Employment Law changes from 6 April 2020 – Employers are you ready?
A number of employment law changes will take effect from the 6 April 2020. Employment Partner, Paula Stuart summarises the key changes below:
New right to written statement of terms
The current law provides that employees are entitled to a written statement of employment particulars, often referred to as the ‘Section 1 statement’ within 2 months of commencing employment.
As from 6 April 2020 all employees and workers will be entitled to a Section 1 statement from ‘day one’ of their employment; existing workers (who are not employees) do not have a right to a written statement unless they are ‘re-engaged’ by the employer after that date.
The Section 1 statement must also include additional prescribed details, namely:
- In relation to hours of work, it must give details of the days and hours of the week the worker is required to work and whether are not such hours are variable and, if they are, how they vary or how that variation is determined
- Any terms and conditions relating to paid leave (other than holiday or sick leave)
- Any other benefits not covered elsewhere in the statement
- Details of any probationary period/trial shifts and the conditions applicable to them
- Details of any training entitlement provided by the employer
- Details of any compulsory training
- Details of any compulsory training that is not paid for by the employer
What happens to existing employees?
An existing employee should have been issued with a Section 1 statement if they have been employed for two months or more under the old regime.
On or after the 6 April 2020 an employee may request an updated Section 1 statement and this should be given not later than 1 month after the request is made and should include the new prescribed information.
What to do?
- Employers should first review, and if necessary update, their employment and casual worker contracts to ensure they include all the Section 1 prescribed information; and
- carry out a workforce audit to identify those employees who currently do not have a Section 1 statement and ensure one is issued; and
- have a system in place to ensure all new employees and workers are issued a Section 1 statement on or before their commencement date.
Changes to IR35 for the private sector
In light of Covid 19 this has now been postponed to 6 April 2021
As from 6 April 2020 the off-payroll IR35 working rules change. The change is relevant to those arrangements where a worker provides services to an end client through a personal service company (PSC) where, if it was not for the PSC, the relationship between worker and end client would be one of employee and employer.
The impact of the change will mean that the responsibility for assessing whether IR35 applies will shift from PSC to the end client if the end client is a medium or large entity; this responsibility already applies to the public sector.
The end user will be responsible for providing the worker with a status determination statement (SDS); this is also a new requirement for the public sector.
For small companies the responsibility remains with the PSC.
A small company will need to satisfy at least two of the following three requirements:
- its annual turnover is not more than £10.2m;
- its balance sheet is not more than £5.1m; or
- number of employees is not more than 50.
HMRC has confirmed that the new rules will only apply to payments for services that are actually provided on or after the 6 April 2020.
Termination payment – Employer NIC payable
At present termination payments are exempt from national insurance deductions (NICs). As from 6 April 2020 employers will be required to pay NICs (13.8%) on any part of a non-contractual termination payment that exceeds the £30,000 threshold.
Holiday pay reference period adjustment
From 6 April 2020 the holiday pay calculation reference period will be extended from 12 weeks to 52 weeks. The holiday pay reference period is used to determine how holiday pay is calculated for those employees and workers who do not have fixed or regular hours and so do not receive the same pay each week or month.
An employer will now need to go back up to 52 weeks (or the number of weeks they have been employed if less than 52) to calculate holiday pay.
For more information on how to calculate holiday pay for workers without fixed hours or pay see How to Calculate Holiday Pay
New Parental Bereavement Law
As from 6 April 2020 a new entitlement to Parental Bereavement Leave and Pay will be introduced. This will provide parents who lose a child under the age of 18 or suffer a stillbirth to take two weeks off work. Eligible parents who have been continuously employed for a period of 26 weeks ending with the date of death of a child will be entitled to 2 weeks statutory pay.
Amendment to Agency Workers rules
From the 6 April 2020 the ‘Swedish derogation’ is being abolished which means that all agency workers will be entitled to equal pay as direct recruits after 12 weeks in the same role.
Previously, whilst agency workers have the right to the same pay and basic working conditions as direct recruits after 12 weeks continuous service in the role there was an exemption from the right to equal treatment in relation to pay if an agency worker is employed under a permanent contract of employment with the agency and is paid a minimum amount between assignments. This was referred to as the ‘Swedish derogation’. This exemption will not apply as from the 6 April 2020.
In addition all employment businesses will have to provide agency workers with a ‘Key Information Document’ which must include the details of pay, contract type and leave entitlement. For more details on this see Key Information Document
National Living and Minimum Wage (NMW) increase
Workers are entitled to a minimum pay per hour subject to their age and if they are an apprentice. The rates will increase from the 6 April 2020 so you will need to review payroll and increase hourly rates of pay where necessary
The rates are:
|25 and Over
|21 to 24
|18 to 20
*This rate is for apprentices aged under 19 or those aged 19 or over in their first year. All other apprentices are entitled to NMW for their age.
The statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay and sick pay will increase as from 6 April 2020 to:
|Rate as from 6 April 2020
|Period of Payment
|Statutory Sick Pay (SSP)
|Statutory Maternity Pay (SMP)
Statutory Adoption Pay (ADP)
|· First 6 wks at 90% average weekly earnings (AWE)
· Remaining 33 wks at £151.20 or 90% AWE whichever is lower
|Statutory Shared Parental Pay (ShPP)
|£151.20 or 90% AWE whichever is lower
|Up to 37 weeks
|Statutory Paternity Pay (SPP)
|£151.20 or 90% AWE whichever is lower
Employment Tribunal Compensation Limits Increase
A week’s pay for the purpose of calculating the statutory redundancy payment and basic ward will increase from £525 to £538 for all dismissals after the 6 April 2020.