Key Developments for legal, compliance, HR and D&I professionals - 2023/2024

Employment

Pay – Holiday pay

Aims to simplify holiday pay calculations by making rolled-up holiday pay (12.07% of pay) lawful for part-year workers and those who work irregular hours, defining normal renumeration and restating EU case law to allow statutory leave carry over in certain circumstances.

The government has published a draft statutory instrument which is expected to come into force on 1 January 2024, and the changes will apply to holiday years beginning on or after 1 April 2024.

Pay – NLW increases

The government has accepted the Low Pay Commission’s recommendations on minimum wage rates. This is the largest ever increase to the minimum wage in cash terms. The National Living Wage will apply to all workers aged 21 and over for the first time (previously applying only to those aged 23 and over).

The annual increases to the minimum wage and national living wage with effect from 1 April 2024 are as follows:

• 21 and over - £11.44 (increase of £1.02)

• 18-20 - £8.60 (increase of £1.11)

• 16-17 and apprentices - £6.40 (increase of £1.12)

The accommodation offset will £9.99 per day (increase of 89p).

The rates will apply from 1 April 2024.

Pay – Hospitality workers pay

An obligation on employers to pass 100% of tips to staff with no reductions, other than tax.

Received Royal Assent on 2 May 2023. Regulations made on 31 July 2023. Expected to come in to force in May 2024.

Family Friendly – Carers leave

A new right to one week’s unpaid leave to provide care for a dependant with a long-term care need.

Received Royal Assent on 24 May 2023. Expected to come in to force during 2024.

Family Friendly – Neonatal leave and pay

A new right for parents of premature or sick babies to one week’s paid leave for each week their baby is in neonatal care.

Received Royal Assent on 24 May 2023. First of seven new Regulations passed on 9 August 2023. Expected to come in to force around April 2025.

Family Friendly – Flexible working

Changes to the rules on the right to request flexible working, including allowing up to two requests a year.

Received Royal Assent on 20 July 2023. Regulations and statutory code of practice to be issued. Expected to come in to force in the second half of 2024.

Diversity and Inclusion – Enhanced redundancy protection

Protection against redundancy during pregnancy and for a period after returning to work.

Received Royal Assent on 24 May 2023. Details to be set out in Regulations. Expected to come in to force during 2024.

Diversity and Inclusion – Workplace harassment

A new duty on employers to take reasonable steps to prevent sexual harassment.

Received Royal Assent on 26 October 2023. EHRC to publish statutory code of practice. Act to come in to force on 26 October 2024.

Industrial Action – Minimum Service Levels  

Minimum levels of service will be set for specified public services, so they do not completely shut down when there are strikes.

Received Royal Assent on 20 July 2023. Consultation on Code of Practice ended 6 October 2023. The Code is expected to come into force in mid-December.

Other – Predictable contracts

A new right allowing workers with an unpredictable work pattern to request a more predictable one.

Received Royal Assent on 18 September 2023. Regulations to be issued. Acas consultation on code of practice closes on 17 January 2024. Expected to come in to force in September 2024.

Other – The Employment Bill

The Employment Bill promised in 2019 remains as elusive as ever as this is not mentioned in the Kings Speech.

Further proposals may continue to come into fruition via individual Private Members Bills as they have done so over the course of 2023.

Other – Working time

Removing working time record keeping requirements set out in CCOO v Deutsche Bank.

The government has published a draft statutory instrument which is expected to come into force on 1 January 2024.

Other - TUPE

The change means that, where there is not a trade union or standing employee representative body in place, employers will be able to consult directly with employees and not go through a process to elect reps where:

• A business with fewer than 50 employees undertakes a transfer (of any size); and/or

• A business of any size is undertaking a transfer of less than 10 employees.

This change applies to TUPE transfers that take place on or after 1 July 2024.

Other – Non-compete consultation

Limiting non-compete covenants to a maximum of three months.

The government has issued a response, in May 2023, to its 2020 consultation. There is no clear timetable on implementation.

Pensions

Extension of Automatic Enrolment

The Pensions (Extension of Automatic Enrolment) Act 2023 amends the Pensions Act 2008, to enable the Secretary of State to make new regulations in order to reduce the lower age limit for auto-enrolment (the stated intention is to reduce it to age 18) and remove the Lower Earnings Limit for qualifying earnings (the stated intention is for contributions to apply from the first £1 of earnings).

