Six key employment law updates you need to know

With the daffodils out already and signs of Spring approaching (despite the best efforts of storms Ciara and Dennis), April will soon be upon us. April tends to be a busy time in the year for HR, where employers are usually required to implement/amend something in line with any new legislation. As you read our update on these employment law changes below, bear in mind these key action points for later:

  • Review, and update if necessary, your contracts* – to ensure they are fit for purpose considering the new requirements to issue more detailed statement of terms;
  • Scrutinise your working relationships/arrangements with staff carefully* to ensure you don’t fall foul of the new requirements when it comes to workers; and
  • Update existing policies in line with the employment law changes*.

Some of the upcoming changes have resulted from the Good Work Plan published in December 2018 and described as the government’s “vision for the future of the UK labour market”.

1. Statutory Rate Increases

The rates table below shows the increased National Minimum Wage coming into effect April 2020, together with the 2019 rates and the difference.

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2020 £8.72 £8.20 £6.45 £4.55 £4.15
April 2019 £8.21 £7.70 £6.15 £4.35 £3.90
Difference £0.51 £0.50 £0.30 £0.20 £0.25

Statutory maternity, paternity and shared parental pay increases to £151.20 per week (was £148.68 April 2019).

What do you need to do?

  • Update your existing parental policy/policies to reflect this change (if your policies specify rates).
  • Identify and write to all employees affected by this change.
  • Ensure changes are effected for April payroll.

2. Parental bereavement leave

From April 2020, employees who lose a child under the age of 18, or suffer a stillbirth from the 24th week of pregnancy, are entitled to two weeks’ unpaid leave, as a right from day one of their employment.

What do you need to do?

  • Update your existing Leave policy/policies to reflect this change.
  • Consider religious and cultural requirements around bereavement – don’t run the risk of racial or religious discrimination claims that may arise from refused requests for time off for religious observances on death. Certain religions require a set time for mourning.
  • Be mindful of the possible long-term effects of bereavement. The effect of grief could manifest itself both physically and mentally, resulting in a long-term condition or illness. This may show as a change in performance, behaviour or absence. Requests for time off or increased sickness leave should therefore be treated carefully, in the knowledge that a long-term condition could give rise to the risk of a disability discrimination claim.
  • Be aware of bereaved mothers’ maternity leave rights – remember that mothers who lose a child after 24 weeks of pregnancy, or during maternity leave, will not lose their entitlement to maternity leave and pay. Rights to paternity leave and shared parental leave (where notice of leave has been given) will generally also be maintained in these circumstances.

3. Statement of terms

The negative press over zero hours contracts has been widespread, and the government is clearly seeking to enhance clarity when it comes to employee/worker status. As a result of its commitments set out in the Good Work Plan, the government will be extending the entitlement to a statement of ‘written particulars’ to include workers as well as employees. Currently employers have up to two months to issue the statement to any employee working for them for more than a month, but from 6 April 2020 the right to a statement of written particulars will become a day one right.

The information to be included in the written statement from day one is also being expanded. In addition to the current information that must be provided for all new joiners on or after 6 April 2020 the statement should also include:

    • how long a job is expected to last, or the end date of a fixed-term contract
    • how much notice the employer and worker are required to give to terminate the agreement
    • details of eligibility for sick leave and pay
    • details of other types of paid leave e.g. maternity leave and paternity leave
    • the duration and conditions of any probationary period
    • all remuneration (not just pay) e.g. vouchers, lunch, health insurance
    • the normal working hours, the days of the week the worker is required to work, and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determined
    • any training entitlement provided by the employer, any part of that training entitlement which the employer requires the worker to complete, and any other training which the employer requires the worker to complete and which the employer will not bear the cost.

What do you need to do?

  • Review current contracts and recruitment processes to ensure that all the required information is included in contracts.
  • Consider implementing procedures as part of the recruitment process to ensure documentation is issued on or before the first day of work.

4. Holiday pay

In the Good Work Plan the government made a commitment to improving the holiday pay arrangements for seasonal workers. To achieve this, the reference period for determining an average week’s pay will increase from 12 weeks to 52 weeks, or if the worker has been employed for less than 52 weeks, the number of complete weeks for which the worker has been engaged.

What do you need to do?

  • Consider which workers this new reference period will relevant for and how to go about implementing the new reference period.
  • Ensure that records of pay for the 52 weeks prior to 6 April 2020 is up to date and continue to accurately record such data.

5. Extension of IR35 (off-payroll working) to private sector

*** Please note the Government has now confirmed that the extension of the IR35 changes to medium to large companies in the private sector has been postponed until April 2021***

The IR35 tax rules are aimed at reducing tax avoidance for off-payroll contractors working through personal service companies (PSC).

From 6 April 2020, medium and large sized private sector businesses (see note below) will be responsible for assessing the employment status of the off-payroll workers they engage. Note that these changes will only apply to payments made for services provided on or after 6 April.

What do you need to do?

If you’re likely to be affected, you should consider:

  • looking at your current workforce (including those engaged through agencies and other intermediaries) to identify those individuals who are supplying their services through PSCs;
  • start talking to contractors about whether the off-payroll rules will apply to them; and
  • put processes in place to determine if the off-payroll rules apply to future engagements.

Note: The legislation applies only to ‘medium or large’ businesses. There’s an exemption for end-clients who are ‘small businesses’ as defined by the Companies Act 2006 which means meeting two or more of the following criteria:

    • Annual turnover is no more than £10.2 million
    • Balance sheet total is no more than £5.1 million
    • No more than 50 employees.

Where the end-client meets two or more of these criteria, responsibility for determining the IR35 status of a contract remains with the PSC and the changes do not apply.

6. Agency Workers – Swedish Derogation Appeal

The “Swedish derogation” principle (which currently allows employers to avoid pay parity (after 12 weeks) between agency workers and direct employees if certain conditions are met) will be removed.

By no later than 30 April 2020, temporary work agencies must provide agency workers whose existing contract contains a Swedish derogation provision with a written statement advising that, with effect from 6 April, those provisions no longer apply.

In addition, temporary work agencies must provide agency workers with a Key Information Document, including information on the type of contract, the minimum expected rate of pay, how they will be paid and by whom.

What do you need to do?

  • If you do not have agency workers, then there are no action points to take. If you do have agency workers, you should review the information that is being provided to them to ensure that it will meet with the new requirements.

How can we help?

*As we have highlighted above, the key message is to review and update your policies and contracts and ensure they reflect the changes taking place. It is also crucial that businesses look at all their working relationships and ensure that all parties are aware of their status. If you’d like our help with preparing for these changes to employment law, then please get in touch.