Employment Relations (Flexible Working) Act: UK payroll and HR legislation update

As UK payroll and HR legislation evolves, professionals need to stay on top of the developments and what they mean. Here’s our latest update on key regulatory changes this year, from Product Legislation Manager, Cybill Watkins.

Employment Relations (Flexible Working) Act 2023

The Employment Relations (Flexible Working) Act gives employees the right to request flexible working from day one of a new job. They will now be able to put in two requests in any 12-month period rather than just one. Staff will also no longer have to explain what impact their request would have on their employer, or suggest how that impact might be dealt with.

Employers, on the other hand, will need to consider these statutory requests seriously and consult with their employees about them. They will also have to provide a good reason within two months should they refuse to grant their request. This waiting period has been reduced from three months.

What does it mean for HR and payroll?

HR professionals will need to review current flexible working policies relating to hours, working patterns, and where work is undertaken to ensure they comply with the Act. They should also check their HR system can handle complex employee work patterns.

Payroll teams, meanwhile, should review flexible working-related processes, current staffing levels, and policies relating to core hours, flexitime, and remote working. It may also be worth considering whether to offer same-day payments rather than BACS to provide professionals with more time to undertake processing or reconciliation.

This act has received royal assent and is due to come into force in early 2024.

Workers (Predictable Terms and Conditions) Act 2023 – England, Wales, and Scotland

This new UK employment law creates a statutory right for workers on non-standard contracts to request a more predictable working pattern. This includes agency workers and people on zero-hours contracts. It also covers people on fixed-term contracts of 12 months or less.

The new right will operate in a similar way to the existing employee flexible working approach, although workers will not be able to request it from day one. Instead, they will need to have worked for the same employer (whether under the same contract or not) at some point during the month immediately before their minimum service period.

Although this minimum service period has not been specified, the government press release indicates it will be 26 weeks. The right to request predictability extends to all workers and employees who are subject to a minimum service requirement. Agency staff can make a request either to their temp agency or hirer.

This request can be made if:

• There is a lack of predictability in any area of their working patterns. This includes the number of hours, days of the week, and times when they work. It also includes contract length.
• Their aim is to obtain a more predictable working pattern and the requested change relates to that.

Workers can make a maximum of two applications in any 12-month period. They must state in writing that they are making a statutory predictable working application and specify the change requested plus the date they propose it should take effect.

What does it mean for HR and payroll?

The government has not provided a firm date for implementation of the new legislation yet. It’s expected to come into force in September 2024, giving employers time to prepare for the changes.

HR teams will be expected to consult with the worker and deal with their request within one month. They will be permitted to refuse requests on six possible grounds:

1. The burden of additional costs would be too great
2. There would be a detrimental impact on the company’s ability to meet customer demand
3. There would be a negative impact on the temp agency, hirer, or employer’s business
4. Recruitment would become more difficult
5. There would not be enough work at the time the (agency) worker proposes to work
6. If structural changes are planned.

Failure to deal with requests reasonably, as well rejection based on incorrect facts, will risk claims based on procedural failings. Employees making a request will also benefit from protection against automatic unfair dismissal and being subjected to a detriment. There would also be a risk of unfair discrimination claims.

Pensions (Extension of Automatic Enrolment) Act 2023

This act gives the Secretary of State for Work and Pensions powers to enact regulations that lower the age at which employers automatically enrol their staff into a pension scheme. While the age limit was previously 22 years, it is expected to fall to 18 years.

The Secretary of State also has the authority to reduce or remove current qualifying earning bands from existing legislation. This means pension contributions could potentially be calculated from the first pound an employee earns, which would streamline the contribution process. It could also boost the potential savings employees, particularly lower earners, could make into their pension pot over the course of their working life.

What does it mean for HR and payroll?

Although the act received royal assent on 18 September, the changes it proposes will require the introduction of a consultation process on how to implement them and over what timescales. As a result, any new legislation is unlikely to be rolled out much before April 2025.

Discover more legislation and compliance updates here.