UK | Employment Rights 2024: Impact on Payroll & Business
The UK Employment Rights Bill 2024, released on October 10, 2024, brings major reforms affecting payroll processes in the UK. Part of the government’s “Plan to Make Work Pay,” is heralded as the “biggest upgrade to rights at work for a generation.” While most changes start in 2025 or 2026, some begin as early as April 2025, requiring updates to payroll systems and practices. This article highlights key payroll-related reforms under the bill.
Key payroll reforms under the Employment Rights Bill 2024
1. Statutory sick pay (SSP) Changes
- Employees will now be eligible for SSP starting on their first day of illness, removing the previous three-day waiting period. Employers will need to update their payroll systems to account for this change, which may result in increased administrative complexity.
- The £123 per week earnings limit to get SSP will be removed. More employees, including many who earn low wages, will now be eligible for sick pay. Payroll systems need to be updated to make sure they follow the new rules..
2. Guaranteed hours for zero-hours contracts
- Employers must offer temporary workers guaranteed work hours. These workers usually work more than a certain amount of time in a 12-week period. To do this, they’ll need to change their payroll systems to track the hours worked and manage contracts accordingly.
- Employers are required to give adequate notice and provide compensation for canceled shifts. This may cause challenges in payroll calculations, as employers will have to factor in extra payments for canceled shifts.
3. Day one rights
Unfair dismissal and leave entitlements: Payroll systems need to be ready to handle new employee rights from day one. These rights include unfair dismissal claims without a two-year qualifying period and immediate access to paternity, parental, and bereavement leave. This means tracking leave accurately and paying it out when needed.
4. Enhanced protections against harassment
Increased compliance costs: employers will have increased obligations to prevent harassment, which could lead to extra expenses for training and administrative tasks that may indirectly impact budgeting for payroll.
5. Collective consultation on redundancies
Broader scope for redundancy consultations: the requirement for collective consultation on redundancies will now consider all redundancies across all business locations. This change may make payroll more complex during redundancy processes. Employers will need to manage consultations and potential payouts more comprehensively.
6. Fair work agency implementation
New enforcement body: establishing a Fair Work Agency to monitor adherence to employment rights will probably lead to closer examination of payroll practices. Employers may need to invest in ensuring that their payroll systems comply with new regulations to avoid penalties.
Final thoughts
The Employment Rights Bill 2024 brings changes to UK employment law. Payroll processes will need to adapt to new rights for workers. PaySpace ensures automatic compliance with the latest legislative changes. This makes sure your business is up-to-date with the latest laws. We’ll track the bill’s progress and make any needed changes when we know more details.