Employment Edit: 11 January 2024

Holiday pay and entitlement reforms

On 1 January, significant holiday pay and entitlement reforms took effect and the government issued accompanying guidance.

The onus now shifts to employers to review their current holiday arrangements and decide on next steps. The reforms represent a significant shake-up of holiday pay arrangements, particularly for workers who qualify as ‘irregular hours’ or ‘part year’ workers, so there is a lot for employers to consider and review. In this article, we set out our pick of the key actions for employers to take as part of this review.

Immigration changes – update

The government has provided some further details on its planned changes to several key immigration routes. In relation to the Skilled Worker route, it has indicated that individuals already in the route prior to the changes coming into effect, which is anticipated to be in Spring 2024, will be exempt from the new minimum salary threshold of £38,700 when they change employer, extend or settle. Full details of transitional arrangements and further policy details are expected in the coming months so sponsoring employers should watch this space.

In other immigration news, the previously announced increase to the Immigration Health Surcharge (from £624 to £1,035 per year per adult and from £470 to £776 per year per child) is expected to come into effect in the coming weeks. The surcharge is payable by visa applicants and their dependants to fund their access to the NHS, but in practice is commonly reimbursed by employers. The earliest the increase can take effect is 31 January 2024, but the exact implementation date will depend on when the Order is made. We will keep you posted on this in upcoming Employment Edits.

Distributing tips fairly

Last year, the Employment (Allocation of Tips) Act 2023 was passed by parliament. Once fully in force, the Act will introduce a range of new measures, including a new duty on employers to ensure that all qualifying tips are allocated fairly between workers and a requirement for relevant employers to have a written policy on how they deal with tips.

To support employers with these measures, the Department for Business and Trade has now issued a draft statutory code of practice on the fair and transparent distribution of tips. The draft code includes guidance on what types of payment constitute qualifying tips and how an employer should choose the factors to determine the allocation and distribution of such tips. The consultation into the draft code will close on 22 February 2024. The government’s aim is for the final code and the full measures in the Act to come into force on 1 July 2024.

Given some changes may take time to implement, employers in the hospitality and other affected sectors should take steps now to prepare for these measures. Steps could include reviewing the draft code, auditing current tipping arrangements and considering what changes may be required in readiness for the new measures coming into force.