Employment Law Changes – October 2024

Fair Allocation of Tips

The Employment (Allocation of Tips) Act 2023 ("the Act") came into force on 1 October 2024. The Act applies to all tips, gratuities and service charges paid by customers on or after 1 October 2024. Employers now have a duty to ensure that such payments are allocated to workers fairly and transparently as well as to make payment in full no later than the end of the month following the month in which the customer paid the tip.

Protecting Workers from Sexual Harrassment

The Worker Protection (Amendment of Equality Act 2010) Act 2023 (“the Act”) came into force on 26 October 2024. Employers must now take “reasonable steps” (raising awareness by training employees) to prevent their staff from being sexually harassed during their employment or risk a 25% uplift to a Claimant’s compensation at the Employment Tribunal if the employer is found to have breached this duty.  As usual, “reasonable steps” are not defined, but issuing advice to management, implementing/announcing a formal policy and conducting management training will all contribute to minimising legal exposure to any claims.

Employment Law Changes – April 2025

National Insurance

In the Autumn 2024 Budget, the Government announced significant National Insurance changes which were implement on 6 April 2025 as follows:  

  • Increasing the rate of secondary Class 1 contributions from 13.8% to 15%. The secondary Class 1 contributions are an employer-paid rate based on the employees’ earnings above set thresholds.   

  • Reducing the secondary threshold for Class 1 contributions, therefore lowering the earnings threshold (from £9,100 to £5,000 a year) on which employers must start to pay secondary Class 1 contributions.   

  • Increasing the Employment Allowance (a set threshold of relief for employers to reduce NICs) from £5,000 to £10,500 and allowing more businesses to claim the relief via the removal of the secondary Class 1 NICs liabilities limit of £100,000 (based on the previous tax year).   

Neonatal Care (Leave and Pay) Act 2023

New parents will be able to take up to a total of 12 weeks of paid leave, in addition to existing leave entitlements, to allow them to spend more time with their baby who has been hospitalised (up to 28 days after birth) and who needs a continuous stay in hospital of 7 full days or more. Eligible parents can receive Statutory Neonatal Care Pay, which is currently either £187.18 per week or 90% of their average weekly earnings, whichever is lower.  The right to take leave is available from the 1st day of employment and any leave can be taken in 2 tiers, where tier 1 must be taken on or within the first 7 days of the child receiving neonatal care and tier 2 can be taken within 68 weeks of the baby’s birth. 

Employers can reclaim neonatal pay through a reduction of their national insurance contributions.

Immigation Rules

The immigration rules were updated on 24th June 2025 for Skilled Worker Visa. There was an adjusted salary threshold and eligibility routes. We advise that right-to-work check processes are aligned with current rules and review sponsorship licences if relevant.

Potential Employment Law Changes

Paternity Leave (Bereavement) Act 2004

This Act will give leave to an employee when their partner dies during or soon after childbirth. It will waive the requirement to have at least 26 weeks service at the 15th week before the expected week of confinement to take Paternity Leave. It will also give additional leave, which has not yet been defined, but could be up to 12 months.

Amendments to the Employment Rights Bill

The government has made some significant amendments to its Employment Rights Bill (ERB) in response to consultations since it was first presented in the House of Commons on 10th October 2024. The most important amendments to the bill are summarised below:

Sick pay

Currently employees are not entitled to Statutory Sick Pay (SSP) until day four of absence. The Government have now confirmed that they will be removing this three-day waiting period, and employees are entitled to receive SSP from first day of sickness absence and given that a major proportion of absence are between 1 – 3 days, this will negatively impact on employment costs to all our clients.

The date of inception has not yet been confirmed.

Low earners will be entitled to either the flat rate of statutory sick pay or 80% of their normal weekly earnings (whichever is lowest).

Fire and rehire

The Government has confirmed that the Bill will make it automatically unfair for an employee to be dismissed for refusing to agree to a change in their contractual terms of employment, but that no interim relief will be available in respect of fire and rehire-related unfair dismissal claims.

