A number of changes to statutory rates and employment related legislation are coming into effect from 6 April 2020.

THE FACTS

Changes to IR35 in the private sector

From 6 April 2020, the Government intends to apply the IR35 reforms that have been rolled out in the public sector to the private sector. From 6 April 2020, if a contractor is operating through an intermediary, such as a personal services company, and but for that intermediary they would be an employee of their client, IR35 will operate so that the HMRC can collect the tax due from the client and not the contractor. For more on IR35 see our previous alert here.

The Government has confirmed a review to consider concerns raised about the implementation of the private sector reforms. However, there has been no suggestion that the implementation date will be postponed, though the review may bring clarification on the new rules.

Where employers use an employment business in the contractual chain it is that employment business who would normally sit directly above the personal service company and primarily be responsible for the PAYE. We now have the PAYE regulations which explains that if the employment business does not and cannot pay such PAYE the responsibility falls back on the client.

Changes to tax on termination payments

Currently, neither employee nor employer National Insurance Contributions are payable on termination payments over £30,000. From 6 April 2020, employer National Insurance Contributions at 13.8% will be payable on termination payments above £30,000. Termination payments will continue to remain exempt from employee National Insurance Contributions.

Removal of Swedish derogation clauses from agency workers’ contracts

From 6 April 2020, legislation will come into effect which removes the right to include Swedish derogation clauses in agency workers’ contracts. This means that agency workers will be have a right to pay parity after 12 weeks. Temporary work agencies using the Swedish derogation clause will be required to inform agency workers that it has been removed from their contracts.

Changes to reference period for holiday pay

Currently, employers are required to calculate holiday pay with reference to the 12 weeks preceding the workers’ holiday. From 6 April 2020, the reference period will increase from 12 weeks to 52 weeks.

Parental bereavement

From 6 April 2020, parents who have suffered the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy will be entitled to two weeks’ statutory leave. The leave will be paid at statutory rates for employees who have at least 26 weeks’ service, who meet minimum earnings criteria, and give proper notice. For more information, click here.

Change to the right to receive a written statement of terms

From 6 April 2020, all employers will need to take action to comply with new obligations to provide information to their workers. For more information, click here.

Statutory rate changes

The following changes to statutory benefits and rates are expected to apply from 6 April 2020:

Benefit

Current Rate

New Rate

Statutory sick pay

£94.25

£95.85

Statutory maternity pay and maternity allowance

£148.68

£151.20

Statutory shared parental pay

£148.68

£151.20

Statutory paternity pay

£148.68

£151.20

Statutory adoption pay

£148.68

£151.20

Limit on week’s pay for unfair dismissal basic awards and statutory redundancy

£525

£538

Limit on compensatory awards for unfair dismissal