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HR and payroll legislation is a complex and ever-moving feast. So here is an outline of some of the most important changes, updates and new developments in the UK and Ireland to help you keep on top of it all.
What current payroll and HR legislation changes mean for employers
Retained European Union Law (Revocation and Reform) Act 2023
This act means that the UK government can now repeal or assimilate any retained European Union (EU) legislation. The statute came into force on 29 June 2023.
What does it mean for payroll and HR?
A significant amount of existing UK payroll and HR legislation originated in the EU and so is subject to assessment for suitability by the government. For example, the Department for Business and Trade (DBT) ran a consultation seeking views on reforms to Working Time Regulations (WTR) and TUPE [Transfer of Undertakings (Protection of Employment) Regulations].
Under discussion with regards to WTR were whether to:
- Change record-keeping requirements for workers choosing to opt out
- Merge current annual leave entitlements as outlined in Section 13 and 13A
- Introduce rolled-up holiday pay
Under debate with regards to TUPE was whether to:
- Change the consultation requirements to simplify the transfer process
There has also been talk of consolidating TUPE into a single set of redundancy rules rather than having them continue to exist on a standalone basis.
There is no word yet as to the outcome of the consultation. But with so many other laws also to be considered, it could be some years before the process is complete.
Statutory Paternity Pay
In response to a public consultation, the UK government plans to amend current legislation with the aim of giving new fathers more flexibility over how and when they take paternity leave.
Today, employees can take their paternity leave in one- or two-week blocks during the first eight weeks after their child has been born or adopted.
They receive statutory pay of £172.48 per week or 90% of average weekly earnings, whichever is lower.
But the amended legislation will enable them to split their leave into two blocks of one week each.
They will also be able to take it at any point during the first year their child is born or adopted.
But to do so, they will need to give the employer notice of their intent 15 weeks prior to the child’s expected arrival and four weeks before each period of leave.
What does it mean for payroll and HR?
Questions have been raised over whether these legislative changes are likely to make much difference to currently low levels of paternity leave uptake. This is because, according to research in June published by the Trades Union Congress, 53% of families struggle financially when fathers take this kind of leave.
As a result, the Chartered Institute of Personnel and Development (CIPD) has called for paternity or partner provision to be increased to six rather than two weeks and for employees to be paid at or near their full rate of pay. Today the UK has the least generous paternity leave entitlement in Europe.
Protection from Redundancy (Pregnancy and Family Leave) Act 2023
This new law provides protection from redundancy for:
- Pregnant women in a ‘protected period of pregnancy’
- Employees who have recently suffered a miscarriage
- Recent returners from maternity, shared parental, and adoption leave
They will get priority access to redeployment opportunities over other redundant employees. The Act came into force on 24 July 2023.
This is in addition to the Maternity and Parental Leave etc. Regulations 1999, which continues to offer protection to those on maternity, shared parental, or adoption leave.
What does it mean for payroll and HR?
The Act provides limited details on the protection offered to these new categories of employee. This includes laying out how long they will be covered for and how to calculate a “protected period” of pregnancy.
For returners from maternity and adoption leave, consultation and other resources appear to indicate they could receive six months’ protection. However, this is not clear for other categories of employee. Likewise, an 18-month ‘protected period’ of pregnancy will start once an individual informs her employer of her situation – although a new provision also points to the protected period beginning at the end of pregnancy.
The aim here would be to cover any miscarriage taking place before employers were aware the pregnancy existed. This enables employees to receive protection under these circumstances too. Currently the law only covers miscarriages that take place after 24 weeks, which is when entitlement to maternity leave starts.
A lack of clear information on the details of the Act means employers cannot currently take concrete action. But they should take time to think through any potential implications. These include the likely consequences of failing to offer suitable alternative vacancies to protected employees.
The existing law, which entitles women on maternity leave to redeployment opportunities, means they can claim they were subject to an automatic unfair dismissal should employers fail to do so, for instance.
Pension auto-enrolment in the Republic of Ireland
The rollout of Ireland’s Automatic Enrolment Retirement Savings Scheme is now scheduled for Q3 2024, but this may yet change due to operational needs. It is expected to cover 750,000 private sector workers between the ages of 23 and 60.
To be eligible, these employees will need to earn more than €20,000 per annum up to €80,000, and not be a member of another occupational pension scheme. There is an increasing contribution scale starting at 1.5% for the employee and employer, and this will reach 6% each at year 10 of the scheme. There are currently no plans to allow for additional contributions, nor reduced contributions.
What does it mean for payroll and HR?
Only one in five payroll and HR professionals said they felt completely ready for the impending roll-out when asked earlier this year. A concerning 43% were either ‘somewhat’ or ‘completely’ unprepared for it.
To make matters worse, 50% indicated they have ‘very little’ or ‘no’ understanding of what the scheme would mean in practice.
Our report Prepared for pension auto-enrolment? offers insights and recommendations for organisations getting ready for the change:
- The figures on how prepared companies in Ireland are
- What investment plans and forecasts firms are making
- How they plan to adjust software and services for the scheme
- Learnings, insights, and pitfalls to avoid from UK auto-enrolment
- Key steps to prepare effectively for auto-enrolment in Ireland
- How to align payroll, HR, and finance for a smooth transition
