7 min read.
In April 2020 there are many changes coming regarding employment law. Clare Thomas, Solicitor at Bowcock and Pursaill is current helping many clients to prepare for the changes in employment law that lie ahead. Here she looks at what you should be considering and what the possible impact could be on businesses.
Changes to the use of Agency Workers
The Swedish Derogation is an exemption from the equal treatment principle as regards pay where agency workers have a permanent employment contract with an employment business and are paid between assignments when they are not working for a hirer. The exemption does not affect an agency worker’s entitlement to the remaining elements of equal treatment i.e. relating to duration of working time, night work, rest periods, rest breaks or annual leave.
From 6 April 2020, the Swedish Derogation will be repealed. If an employment business employs an agency worker under the Swedish Derogation as at 6 April 2020, it has until 30 April 2020 to provide the worker with a written statement that the derogation no longer applies and that they are eligible for week 12 rights subject to completion of the qualifying 12-week period. A claim for failure to do so lies against the employment business.
The idea behind this change is to generate more permanent job roles.
In addition, employment businesses will be required to provide a “Key Information Document” to a work-seeker before agreeing the terms on which the work-seeker will undertake work. This will also take effect from 6 April 2020.
Employment businesses who manage agency workers will need to ensure they are compliant with these new rules. Businesses that use agency workers (the hirer) may also want to ensure that the employment business supplying them with agency workers is compliant and the cost of using agency workers may be affected by these changes.
The law around taxation and national insurance is changing when looking at settlement agreements
A settlement agreement is used to waive an employee’s rights to bring claims against an employer; in return the employee usually gets an agreed sum of money. Settlement agreements are often used when employment is terminated, either by the employer or employee.
From April 2020, employers will have to pay NIC on sums over £30,000 as well as income tax. This means that every settlement in excess of £30,000 will be subject to Class 1A NIC liability. This national insurance charge is only relevant to employers and does not affect the employee. HMRC will charge late payment interest and penalties if the NIC is not paid correctly.
We work with clients to make sure they’re following all the correct processes and understand what these changes mean to their business to ensure no fines occur.
Extension of right to a written statement of terms Employee contracts are now becoming an immediate right to employees
Employers are currently obliged to provide employees whose employment is to continue for more than one month with a written statement of certain terms of their employment (the required statutory particulars and certain other pieces of required information. From 6 April 2020, there will be no minimum service requirement and the obligation on employers to provide a written statement of particulars will be extended to workers (including agency workers), as well as employees.
Currently there is some flexibility in the timings of the provision of the information required. From 6 April 2020, the majority of particulars will need to be given in a single statement before the job begins.
In addition, from 6 April 2020, the statement will be required to contain the following additional particulars:
- the days of the week the worker is required to work, whether the days and working hours may be variable and how any variation will be determined;
- any paid leave to which the worker is entitled;
- details of any other benefits provided by the employer that are not already included in the statement;
- any probationary period, including any conditions and its duration; and
- any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the worker.
The changes to section 1 statements set out above will only apply to those starting work on or after 6 April 2020, subject to certain transitionary measures. The new rules requiring the provision of a section 1 statement do not apply to existing workers who have started work before 6 April 2020. (However, if their contract terminates and they start work under a new contract on or after 6 April 2020, they would be treated as a new worker and would be entitled to receive a compliant section 1 statement.)
It is important that employers prepare a compliant statement as even if they do not recruit new employees, an employee can still request an updated statement compliant with the new requirements and this will need to be provided promptly on request. We review contracts for our clients and offer any advice needed to ensure their contracts are legal and compliant with the new requirements.
How employers determine holiday pay calculations will change
From 6 April 2020, a new reference period for determining the average weekly earnings for holiday pay calculations will come into play; it will now be 52 weeks instead of the previous 12 weeks. This change is meant to improve pay calculations for workers in seasonal or atypical roles.
Employers will have to consider which employees this new law will affect alongside ensuring all records are up to date and accurate for the duration of the new longer reference period. We can help clients with these calculations to ensure they meet the latest standards.
Changes to the National Minimum Wage and National Living Wage
From 6 April 2020, employers are set to give employees over 25 years old a 6.2% pay rise when paying them the new National Living Wage of £8.72 and wages have risen across other age ranges as well. A 6.5% increase to £8.20 for 21-24 year olds, 4.9% increase to £6.45 for 18-20 year olds, 4.6% increase to £4.55 for under 18s and a 6.4% increase to £4.15 for Apprentices.
Wage increases can be hard on businesses as more money goes out to workers and overheads need to be maintained. We can help you with all your employment law concerns as you make your way into the new financial year.
Off-payroll working rules (IR35) will change
The Government is planning to introduce legislation from April 2020 that will impact on payments made to personal service companies (PSCs) by large and medium sized businesses. In relevant cases, payments to PSCs will be treated as payments of employment income on which the client (or third party intermediary) must account for tax. This effectively shifts responsibility for the IR35 tax compliance from the PSC to the client or intermediary. Whilst there has been talk of reviewing the legislation, the implementation date may not necessarily be put back, so employers should continue to prepare.
New parental bereavement leave law
The Parental Bereavement (Leave and Pay) Act 2018 will come into force in April 2020 meaning bereaved parents will have the right to two weeks off following the death of their child if under the age of 18. This includes stillbirths after 24 weeks of pregnancy.
Parents who have been in their job for six months or more will be entitled to statutory pay for their leave. Employers can be affected by this as the leave can be taken as either two consecutive weeks or two blocks of one week and little notice may be provided when putting in for the leave due to the circumstances. We can help to get employers up to speed on the latest regulations when looking at employee bereavement law.
Brexit can also potentially alter laws in the UK relating to employment, especially when looking into immigration requirements and visas.
We will know more about this as we settle in to life post Brexit.
For help and advice on the changes in employment law or any employment law concerns contact Clare Thomas at Bowcock and Pursaill on 01782 200500 or email firstname.lastname@example.org.