As we begin to plan our 2024 HR “to do” list, the government has been busy passing new legislation to take effect, in some cases from 1st January 2024. As part of a series of updates, Emma O’Connor, Legal Director and Head of HR Training gives a summary of the key January 2024 changes before moving to discuss April changes and beyond in later articles, and what these changes mean for HR and leadership teams.
Signalling a new post-brexit dawn
As part of the government’s plans to retain certain key EU legislation and case law, we saw a number of changes introduced into UK law from the start of the year in some instances. From 1st January, EU law will no longer have supremacy over UK domestic law and UK laws no longer have to be interpreted in line with EU law (subject always to legal caveats).
So that certain legal rights and protections are preserved in UK law, we saw a number of key changes, particularly in the area of holiday and holiday pay, which employers need to be aware of. The key changes and implementation dates are:
Amendments to the Equality Act 2010
From 1 January 2024, the following protections were specifically legislated for:
direct discrimination protection for women who are pregnant, on maternity leave or who are breastfeeding;
a specific provision outlawing indirect associative discrimination;
a new provision relating to discriminatory statements about recruitment;
an amended definition of ‘normal day-to-day activities’ in disability discrimination law to include an inability “to participate fully and effectively in working life on an equal basis with other workers”; and
a single source test in relation to equal pay claims.
The government is not going to issue any new guidance to these legislative changes because these are rights and protections workers already had under previous EU law. Of course, they are open to tribunal interpretation, particularly, in relation to what participating “fully and effectively” in working life might look like.
Amendments to Working Time Regulations and new guidance issued
Please note there are some differing implementation dates which are listed below. There is also updated holiday guidance which we recommend having a look at as it gives some additional information for HR and payroll teams as to the changes.
There are some significant changes to holiday pay, calculating holiday and holiday recording keeping that should be noted:
Recording keeping – there are changes to the need for employers to maintain records of working hours under the Working Time Regulations 1998. From 1st January 2024, employers will need to keep records which show they can demonstrate compliancewith the Working Time Regulations 1998 as well as maintaining adequate records in the context of a given workplace and working patterns.
Carry-over of annual leave – whilst many employers already allow for this, there are new provisions which specifically allow holiday to be carried over, where holiday has not been able to be taken, in the following situations:
due to statutory maternity/family leave;
where the employer has either failed to give the worker a reasonable opportunity to take the holiday or failed to tell them that if not taken, holiday will be lost; or
where there has been confusion over the status of the worker. There are different time frames as to how long unused holiday can be carried over and also how much holiday can be carried over. These are explained in the guidance. For example, in cases on sickness absence, the rules mirror existing EU caselaw which says 20 days can be carried forward from the end of the holiday year in which the leave was not taken, and then carried forward for 18 months.
COVID-19 holiday carry-over rules – these are now repealed and so any accrued “lockdown-related” leave not taken by 31 March 2024 will be lost.
Calculating holiday pay and the term “normal remuneration” - This is important to note: when calculating holiday in relation to the EU 4-weeks’ holiday, it should include (amongst other things) commission, overtime pay and any other payments which are “intrinsically linked” to the contract of employment (note - this is also the case for the additional 1.6 weeks’ leave for irregular hours and part-year workers) which are paid to the worker immediately prior to them taking holiday (note too that the reference period for calculating average earnings for irregular workers is different).Most employers had already adopted this practice, given previous UK appeal cases which followed EU caselaw. However, this practice is being specifically adopted to UK holiday legislation from 1st January 2024.
Irregular and part-year workers: rolled up holiday pay and percentage uplift – the government have confirmed that for holiday years which start on/after 1st April 2024, employers will be able to use an uplift of 12.07% against a worker’s normal rate of pay to calculate holiday pay. Also, for irregular and part-year workers, employers will be able to roll-up holiday pay as part of – but separate to – their normal pay. This also avoids the issue created by the recent case of Harpur Trust -v- Brazel, where it was held a part-year worker would be entitled to more holiday than a part-time worker. If rolling-up, please remember to note this payment specifically on the pay slip to avoid confusion.
Leave entitlement should be calculated using an accrual rate of 12.07% of hours workedin each pay period rounded to the nearest hour (there are some differences in holiday accrual during the first 12 months of work).
National Insurance rates cut – 6 January 2024
National Insurance rates were cut by 2% (from 12%) for those earning between £12,570 and £50.270. Self-employed workers will pay 9%. Class 2 National Insurance for the self-employed will be abolished.
The next steps and HR action points
2024 looks like a bumper year when it comes to legislative changes, and we will be updating our readers and audiences in the coming months on the additional changes we can expect this year. In terms of the January changes, the changes to holiday and calculating holiday pay are probably the most significant for HR teams and payroll department. Audit holiday and holiday pay – when is the holiday year? What are staff taking – if they are not taking their holiday entitlement, why not? How is holiday pay calculated and do you need to make adjustments? What are the risks if we do not? Do we need to take advice when it comes to other payments paid to workers and whether they should be paid with holiday pay?
There will be pressure on HR to ensure that practices, policies, and procedures are up to date and that managers are aware of the changes, not just in January but also later this year – and what they mean in terms of people management and risk. Training, raising awareness are all areas Boyes Turner’s HR Training Academy can assist with, so join our mailing list, accept invites to our webinars and speak to us about manager and HR training.
Speak to us
If you want to discuss the new holiday rules or want to discuss how you can roll out management training, then please contact [email protected].
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.