Trade Unions

The notice that a union must provide ahead of strike action will be reduced from 14 to 10 days; however, the mandate for industrial action after ballot will be increased from 6 to 12 months.

Zero hour contracts

The Government has confirmed that “guaranteed hours” over a 12-week reference period will apply to agency workers, as well as to workers, if they are on a zero hour or low hour contract. This means that employers will not be able to hire agency workers to avoid the new guaranteed hours rule.

Agency workers will have the same right as employees to reasonable notice of shifts, cancellation of shifts and changes to shifts and they will also be entitled to compensation if the shifts are changed at short notice. The agency and the end user will be mutually responsible for providing reasonable notice to agency workers, but the agency will be responsible for making any payment because of short notice. The agency worker and the

agency will be able to agree in their contract to recover costs from the hirer where the hirer was responsible for a shift change at short notice.

Redundancy rights

Collective consultation is required where 20 or more redundancies are being made at one establishment, or where another higher threshold is met.  The original Bill envisaged the removal of the “establishment test” which would have meant redundancies across an entire organisation would be counted, but this will now be retained, whereby this criterion of 20 will apply for each site.  However, the additional threshold for triggering additional redundancies is currently unknown.

The Bill confirms that employers do not need to consult all employees at the same time during a collective consultation, nor do they need to attempt to reach the same agreement with each employee. However, the maximum protective award has been increased from 90 to 180 days so employers are at a greater risk should they fail to comply with their obligations.

The Fair Work Agency

The Fair Work Agency (FWA) will be established to deal with enforcement of employment rights such as holiday pay, National Minimum Wage and statutory sick pay under a single body. The recently published amendments outline and increase the FWA’s remit. For example, the FWA will be able to:

  • enforce the requirement to keep records of holiday leave and pay with potentially unlimited fines;

  • bring employment tribunal claims on a worker’s behalf;

  • provide legal assistance to employees for employment proceedings; and

  • recover costs of enforcement incurred by the Secretary of State from employers who have been found not to have complied with the law.

Early pregnancy bereavement leave

Currently, mothers and their partners are entitled to 2 weeks’ parental bereavement leave if they have a stillbirth or suffer a pregnancy loss after 24 weeks of pregnancy. Following an amendment to the Employment Rights Bill, mothers and their partners who suffer a pregnancy loss before 24 weeks will be entitled to 2 weeks of miscarriage bereavement leave. The leave is set to be unpaid.

Dismissals during and after pregnancy

Employers will need to give employees specific notices, produce certain evidence and follow specific procedures if they want to dismiss an employee who is pregnant or on maternity leave or in the following six

months of the employee returning to work. Dismissals during and after pregnancy will be banned unless specific circumstances apply, but this has yet to be defined. It is proposed that this ban will be in place for the period up to 6 months following return to work.

Umbrella companies

Umbrella companies (companies that act as intermediaries between a contractor and an end client or recruitment agency) will be defined under the Bill so that they come within the definition of employment businesses. This means that they will be regulated in the same way as agencies supplying temporary workers to address concerns about umbrella companies exploiting workers’ employment rights, affecting competition and causing tax loss.

 The Right to Disconnect

This is the right of employees not to respond to work issues when they receive the advice, outside of working hours and it has yet to be confirmed whether this further right will be included in the Bill, leading to speculation that it may not be taken forward by the government.

 There are still several areas of the Bill that require further clarification, including the highly anticipated reduction in the length of service to gain unfair dismissal rights for employees the “protection period”, being reduced from the existing two years. We expect these to be addressed as the Bill continues its journey through Parliament. The Bill is not expected to come into force until the Autumn of 2026. 

Statutory rates / National minimum wages – from 6 April 2025

PSM are not only here for day to day technical and administrative HR support, but as commercially strategic decisions involve and are so often critically dependent on the relevant technical and employee structure, PSM are here to guide and advise our clients. Hence our moto “Making life easier for you”, as we believe that there is no such thing as an unsolvable HR problem. So please give us a call if you require any guidance on both HR and commercial business advice.

If you have any queries on any issues, please call a member of your PSM team on 01784 472 541.

Allison Murray

HR Manager