COMPLIANCE
The unintended consequences of the Employment Rights Bill for payroll
Charlie Barnes, Head of Employment Legal Service, and Anna Burdett, Legal Associate, RSM UK, discuss the ‘domino effect’ of some of the changes the Employment Rights Bill will bring for payroll professionals to be mindful of R egular updates on the Employment Rights Bill have featured in both Professional offer after every 12-week reference period, until the worker no longer qualifies.
over each 12-week reference period are properly recorded and reflected in their contracts of employment. This responsibility will likely fall on payroll and human resources (HR), with payroll teams being responsible for tracking average hours worked, flagging discrepancies and updating records. Meanwhile, HR teams will likely take responsibility for drafting new contracts and communicating the guaranteed hours offer to the workers. Clear division of responsibilities between payroll and HR will be essential to ensure compliance with the new legislation and to prevent mistakes. Shift curtailment and cancellations The Bill will introduce a new obligation for employers to compensate workers for short notice shift cancellations, curtailments or changes. Currently, we’re still waiting for detailed guidance on how short notice will be defined, or how compensation will be calculated. Systems will need to be updated to ensure there’s a process to make a payment for shifts where they have been cancelled / curtailed at short notice, and this will need to be detailed separately on the payslip. Payroll teams will also have to determine whether these penalties will be excluded from other calculations, such as holiday pay, statutory sick pay (SSP) and statutory maternity pay, and separate legal advice will be needed.
A recent amendment to the Bill means that this will now be extended to agency workers too, and it will be the hirer that must make the offer. So how could this affect payroll? Subsequent reference periods A key challenge for payroll specialists will be managing the changes to contractual hours resulting from the offers made by employers at the end of each 12-week reference period. If casual workers begin to regularly work more hours over time, subsequent reference periods will require recalculating the guaranteed hours based on the most recent 12-week period. If the workers accept the offer, payroll systems will need to be updated regularly to reflect these changes in contractual hours. For employers with monthly payrolls for casual workers, there’ll be the added complexity of having to adjust payroll calculations to accommodate contractual changes agreed after each 12-week reference period. This will add another layer of administration to an already extensive list of tasks for payroll teams.
magazine and across the events the CIPP offers. This is because it will reshape workers’ rights in the UK. The Bill brings about significant changes in how employers manage hours, pay and benefits, meaning payroll specialists must prepare for a variety of potential challenges and unintended consequences. In this specific article, we turn our attention to analysing some of the key areas for payroll professionals to be alert to. Guaranteed hours and casual workers The Bill introduces a requirement for employers to offer guaranteed hours to qualifying workers. This is particularly relevant to workers employed under zero-hours contracts or “zero-hours arrangements”, as well as those with a low number of minimum guaranteed hours, but who regularly work more than that. It was suggested that the threshold for what’s considered “low hours” will likely be more than two hours. However, there’s still some uncertainty over what this will be. Under this change, these workers will need to be offered a guaranteed hours contract which reflects the average hours they worked over a 12-week reference period. The obligation is ongoing too, meaning the employer must make the
Ownership of processes and responsibilities
The new legislation places significant responsibility on employers to ensure average hours worked by casual workers
| Professional in Payroll, Pensions and Reward | May 2025 | Issue 110 18
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