2020 looks set to be an interesting year in the world of employment law with a raft of legislative changes coming into force. Below is a summary of some of the key changes employers can expect to see in the coming months:
Employees are entitled to receive a written statement (known as a “section 1 statement”) of their key terms and conditions of employment. Three key changes will come into effect from 6 April:
1) The right to a written statement will be extended to workers;
2) The written statement must be given on or before the first day of employment, rather than within two months of employment starting; and
3) In addition to the information employers already have to provide, the statement will also be required to set out:
• the days of the week the individual is required to work and whether the days or hours could change and, if so, how;
• any paid leave entitlement other than sickness or holiday;
• details of any probationary period including any conditions that apply; and
• any training provided by the employer and any other training the employee/worker has to complete which the employer won’t pay for.
Existing employees already employed on 6 April can request a statement containing this additional information, and employers will have one month to respond.
Employers may wish to issue an addendum to existing contracts and to update their standard form employment contracts to ensure the additional information is included.
The introduction of the off-payroll tax rules to the private sector will take effect on 6 April 2020, subject to the passing of the Finance Bill 2020. The legislation will see the compliance burden shift so that the end-user client, which uses services supplied by a contractor via a personal service company, will become responsible for deciding if the rules apply. If the rules do apply, then payment to such individuals will be treated as payments of income from employment, and the end-user client will have to account for income tax and NICs. For further details about the extension of the IR35 regime to large and medium sized businesses in the private sector, see our previous article here.
The so-called ‘Swedish derogation’ will be removed from the Agency Workers Regulations 2010 with effect from 6 April 2020. The derogation currently provides an exemption to the right to equal pay for agency workers who are employed under a permanent contract of employment with the temporary work agency (“TWA”) and are paid between assignments. The removal of the derogation will mean that all agency workers will have a right to pay parity after 12 weeks’ continuous service.
On or before 30 April 2020, TWAs must provide agency workers whose existing contracts contain a Swedish derogation provision with a written statement advising that, with effect from 6 April 2020:
• the agency worker is entitled to rights relating to pay, subject to completion of the qualifying period; and
• the Swedish derogation in their original contract no longer has effect.
TWAs currently using the Swedish derogation may wish to move affected agency workers onto suitably amended or new contracts which give them the right to equal pay.
A further proposal arising from the Good Work Plan, and which will be implemented on 6 April, is an increase in the reference period for calculating average pay (for the purposes of calculating holiday pay) from 12 to 52 weeks. Payments (for example overtime) that would amount to a worker’s “normal remuneration” but that fall outside of the 12-week reference period would not currently be included when calculating average pay due to the relatively short length of the reference period. This problem should largely be removed by the change.
From 6 April 2020, all termination payments above £30,000 will be subject to Class 1A NICs (employer liability only). Up to 5 April 2020, the charge on termination payments in excess of £30,000 is limited to income tax only. The change means that the treatment of termination payments will become even more complex but also more costly for employers, who will be required to pay the Class 1A NICs at 13.8% on the excess of termination payments exceeding the £30,000 limit.
Employers negotiating settlement agreements will need to ensure this additional cost is factored in for any payments to be made on or after 6 April.
Parental Bereavement Leave
On 24 January the government published draft regulations to implement parental bereavement leave and statutory parental bereavement pay from 6 April 2020. Under the Parental Bereavement (Leave and Pay) Act, employees will be entitled to two weeks’ leave if they lose a child under the age of 18 or suffer a stillbirth after 24 weeks of pregnancy. The right to leave will apply from day one of employment and it can be taken as a two-week period or two periods of one week, within the first year after the death. Employees with 26 weeks’ continuous service will be entitled to these two weeks paid at the statutory rate, while those below the threshold will be entitled to unpaid leave.
Employers may wish to consider whether to amend existing compassionate leave policies or implement a separate parental bereavement leave policy.
Following the Queen’s Speech, a new Employment Bill appears to be on the horizon in 2020 and will bring together various proposed measures, including:
• A single enforcement body for the labour market to ensure that vulnerable workers are aware of and can exercise their rights;
• A requirement for employers to pass on all tips and service charges to workers, and ensure they are distributed fairly;
• A right for all workers to request a more predictable and stable contract after 26 weeks’ service;
• The extension of redundancy protection to reduce pregnancy and maternity discrimination. Employees will be protected from the point they notify their employer of their pregnancy until six months after the end of their maternity leave;
• Leave for neonatal care to support parents of premature or sick babies; and
• A week’s leave for unpaid carers.