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.
IR35 rule changes
In 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.
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.
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 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.
Given the new obligation is to provide particulars on ‘day one’, employers should prepare the statement of particulars during the recruitment stage.
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.
No list of changes to employment law would seem complete without a reference to Brexit in recent years. However, despite the UK being set to leave the European Union on 31 January, there are unlikely to be any major changes to employment law yet.
The UK will begin a transition period 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. Employers are advised to be aware of any developments that may take place as negotiations continue.