024 Newsletter: Employment Law Yearly Round-up

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Calendar December 28, 2024

As we approach the end of 2024, it’s time to reflect on the significant changes that have shaped the employment law landscape in the UK. With a new Labour Government and Budget, this year has been marked by transformative legislation and policy shifts that have had far-reaching impacts on employers and employees. At Kalra Legal Group, our dedicated team of employment law specialists has been meticulously tracking these developments to ensure our clients remain compliant and well-informed.

2024 Employment Law Highlights

Budget and Wage Increases

The Labour Party’s victory in the 2024 general election has ushered in a new era of economic policies, with several key manifesto promises being swiftly implemented. One of the most notable changes has been the substantial increase in wage rates. The National Minimum Wage has seen a significant boost, rising from £8.60 to £10 per hour, while the National Living Wage has increased from £11.44 to £12.21 per hour. These increases represent a concerted effort to address the ongoing cost of living crisis that has affected millions across the UK.

While these wage hikes are undoubtedly beneficial for workers, they present new challenges for employers. Companies across various sectors are now tasked with adjusting their payroll systems and budgets to accommodate these higher wage rates. It’s crucial for businesses to plan ahead and consider how these increased labour costs might impact their overall financial strategies.

National Insurance Contributions

The Autumn Budget brought further changes to the financial landscape for both employers and employees. In a move aimed at bolstering public finances, the government has implemented changes to National Insurance contributions. Employer contributions have seen a notable increase, rising from 13.8% to 15%. Additionally, the payment threshold has been reduced to £5,000, meaning that employers will start paying National Insurance on a larger portion of their employees’ salaries.

These adjustments to National Insurance are likely to have a significant impact on businesses’ costs. Employers will need to carefully review their financial planning to ensure they can meet these increased obligations while maintaining their operational efficiency.

Proactive Duty to Prevent Sexual Harassment

In the wake of high-profile scandals that have rocked various industries, the UK government has taken decisive action to combat workplace sexual harassment. The Worker Protection (Amendment of Equality Act 2010) Act 2023, which came into force on 26 October 2024, marks a paradigm shift in how sexual harassment is addressed in the workplace. This groundbreaking legislation places a proactive duty on employers to take meaningful steps to prevent sexual harassment before it occurs.

Under this new law, employers are required to implement comprehensive training programs that educate all employees about what constitutes sexual harassment and how to prevent it. Additionally, companies must conduct thorough risk assessments to identify potential areas of vulnerability and take proactive measures to mitigate these risks. The legislation also mandates the implementation of robust reporting procedures, ensuring that employees have clear and accessible channels to report any instances of misconduct.

This shift towards prevention rather than just reaction represents a significant change in the approach to workplace safety and respect. Employers who fail to take these preventative measures may find themselves facing serious legal consequences.

Employment (Allocation of Tips) Act 2023

The hospitality sector has seen a significant overhaul in how tips are handled with the introduction of the Employment (Allocation of Tips) Act 2023, colloquially known as the Tronc legislation. This act has been designed to ensure fair treatment of hospitality workers and bring transparency to the often opaque world of tipping.

Under the new law, employees must receive 100% of their tips, ending the controversial practice of employers retaining a portion of tips for administrative costs or other expenses. The legislation also mandates complete transparency in tip allocation, requiring employers to clearly document how tips are distributed among staff.

This change benefits workers by ensuring they receive their full earnings and helps build trust between employers, employees, and customers. To respond to this change, restaurants and other hospitality businesses must adapt their systems to comply with these new requirements.

Changes to Calculating Holiday Pay

Following the Employment Rights (Amendment Revocation and Transitional Provision) Regulations 2023, the method for calculating holiday pay changed on April 1st 2024. The key modifications include a new holiday entitlement system for irregular hours and part-year workers, where holiday accrual is based on 12.07% of the hours worked by the individual in the previous pay period.

This calculation method effectively converts the UK statutory holiday entitlement for full-time workers (5.6 weeks) into a percentage of holiday against working time. Additionally, the changes reintroduced rolled-up holiday pay for irregular hours and part-year workers, allowing employers to pay holiday pay as an uplift of 12.07% to the normal rate of pay at the time work is done instead of when the holiday is taken. The amendments also include changes to the definition of a week’s pay for holiday pay calculations and modifications to the rules for carrying over holiday entitlement. These changes aim to ensure that annual leave entitlement is lawfully pro-rated to reflect the number of hours actually worked by irregular hours and part-year workers.

Looking Ahead: Preparing for 2025

As we approach 2025, several important changes are looming that will further reshape the employment law landscape. It’s crucial for both employers and employees to stay informed about these upcoming developments and prepare accordingly.

Employment Rights Bill – Day One Rights, Zero Hour Contracts and Fire and Re-hire Changes

The Labour government’s new Employment Rights Bill, unveiled on 10 October 2024, promises to bring about some of the most significant reforms to employment law in recent years. One of the most notable proposals is the plan to make unfair dismissal a ‘day one’ right. This would remove the current two-year service requirement, potentially giving employees greater job security when they start a new position.

Another major change on the horizon is the potential ban on zero-hours contracts. While these contracts have provided flexibility for some, they have also been criticised for creating job insecurity. The government is exploring alternatives that could provide flexibility while ensuring more stable employment arrangements.

The controversial practice of ‘fire and rehire’ is also in the crosshairs, with expectations of stricter regulations or even an outright ban. This would significantly impact how companies approach restructuring and contract negotiations.

Gender Pay Gap Reporting and Equality Action Plans

The Employment Rights Bill also introduces significant changes to gender pay gap reporting and equality measures for organisations with 250 or more employees. Under the new legislation, these employers must now develop and publish comprehensive equality action plans alongside their gender pay gap data, outlining steps to promote gender equality, reduce pay disparities, and support women going through menopause. The bill also requires employers to publish gender pay gap information about their outsourced service providers. A new regulatory enforcement unit will oversee compliance, and failure to publish an action plan will result in the employer being listed on the reporting website. These changes significantly expand the responsibilities of large employers in addressing gender pay disparities and promoting workplace equality.

Neonatal Care Leave

In a move to support new parents facing challenging circumstances, a new day-one right for employees to take up to 12 weeks of leave if a neonate is admitted to hospital for an extended period is expected to come into effect in 2025. This compassionate policy will allow parents to focus on their child’s care without the added stress of job insecurity.

Conclusion and Recommendations

As we reflect on the sweeping changes of 2024 and look ahead to 2025, it’s clear that the employment law landscape is evolving rapidly. The focus on enhancing worker protections and promoting fair employment practices is more pronounced than ever.

At Kalra Legal Group, we strongly recommend that employers take proactive steps to stay ahead of these changes.

Firstly, it’s crucial to review and update all policies and procedures to ensure they align with the new legislation. This may involve significant revisions to employee handbooks, contracts, and internal guidelines.

Secondly, providing comprehensive training to managers and HR personnel on the new legal requirements is essential. This will help ensure that those in leadership positions are equipped to implement and enforce these new rules effectively.

Regular audits should be conducted to ensure ongoing compliance with the latest employment laws. As these laws can be complex and far-reaching, it’s advisable to seek expert legal advice when navigating particularly challenging employment issues.

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