As we begin the new year, we’re taking a look at the HR and employment law changes that are on the horizon in 2020.
Employers and managers should be aware of this new legislation and aim to prepare well in advance.
Parental Bereavement Leave rights take effect – 6 April 2020
The Parental Bereavement (Leave and Pay) Act 2018 provides for at least two weeks’ leave for employees following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy. Employees with 26 weeks’ continuous service will be entitled to two weeks of paid leave at the statutory rate and other employees will be entitled to unpaid leave.
IR35 rule changes
From 6th April, private-sector firms using personal service company (PSC) contractors will take legal responsibility for ensuring off-payroll contractors stick to the tax rules known as ‘IR35’.
The effect of the rule change will be that if you or your agency are paying a worker through a company, you will need to deduct income tax and employee National Insurance contributions (NICs) and pay employer NICs from those payments, effectively making you, for tax purposes, the ‘employer’.
This ruling comes in as the Treasury believes a third of people claiming self-employed status should pay more in national insurance as they are effectively employees of their clients.
Affected businesses and organisations in the private and charity sectors will need to check whether contractors, freelancers, or any worker considered self-employed need to pay income tax and national insurance.
Abolition of the ‘Swedish derogation’ relating to pay for agency workers from 6 April 2020
The Agency Workers (Amendment) Regulations 2019 (SI 2019/724) abolish the ‘Swedish derogation’, which created an exception to the rules requiring agency workers to be given comparable terms and conditions to an employer’s own workers in certain circumstances. Under the derogation, agency workers can exchange their right to be paid the same as directly recruited employees for a contract guaranteeing pay between assignments.
The Government’s Good work plan, published on 17 December 2018, highlights the misuse of the derogation by some employers. The legislation banning this type of contract is intended to prevent agency workers losing out on their equal pay rights. Workers on Swedish Derogation contracts will have to be given written confirmation of the abolition of the ‘derogation’ in April.
Increase in the national living wage
There is clarity on one aspect of the Good Work Plan; the national living wage is already confirmed to rise by 6.2% in what the government says is “the biggest cash increase ever”.
From 1st April, the new rates will be:
The National Living Wage for ages 25 and above – up 6.2% to £8.72
The National Minimum Wage for 21 to 24-year-olds – up 6.5% to £8.20
For 18 to 20-year-olds – up 4.9% to £6.45
For under-18s – up 4.6% to £4.55
For apprentices – up 6.4% to £4.15
Extension of the right to a written statement of particulars of employment
Currently, employees who have been continuously employed for more than one month must be provided with a written statement of terms within two months of employment commencing.
From 6 April, all new employees and ‘workers’ will have the right to a statement of written particulars from their first day of employment. Previously workers didn’t have any right to a written statement.
Given the new obligation is to provide particulars on ‘day one’, employers should prepare the statement of particulars during the recruitment stage.
Additional Information to be contained within written statements of employment
A number of additional areas of information will need to be included in employment contracts issued from 6thApril, i.e.
More on working hours and days
Other paid leave, provided by the employer (e.g. extra paid leave upon increase of service)
Other benefits provided by the employer (e.g. health cover)
Probationary periods – previously, this was optional
Training that the worker must complete, including training for which the employer will not bear the cost.
Employers will be required to issue written statements conforming to the new requirements only in relation to employees and workers who start work with them on or after 6 April 2020. However, ‘pre-existing employees’ who joined before that date will still be able to request a statement and the employer must provide one that complies with the new requirements within one month.
This entitlement will apply only if the employee is still working for the employer or is within three months of their leaving date. Employees can make only one such request.
Further, if, on or after 6 April 2020, there is a change to terms of a pre-existing employee that would have had to have been included in the new-style written statement (i.e. as if that employee had started work on or after 6 April 2020), and the employee has not previously requested a new-style statement, the employer must provide the employee with a written statement of the change.
The Deminos team will be updating applicable documentation in the coming weeks and months with any relevant information to ensure compliance and best practice is adhered to and will be in contact with clients directly, as necessary.
New rules for calculating holiday pay
The reference period used to calculate holiday pay for workers with variable pay is also changing on 6 April. Currently, this is the pay that a worker receives during the 12 weeks worked prior to taking a holiday.
This is problematic for workers with variable pay based on the hours they work, as it means that holiday pay is higher if leave is taken immediately following peaks, and lower if it is taken following a slower period.
On 6 April, the reference period will be changed to 52 weeks, or the number of weeks of employment if a worker has been employed for less than 52 weeks. This is so employees are not disadvantaged as a result of taking holiday.
The Good Work Plan
Described as the “largest upgrade in a generation to workplace rights”, the Good Work Plan was created after Matthew Taylor’s Review of Modern Work Practices.
Although the Plan was initially put on hold due to the uncertainty surrounding Brexit, the government returned to it and should start implementing it in 2020 after last year’s general election win.
Although there is still no official timescale to many of the Plan’s proposals, employers should expect changes to:
Anti-discrimination laws regarding flexible working
Legislation to prevent poor treatment of workers
Enhancement of the Pension Regulator’s powers
Online access to information regarding individuals’ pension savings
At Deminos, we’ll let you know about any developments as they occur.
No list of changes to employment law would seem complete without a reference to Brexit in recent years. However, despite the UK’s departure from the European Union on 31st January, there are unlikely to be any major changes to employment law for a while.
The UK will begin a transition period upon leaving the EU, which is expected to last at least until the end of year, meaning that although the UK will cease to be an EU member, the trading relationship will remain the same, as will rights to work in the UK for EU, EEA and Swiss citizens. Whatever happens, Irish citizens will maintain the right to work in the UK under the longstanding pre-existing arrangements between the two countries. Employers are advised to be aware of any developments that may take place as negotiations continue, and we will provide updates when the shape of future arrangements becomes clear.