COMPLIANCE
New year, new broom
Jeni Morris ACIPP, head of the national minimum wage (NMW) team at EY, offers advice to employers on how to successfully sweep into 2025
A s we prepare to sweep into and opportunities for the payroll sector. With the government’s commitment to reforming workers’ rights, businesses must adapt to the evolving landscape of employment law and payroll practices. Here’s what’s on the horizon for payroll professionals in the coming year. 2025, the new year will bring with it a fresh set of challenges Government reforms and the impact on payroll The Employment Rights Bill is set to reshape UK business and includes measures to regulate zero-hour contracts, as well as promote flexible working. With the national living wage (NLW) increasing in April 2025 by 6.7%, the rate for 18 to 20-year-olds soaring by 16% and the apprenticeship rate jumping by 18%, the ripple effects on payroll will be significant. The government has confirmed that it intends to gradually align to a single NLW, removing the current age bands. Many other changes and consultations are expected throughout 2025/2026, including ones on holiday pay and statutory sick pay (SSP). Organisations must prepare for these changes, which are expected to be implemented by autumn 2026. The Fair Work Agency (FWA): a new era of enforcement The introduction of the FWA marks a pivotal change in the enforcement of employment laws. As an executive agency within the Department for Business, Energy and Industrial Strategy, the FWA will absorb the functions of the Gangmasters and Labour Abuse Authority
and the Director of Labour Market Enforcement. National minimum wage (NMW) enforcement will remain front and centre, with expanded roles to include (for the first time) enforcement of holiday pay and SSP, so it’s time for businesses to review their compliance with the NMW. Planning for NMW compliance To navigate the new regulations, businesses must take decisive action on the following: l audit and policy development: establish clear policies to manage and report on payroll-related expenses, ensuring compliance with the new wage standards l monitoring and communication: implement robust monitoring processes to identify issues before each payroll cycle, fostering clear communication between management, human resources and payroll teams. Addressing unpaid working time and mandatory training Employers must ensure that all working time, including mandatory training, is compensated. With the rise of hybrid working, tracking time spent on e-learning modules has become crucial. Employers should: l leverage technology: use tools to accurately capture time spent on mandatory training l set clear guidelines : require training to be completed during working hours and provide explicit instructions on recording this time. Correcting apprenticeship rates and worker classification Mistakes in paying apprentices at the
correct rate can lead to significant underpayments. Employers should: l review contracts: ensure that contracts accurately reflect the stages of an apprenticeship and the associated pay rates. Understanding the nuances of work types The distinction between salaried and unmeasured work is a complex area that can affect NMW compliance. Employers must: l analyse work patterns: recognise when additional hours could lead to non-compliance with the NMW l know their workforce: differentiate between salaried and unmeasured workers and maintain accurate records to prove compliance. Time off in lieu (TOIL) and overtime policies When using TOIL to address NMW breaches, timing is critical. Policies should ensure that TOIL is taken within the same pay reference period to avoid compliance issues. A proactive approach The payroll sector must embrace the new year with a proactive approach to the upcoming changes. By auditing current practices, enhancing monitoring systems and understanding the intricacies of the new regulations, businesses can ensure a smooth transition into the new payroll landscape of 2025. With the right preparation, the challenges can become opportunities for growth and improvement in the world of payroll. n
| Professional in Payroll, Pensions and Reward | December 2024 - January 2025 | Issue 106 31
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