Received Royal Assent on 18 September 2023.

DB Funding Code

The draft DB Funding Code, once finalised, will provide guidance on how trustees can comply with new scheme funding and investment requirements. Those requirements are contained in relevant provisions (yet to come into force) of the Pensions Act 2004, and regulations (currently in draft and also subject to separate consultation by the Department for Work and Pensions (“DWP”)). This follows the governments 2018 white paper on protecting DB schemes.

TPR’s ambition was for the legislation and DB Funding Code to be in force from 1 October 2023 but this has been pushed back until 1 April 2024.

Authorised surplus payments

A reduction of the authorised surplus payments to charge from 35% to 25% is to be expected.  Further, the government will also introduce measures to make surplus extraction easier and ensure surpluses can be shared with scheme members. There will be a consultation of the measures in winter 2023  including looking at safeguards for members benefits and a possible 100% PPF underpin.

Effective from 6 April 2024.

Lifetime Allowance

The Lifetime Allowance will be abolished. Authorised lump sums and lump sum death benefits will be tested against a new threshold set at the same level as present (£1,073.100). The maximum amount payable as a pension commencement lump sum and the maximum tax-free element for an uncrystallised funds pension lump sum will remain  at £268,275. However, a new pension commencement excess lump sum will be introduced taxable at an individuals marginal rate.

Effective from 6 April 2024.

Local Government Pension Schemes

A deadline has been set for the accelerated consolidation of Local Government Pension Scheme (England and Wales) assets, setting a direction towards fewer pools exceeding £50 billion Assets Under Management, and implementing a 10% allocation ambition for investments in private equity.

March 2025 deadline.

Diversity and Inclusion

The Pensions Regulator published equality, diversity and inclusion guidance for pension scheme governing bodies and employers. The Pensions Regulator hopes the guidance, developed with an industry working group, will be used by pension scheme governing bodies and sponsoring employers to improve the EDI of their scheme’s board.

Published and effective from 28 March 2023.

Immigration

The Spring Statement of Changes

The Spring Statement of Changes to the Immigration Rules brought in a number of changes to the work based visa routes.  From April 2023 there were increases to the general salary thresholds and hourly rate limit for the skilled worker route. The Start Up visa was closed and replaced with a new Innovator Founder route. The Youth Mobility Scheme has been extended with New Zealand nationals who are under the age of 35 being able to apply and the visa they are eligible for being extended from two to three years.

Effective from April 2023.

Hybrid working

The Home Office confirmed that there was no need to report when a worker moves to a hybrid working pattern.  Internal records will still need to be kept however.

Effective from May 2023.

Authorising Officers/Key Contacts

From June 2023 Level 1 users and October 2023 Authorising Officers/Key Contacts now have to provide their national insurance numbers when updating their details on the sponsor management system. From 8 October 2023, companies now have to provide their Companies House number on a sponsor licence application.

Effective from June 2023 and 8 October 2023.

Visa national list

Citizens of Dominica, Honduras, Namibia, Timor-Leste (East Timor) and Vanuatu were placed on the 'visa national' list and so are now required to apply for UK visitor visas in advance of travel to the UK.

Effective from July 2023.

Electronic Travel Authorisation (Qatar)

Nationals from Qatar are required to secure an Electronic Travel Authorisation if they are visiting the UK.

Effective from 15 November 2023.

Illegal worker penalties

The maximum civil penalty an employer can receive for employing an illegal worker will be raised from £20,000 to £60,000 for multiple violations.

Effective from early 2024.

Surcharge

The Government has announced an increase to the immigration health surcharge from £624 to £1,035 per year of the visa. For applicants for student and youth mobility scheme visas and child applicants, this will rise from £470 to £776 a year.

This will come into force on 16 January 2024 at the earliest.

Australian and Canadian nationals

Australian and Canadian nationals who are under the age of 35 will be able to apply for a Youth Mobility Scheme visa. The current age limit is 31. They will also be able to extend their visa by a further year which means they will be able to stay in the UK for a maximum of three years. Andorran and Uruguay nationals who are under the age of 31 are also being added to the scheme and they will currently be able to work in the UK for a maximum of two years.

