Following up from our previous blog regarding The Good Work Plan, some of the government’s draft regulations have now been put into action and we are preparing ourselves with an array of changes in employment law.
To avoid having to trawl through the reams of legislation, we have summarised the top 6 key employment law changes that will be coming into effect in April 2020.
- New right to a written statement of terms
Employers previously had two months to provide their employees with a statement of written particulars following the start of their employment. This will no longer be the case.
From 6 April 2020, all new employees and workers will have the right to a statement of written particulars from day one of their employment. This means that the contractual terms are to be ironed out during the recruitment process ensuring that you have sufficient time to comply with the right.
As part of the right, the new law stipulates that employees and workers will be entitled to additional information. This will include:
- what specific days of the week the employee/worker is required to work;
- whether such hours may be varied and if so, how they vary or how the variation is to be determined;
- all benefits provided by the employer, such as medical insurance and not just pay
- details of the probationary period including the duration and conditions of passing the period; and
- details of training entitlement including details of mandatory training which is not funded by the employer.
The template contracts provided on the QCS Policy Centre have been updated to include the requirements of the new right but, in the event you are unsure or if you have unusual staff benefits, please take legal advice to ensure compliance.
- Amendments to agency workers rules
From 6 April 2020, once an agency worker completes a qualifying period of 12 weeks, they will be entitled to the equal rate of pay as those employees and workers directly employed by the business.
While agencies are likely to bear the brunt of this change, businesses in general and, in particular, within the care sector who are reliant on flexibility of agency workers may wish to bear this in mind.
- Changes to IR35 rules for the private sector
In 2017, public sector businesses have been subjected to the HMRC’s IR35 rules. From 6 April 2020, these rules will be extended to medium and large-sized private sector businesses.
To determine whether you are a ‘medium and large-sized business’ you will need to have two of the following:
- an annual turnover of more than £10.2 million;
- a balance sheet total of more than £5.1 million; and/or
- more than 50 employees.
If you satisfy the test, you will become responsible for assessing the employment status of any ‘off-payroll workers’ you engage. Amongst others, off-payroll workers may include contractors and agency workers in some circumstances.
As an intermediary, i.e. a business which supplies workers to another business (‘the client’), you will need to determine the employment status for the worker to see if the off-payroll working rules apply. If they do, you will calculate a ‘deemed employment payment’- the amount reflective of the sum the worker would receive following the usual tax and National Insurance contribution deductions.
As a client, you will need to determine the employment status of all workers you engage for every contract you agree with an agency and worker. If you are also the fee-payer and the off-payroll working rules apply, you will need to deduct and pay tax and National Insurance contributions to HMRC.
It would be advisable for medium and large-sized businesses who rely on agency workers to keep a clear record of what determination they have made for each worker/contract but also the reason for the determination, any fees paid and have inline a standard procedure the business could use in the event that there is a disagreement.
These changes come into effect on 6 April 2020. The Government has provided guidance for both intermediaries and clients. However, please be aware that recent reports have stated the Conservatives may look again at IR35 if they remain in government.
- Holiday pay reference period adjustment
From 6 April 2020, the pay reference period for calculating “normal remuneration” during holidays will increase form 12 weeks to 52 weeks. The government implemented this change to allow employees and workers who have irregular working patterns to benefit from a longer period to ensure a more accurate holiday pay calculation.
It would be essential for businesses to keep a constant and clear record of their employees and workers hours worked and pay.
- Parental bereavement law
In September 2018, Parental Bereavement (Leave and Pay) Act 2018 received Royal Assent. In our earlier blog post we covered what this new legislation would encompass. While the exact date in which the legislation comes into effect is yet to be confirmed there are steps businesses can take now to best prepare. In particular, employers may wish to implement new policies clarifying its stance. Those employers who already have existing policies may wish to review and update them in line with any legislative changes.
- Taxation on termination payments
Following up from the announcement in 2017 introducing the National Insurance Contribution (‘NIC’) charges to termination payments paid under a settlement agreement, the government’s delayed changes are now set to take effect from 6 April 2020.
Currently, the charge on termination payments in excess of £30,000 is limited to income tax only. The updated NIC legislation will seek to align NIC and income tax, notably it will be an employer’s obligation to make NIC for qualifying termination payments above £30,000. This NIC will be introducing a 13.8% Class 1A ‘Employer National Insurance Contribution’ charge for part of the termination payment that attracts income tax.
In essence, this means that employers must bear the cost of National Insurance Contribution and not the employee. Employers may wish to bear this in mind if they are contemplating making a settlement offer to an employee to terminate their employment.