Payroll Compliance in the Post-Brexit World: What UK Businesses Need to Know

All business in the UK has to contend with regulation when it comes to payroll. Following the UK’s exit from the European Union, those rules have evolved slightly. The supremacy of EU law in the UK came to an end in 2024, which handed the government the power to change the older rules.

A few changes have emerged since then. Staying on the right side of the law, and avoiding legal and reputational damage, means keeping up with them.

Changes to Working Time Regulations

2024 saw a number of changes and clarifications to the Working Time Regulations, which require businesses to keep records demonstrating that no one is being employed beyond a forty-eight-hour average weekly limit.

The law now explicitly says that complying with the rules doesn’t necessarily mean tracking every working hour of every day. This theoretically means lower costs for employers, with the smallest businesses likely to benefit from this flexibility more than larger ones.

Holiday Pay and Entitlement Updates

There are also changes to the way that holiday pay rolls over for irregular and seasonal workers. You’ll get around 12% of the hours worked in the previous period, and you’ll be entitled to rolled-up holiday pay for leave years starting after 1 April 2024.

This extra flexibility might be difficult to manage without the help of the right payroll system. Fortunately, modern payroll software, of the kind used by many SME accountants, makes it easy to deal with holiday entitlements, even when they vary from employee to employee.

Future Payroll Considerations

Under the Workers (Predictable Terms and Conditions) Act 2023, workers in the gig economy would have enjoyed the right to request more predictable working hours. Despite this piece of legislation being scrapped, it remains very much on the agenda, and may feature as part of the upcoming Workers Rights Act.

If you’re in this position, then it’s worth paying attention to the latest developments around this area of law. Given the UK’s underwhelming economic performance, this is an area of legislation that looks increasingly precarious.

TUPE Regulations and Payroll Implications

The Transfer of Undertakings (Protection of Employment) Regulations 2006 are derived from EU law. They’re designed to provide employees with security when it comes to the terms of their employment.

Changes to the law mean that small businesses (defined as those with fewer than fifty employees, or those transferring fewer than ten employees) will be permitted to engage directly with employees, when no representatives are in place.

This change was intended to help smaller businesses to avoid the administrative costs of dealing with representatives. Employees remain protected by the Equality Act, and other anti-discrimination legislation.