Effective from 31 January 2024.

Electronic Travel Authorisation

Nationals of Bahrain, Jordan, Kuwait, Oman, Saudi Arabia or the United Arab Emirates will have to apply for an Electronic Travel Authorisation if they are visiting the UK.  This will cost £10.

Effective from 22 February 2024.

Biometric Residence Cards and Permits

Biometric Residence Cards and Permits are being replaced with e-Visas.  From 1 January 2025, the current BRP system is being replaced with a new digital system for confirming immigration status.  This is going to be phased in over 2024, and all new BRPs will have an expiry date of 31 December 2024.  This does not mean that a person's leave will expire on that date, simply the BRP.

Effective from 1 January 2025.

Share-Based Incentives

Enterprise Management Incentive (EMI) Options

The EMI rules have been simplified through the removal of two administrative requirements. Firstly, the requirement to set out the details of any restrictions on the EMI shares in the option agreement has been removed. Secondly, the requirement for the employer company to declare that an employee has signed a working time declaration when they are granted an EMI option has also been removed (this does not remove the working time requirement itself).

The deadline for notifying EMI option grants to HMRC will be extended from 92 days after grant to 6 July following the end of the tax year in which the options were granted.

Effective from 6 April 2023.

Effective from 6 April 2024.

Company Share Option Plan (CSOP)

The CSOP limit has doubled from £30,000 to £60,000, allowing each participant to hold an option over more shares.

The requirement for CSOP shares to be either employee-controlled shares or open market shares the (‘worth having’ condition) has been removed. This will make it easier for companies with more than one class of share to operate a CSOP.

Effective from 6 April 2023.

Save As You Earn (SAYE) Share Option Plan

There has been no tax-free bonus under SAYE due to the notional interest rate being 0% for a very long time. However, following an HMRC review, a new mechanism was announced for the calculation of SAYE bonuses by reference to the Bank of England base rates. The new mechanism takes effect for invitations made on or after 18 August 2023 and is expected to result in tax-free bonus payment being made for the first time in a long time.

Effective from 18 August 2023.

Call for evidence on the Save As You Earn (SAYE) and Share Incentive Plan (SIP) employee share schemes

A call for evidence on the Save As You Earn (SAYE) and Share Incentive Plan (SIP) all-employee employee share schemes concluded on 25 August 2023.

It is expected that changes will be made to both schemes in summer 2024 following the published report on the call for evidence.

Capital Gains Tax

The annual exempt amount for Capital Gains Tax has decreased to £6,000 for the 2023/24 tax year from £12,300 for the previous tax year.

Effective from 6 April 2023 and is expected to be halved again in April 2024.

Health and Safety

Fire and building safety under The Building Safety Act 2022

Additional Building Safety Act guidance setting out the criteria for being a higher-risk building (under the Building Safety Act 2022 and the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023) during the occupation phase of the new higher-risk regime.

Additional fire safety legislation: (i) enhances cooperation and coordination between responsible persons, (ii) enhances recording and sharing of fire safety systems, (iii) allows authorities to take action against non-compliant entities, and (iv) allows residents to receive complete information about their building's fire safety protocols. 

The Building Safety Act 2022 received Royal Assent on 28 April 2022, with subsequent guidance being published on 21 June 2023.

Fire safety legislation was effective from 1 October 2023.

Extension to the UK conformity assessment marking ("UKCA") marking transitional deadlines

Additional time to transition to the post-Brexit UKCA regime requirements, allowing continued recognition of EU CE marking in Great Britain (for an additional two years, until 31 December 2024) and extending associated transitional provisions regarding labelling with regards to the UKCA marking, importer information and responsible person’s information (until 31 December 2027 for some aspects).

The Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022, which granted the extension of time, came into force on 31 December 2022.

The Terrorism (Protection of Premises) Bill (i.e. Martyn's Law)

A new statutory duty upon owners and operators of certain publicly accessible locations to consider the risk of terrorism and implement counter-terrorism measures.

The King's speech reaffirmed the commitment to introduce the Bill. The Bill could potentially be enacted as early as 2024, though this is subject to the pace of its progression through the legislative process.