Statutory Pay and Carers Review

There is no doubt that the Labour Party government has been busy since winning the election, in terms of what can be expected from the new ruling party is traditionally observed by the measures implemented within the first 100 days of Parliament, so it would be reasonable to say that they have hit the ground running on this front.

So far, the government has expedited legislation, as part of their promise to deliver changes to employment rights under their commitment to Make Work Pay.

This has included an ongoing review of parental leave resulting in further proposals set out in the plan.

In the interim period, government has met with various business representatives to discuss these proposals and highlight wider plans with a view to understanding potential impacts on business.

A central component of the Make Work Pay plan is the focus on worker’s rights. Workers will be granted further basic rights of protection against unfair dismissal, parental leave and sick pay. Providing day-one rights to all workers and plans to extend protection from dismissal for new mothers are also included in the review of measures.

It is important to add that some of these changes were already in place under the Conservative Government, but Labour will introduce new legislation in line with future reforms.

Based on what has been announced so far here is a summary of some of the proposals put forward.

Carers leave

New legislation was introduced on 6 April 2024, to provide carers with a day one right to take up to one week of unpaid leave every 12-months, to care for a dependent that has a physical or mental illness or injury that means they are expected to need care for more than 3 months, or a disability (as defined in the Equality Act 2010), including care needed because of old age.

The leave can be taken as a whole week off or taken as individual days or half days throughout the year.

Following a review of the implementation of this policy government has said “we will examine any benefits of introducing paid carers’ leave while being mindful of the impact of any changes on small employers”.

No confirmed end date for the review has so far been announced.

Consideration: If paid leave is introduced, Carers leave might become another statutory payment therefore employers would have the right to recovery under the existing relief rules. This would suggest that entitlement could be aligned with the same rules for existing parental pay.

Bereavement Leave

Currently the leave is only available to employees who have suffered the loss of a child under the age of 18, or a stillbirth after 24 weeks of pregnancy, the rights also apply to adoptive parents and people with parental responsibility.

Those with parental responsibility such as kingship carers, are eligible if the child has lived with them under their charge for at least 28 consecutive days to the death and they are not receiving payment for their services.

All eligible workers are entitled to two weeks’ leave which can be taken in separate weekly blocks and must be taken within 56 weeks of the loss of the child or stillbirth.

Whilst the leave is a day-one right entitlement to pay must be established, therefore only employed earners that satisfy the eligibility criteria will have access to the pay. The rate of pay is set at the standard weekly rate of £184.03 (2024/25), or 90% of the average weekly earnings whichever is the lower of the two.

Government have announced that they will clarify the law and entitlement, introducing the right to bereavement leave for all workers.

Consideration: Extending the right to all employees would seem a sensible extension to the rules, most employees will have policies on compassionate leave which should advise employees on all requires, notice, duration and payment.

Employment rights are devolved in Northern Ireland (NI), so do not forget the right to bereavement leave and pay applied from April 2022. The NI government had initially considered whether the leave and pay should become a day-one right for employees. However, current legislation on entitlements to leave and pay are aligned with Great Britian.

Sick leave and pay

All employers must pay statutory sick pay (SSP) to employees and workers that meet the eligibility criteria i.e. sick for four days in a row (PIW), paid average weekly earnings of at least £123 (current weekly LEL), in the relevant period, etc.

If the employee meets all eligibility criteria, the first 3 qualifying days of the first spell of sickness (waiting days) are not paid, all remaining days are paid at the standard weekly rate of £116.75 (2024/25). Daily rates are calculated by dividing the weekly amount by the number of qualifying days in the week.

Qualifying days is one of the least well-understood aspects of SSP. We know from ACT (our online assessment & eLearning platform) that less than half of payroll professionals understand the current definition of “qualifying days” (see Figure 1 below).

The government proposes to strengthen statutory sick pay, remove the lower earnings limit to make it available to all workers and remove the waiting period. This will introduce a day-one right to SSP for all employees, but the rules on establishing a PIW will remain unchanged.

Consideration: This might lead to more administrative burdens being placed on employers. Given SSP is not recoverable will result in increased costs for employers with smaller businesses potentially being impacted the most.

We also know from ACT data that SSP is already one of the most challenging areas for payroll professionals, especially when it comes to understanding SSP entitlement and the process of managing SSP payments (see Figure 2 below). For many payrollers, these proposed changes will mean greater challenges and even more to learn if we are to keep up to date.

SSP rules can differ in Northern Ireland so do not assume it’s the same always check.

The next stage in Labour’s plan is the delivery of the Autumn budget by the Chancellor Rachel Reeves on 30 October, whether more will be revealed about any of these initiatives we will have to wait and see.