As we stand on the brink of 2024, a new landscape of payroll and employment awaits. Regulatory changes announced in 2023 have left payroll professionals with plenty to prepare for in the new year, reminding us that there truly is no end to payroll evolution. The direct impact this has on the payroll space means it cannot be ignored; systems and processes must adapt accordingly.
Here’s what we know so far regarding key changes to look out for in payroll and employment in 2024:
Holiday pay & entitlement
In November, the government published responses to consultations regarding reshaping holiday pay & entitlement rights. These changes are due to apply for leave years starting on or after 1st April 2024. Irregular hours and part-year workers will accrue annual leave entitlement on the last day of each pay period at the rate of 12.07% of the number of hours that they have worked during that pay period. This is subject to a maximum of 28 days per year. For further information, please refer to this article. Payroll processes need to adapt to these changes to ensure accurate calculations.
Minimum wage increases
Minimum wage is set to increase to £11.44 per hour from April 2024, applying to 21-22 year olds for the first time. Minimum wage for 18-20 year olds will also have an increase of £8.60 an hour, as well as apprentices, at £6.40 an hour. Payroll teams must adjust their calculations accordingly.
The Workers (Predictable Terms and Conditions) Act
The Workers (Predictable Terms and Conditions) Bill received Royal Assent in September 2023, and will come into force in September 2024. This bill introduces the right for workers to request a more predictable working pattern to tackle unfair working practices and support growth in the flexible labour market. Employers should prepare for open discussions on work patterns and consider introducing timesheets with their payroll systems to ensure compliance.
The Flexible Working Bill
In 2023, the new Flexible Working Bill received Royal Assent. Though it’s set to become law, the date of change hasn’t been specified. Most likely, this will be 2024. This bill gives workers more flexibility over when & where they work. Therefore, payroll systems must be able to handle new flexible work arrangements.
The Carers Leave Bill
In May 2023, The Carer’s Leave Bill received royal assent. This bill will introduce a statutory entitlement to five days unpaid carers leave per calendar year, for employees that are providing or arranging care. It is paramount to be prepared to deliver changes to the way you offer support to all unpaid carers in your workforce.
Autumn Statement growth measures
On November 22nd 2023, Jeremy Hunt announced his financial update aiming to grow the UK economy with 110 growth measures. 5 key changes that will impact payroll are:
- The main rate of employee National Insurance is to be cut by 2% from January
- Class 2 NICs will be abolished. Class 4 NICs will be reduced by 1%
- Pension savers may be granted legal right to require new employers to pay savings to an existing pension pot.
- State pension to increase by 8.5% in April 2024, as the government retains the triple lock.
- Universal Credit and other benefits to increase by 6.7% from April.
These changes are expected to take effect over the next year, or even the next few years. Payroll processes will need to adapt quickly.
The fluidity of UK employment demands a perpetual evolution in the payroll domain, demanding adaptive systems and processes. Surveying the landscape of imminent transformations in 2024, from the recalibration of holiday pay and entitlements to the increase in minimum wages, the enactment of The Workers (Predictable Terms and Conditions) Act, and the profound impact of the Autumn Statement’s growth measures, means payroll professionals must navigate these new changes with foresight and resilience.
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