Employers should prepare now for the following changes coming into force in April:
- From 6 April 2020 employees will be entitled to two weeks’ statutory parental bereavement leave following the death of a child under 18 or a stillbirth after 24 weeks of pregnancy. There is also a right to statutory pay for those with 26 weeks’ service. Employers will need to review their existing compassionate leave provision and update/introduce appropriate policies, as well as alerting managers to the new rights. Further details are set out in our briefing.
- There are new information requirements for employers recruiting employees or ‘workers’, or changing key terms for existing employees, from 6 April 2020. Fuller written statements of terms must be given on or before day one of work. Employers need to update existing templates, create new versions for ‘workers’, and refresh training for HR staff and managers in preparation for the deadline. Our detailed briefing sets out what has changed and the practical action points for employers.
- From 6 April 2020, the cost to employers of many termination compensation payments will increase. Employers will have to pay Class 1A employer NICs (currently at 13.8%) on termination payments above the £30,000 tax-free threshold in respect of terminations on or after 6 April 2020 (bringing NICs into line with income tax). HMRC’s latest Employer Bulletin states that the new liability will not apply to sums paid after 5 April in respect of employment terminated before 6 April. If this is reflected in the commencing regulations (not yet published), there could therefore be a financial benefit in ensuring imminent terminations take place prior to 6 April. Cautious employers may wish to err on the safe side and plan for both termination and payments to be made pre-6 April. Also note that from October 2019 the HMRC has made a small adjustment to the method of calculating “PENP” (post employment notice pay) for the purposes of taxing such part of a compensation payment as reflects unworked notice. The change is relevant where an employee is paid monthly but the notice period not worked is not a whole number of months, and it enables the weekly pay to be calculated assuming 30.42 days in the month where the last pay period falls in a month of less than 31 days.
- Despite mounting calls for delay or reform, the Government has confirmed that the public sector off-payroll working rules (IR35) will be extended to large and medium-sized private sector companies this April. However, following the Government’s review, a number of minor changes will be made (as detailed in its report here). The new rules will only apply to payments made for services provided on or after 6 April 2020, and not services provided prior to that date but remunerated after it. HMRC will apply a ‘light touch’ in the first year and only impose penalties for errors if there is deliberate non-compliance. Information provided will not be used to open new investigations into Personal Service Companies for prior tax years unless there is reason to suspect fraud or criminal behaviour. The legislation will also be amended to require end-users to respond to a request for information about their size from the agency or worker, and to clarify the position where there are offshore companies in the chain. Further guidance on the changes can be found here and the Employment Status Manual here has now been updated. Our earlier blog post discussing the changes is here.
- The 12 week reference period used for calculating statutory holiday pay for workers without normal working hours (eg zero hours workers), or whose pay varies according to the amount of work done within those hours (eg, piece workers) or with the time of work (eg shift workers whose weekly shifts vary, or term-time only workers), will be extended to 52 weeks (or the number of weeks that a worker has been employed if less than 52) with effect from 6 April 2020. Where that period includes weeks where no remuneration was payable, earlier weeks (to make up 52 in total) should be taken into account when calculating the average pay, but ignoring any weeks earlier than 104 weeks before the calculation point. The aim is to give a more representative figure for the average pay of casual and seasonal workers. The Government has updated its guidance on calculating holiday pay for workers without fixed hours or pay to reflect the change. The Government has also launched a campaign to highlight to workers their right to paid holiday leave.
- Two changes relevant to agency workers apply from 6 April 2020: (i) agencies must issue new work-seekers with a ‘key information document’ in a prescribed format and containing prescribed content (eg, the type of contract, minimum expected rate of pay, method of payment, details of benefits, deductions and paid holiday), before agreeing the terms of the contract; (ii) currently workers who have a permanent contract with the agency are excluded from the right to equal pay with comparable direct hires from week 13 if they are paid a minimum amount between assignments and the contract satisfies certain conditions; this “Swedish derogation” is being repealed from 6 April and agencies are required to notify the workers of this by 30 April 2020. Businesses that hire agency workers employed under the Swedish derogation may need to review, and possibly renegotiate, their contracts with the agencies in light of any increased cost.
- The threshold required for employees to make a request to their employer (where it has at least 50 employees) to negotiate on the introduction of information and consultation arrangements will be reduced from 10% to 2% of employees (subject to a minimum of 15 employees).
- The annual uplifts to the caps on tribunal compensation, the flat rate of statutory family-related leave pay, statutory sick pay, and minimum wage that will apply from April have been confirmed. See our blog post here for details. The Government has also published draft regulations, expected to come into force on 6 April 2020, to introduce more flexibility in pay arrangements for salaried hours workers in relation to the national minimum wage, and has confirmed that it will revive the naming scheme for employers who break national minimum wage law but ease the penalty regime in relation to salary sacrifice schemes. Its response to consultation on this topic is here.
- Finally, larger private sector employers will need to publish their third year’s gender pay gap report (for data as at 5 April 2019) by 4th April 2020.