Recent employment law updates employers need to know about

Last Updated: February 28th, 2024

In this guide, we take a look at some of the key updates for 2024, which SME leaders should stay on top of, to ensure a compliant working environment is fostered.

The Equality Act 2010 (Amendment) Regulations 2023

The amendments to the Equality Act became effective from 1 January 2024. The key amendments are in relation to:

  • Direct discrimination – the act now allows for more favourable treatment in respect of pregnancy, childbirth and maternity. This means that a man cannot bring a claim for direct sex discrimination on these grounds. Further, less favourable treatment of a woman because she is breastfeeding at work, will constitute direct discrimination on grounds of sex. Lastly, unfavourable treatment after the protected period (during pregnancy to the end of maternity leave) will now constitute discrimination, whereas previously, discrimination was only during the protected period.
  • Indirect discrimination – a person who does not share a protected characteristic (i.e. age, race, religion, disability or gender) with a disadvantaged group, suffers substantially as the same disadvantage as the group, can bring a claim for indirect discrimination.
  • Discrimination and recruitment – there is increased protection against discrimination in the recruitment process. Employers will be liable for discriminatory comments made about recruitment, even if it is made outside the recruitment process and there is no identifiable victim.
  • Clarifying the definition of disability – Currently, disability is defined as a physical or mental impairment, which effects an individual’s ability to carry out their normal day-to-day activities. Under the new definition, an individual can be classified as disabled, if they are able to demonstrate that their impairment substantially impacts their ability to participate in their working life equally with their colleagues.

Following the changes, SMEs are likely to suffer significant consequences, as they widen the scope for discrimination claims. SMEs should consider providing up-to-date equality awareness training for all managers, so that the business can remain compliant with the recent changes.

Holiday entitlement and pay

The government published its new guidance on holiday pay and entitlement on 1 January 2024. The key changes for employers are:

  • Carrying forward holidays – workers will be able to carry forward holidays in circumstances where the employer fails to recognise the right to paid holiday, fails to provide reasonable opportunity to take leave, or fails to warn workers about losing holiday if not used. Employees will also be able to carry forward leave if they aren’t able to take leave due to statutory leave or sickness. Employers will need to build effective HR systems, to ensure that leave is not inadvertently carried forward.
  • Holiday entitlements – the government has decided not to introduce a single rate for calculating holiday pay. Workers will continue to receive 4 weeks of holiday at ‘normal pay’ and 1.6 weeks of holiday at ‘basic pay’. Whilst many employers chose not to distinguish between the 2 rates and simply pay the full 5.6 weeks at ‘normal pay’, those that don’t will continue to use complex calculating systems.
  • Irregular hours and part time workers – under the new rules, irregular and part time workers will be able to calculate their holiday pay in hours, rather than in days. For holidays commencing from 1 April 2024, a new accrual method calculates holiday entitlement at 12.07% of hours worked in a pay period in the first year of employment and beyond, accrued at the end of each pay period and subject to a total cap of 28 days of holiday each year.
  • Rolled up holiday pay – Employers can pay a worker holiday pay at the same time as basic pay (rolling the two payments together). Employers will be allowed to pay rolled up holiday to part-time and irregular workers, where it is calculated on the basis of 12.07% of all pay for work done in a pay period, paid at the same time as the worker is paid for the work done.

Adapting to the new regulations may require significant resources, particularly for SMEs with limited HR capabilities. However, by embracing these changes, SMEs can position themselves as employers of choice, attracting and retaining top talent in an increasingly competitive marketplace where talented workers are hard to find.

Fire and rehire

Fire and rehire refers to when an employee is fired, but then rehired on new terms, which are usually less favourable. The government will be publishing its finalised statutory Code of Practice on fire and rehire dismissal tactics in spring 2024. Further, tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation, if an employer unreasonably fails to comply with the Code of Practice. If your business is looking to change contractual terms imminently, please keep an eye out for this.

Rise of Wages

From 1 April 2024, the National Living Wage will apply to workers aged 21 and over (currently aged 23) and will jump from £10.42 to £11.44 per hour. This change will impact many SMEs, as wages will rise, which could result in SMEs either having to increase costs or reduce the workforce.

Changes to flexible working

From 6 April 2024, the right to request flexible working will become a day one right, which removes the current 26 weeks’ (6 months) qualifying period. Employees will be able to make 2 statutory requests in any 12-month period, whereas currently, employees can only make 1. Further, the changes also remove an employee’s obligation to explain what effect (if any), the request may have on the employer and how the employer might deal with it.

The changes will also bring new obligations for employers, who must first consider flexible working requests, having first consulted the employee, before outright rejecting them, and to provide a response within 2 months for any requests, which is less than the current 3-month deadline.

These flexible working changes reflect the government’s aim to create adaptable working environments, however, they create greater challenges to SMEs who rely on the workforce to be present at the workplace. The changes could result in greater disruption and friction in the workplace, even from day one, if requests are not granted, as well as SMEs having to reopen employment contract negotiations, even after the first day, to combat the change.

SMEs will need to consider redrafting and reviewing practices and policies, as well as updating HR system to effectively monitor flexible working requests.

Family friendly rights

From 6 April 2024, new rights will come into force to protect carers and new parents. The key changes are:

  • Carer’s leave – new changes will now allow employees to take 1 week’s unpaid leave, to care for a dependent with long term needs. The leave can be taken in part or in whole in a block of 1 week, with the notice requirement being twice the leave period or 3 days, whichever is longer.
  • Protection from redundancy – currently, the law protects pregnant employees or those returning back to work from maternity, adoption or shared parental leave, by allowing protection in redundancy situations. For example, having the right to be offered suitable alternative roles. Now, the protection will further extend to expectant mothers, during pregnancy and new parents returning to work from leave, who will become eligible for 18 months of protection after childbirth. If your company is considering a restructure in 2024, you should consider these changes.
  • Paternity Leave – a minor change is expected to be made, to allow paternity leave to be taken in 2 separate blocks at any time within the first year after childbirth, rather than within 8 weeks.

TUPE

From 1 July 2024, the government will allow more circumstances in which direct consultations between employers and employees in TUPE transfers can take place, rather than going through an elected employee representative. The regulations will apply to businesses with fewer than 50 employees or transfers involving less than 10 employees. This change will help SMEs streamline the transfer process.

Predictable working pattern

From September 2024, the government will introduce further protection for workers and agency workers, who will be given a new statutory right to request more predictable working patterns where there is a lack of predictability.

Employers should note that whilst workers have the right to make the request, employers have the right to reject them.

Preventing sexual harassment

From October 2024, employers will be under a duty to take proactive steps to prevent sexual harassment in the workplace. A new Code of Practice will be issued to support this change. Employers should note that where a claim for sexual harassment has been upheld by a tribunal, there will be a power to uplift any compensatory award by up to 25%, if the tribunal considered that an employer has failed to take reasonable steps to prevent harassment.

Employers should review harassment policies and roll out periodic training on harassment in the workplace to all employees, to ensure a safe working environment. Failure to comply could result in financial penalties and a damage to reputation.

We can help

The challenges for SMEs will be in the implementation of these changes. Adapting to the new regulations will require updating employment contracts, revising employee handbooks and updating company policies. We understand that SMEs with limited resources don’t have the luxury of an in-house employment team and that’s where we can support you. Please get in touch.

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