Employment

The following HR and employment law changes are due to come into force in April 2020:

New right to a written statement of terms

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 2020, all new employees and workers will have the right to a statement of written particulars from their first day of employment. The obligation will apply to all engagements, regardless of their length.

Additional information will have to be included as part of the extended right, such as:

  • Working days
  • Variability in hours / days
  • Any paid leave, for example, maternity leave
  • All benefits
  • Any probationary period
  • Certain information on training

There is no need to update contracts of employment / statements of particulars for individuals who started employment before April 2020. However, anyone who requests a section 1 statement must be provided with one; and any such statement must comply with the new requirements.

Changes to particulars in a section 1 statement must be notified within one month. All employees and workers must be notified of any changes, including those employed before April 2020 who didn’t receive information on those particulars in their original statement.

Amendments to agency workers rules

Agency workers have the right to the same pay and basic working conditions as direct recruits after 12 weeks’ continuous service in the same role – the equal treatment principle.There is an exemption from the right to equal treatment as regards pay (including holiday pay) if an agency worker is employed under a permanent contract of employment with the agency (with minimum requirements) and is paid a minimum amount between assignments. This is called the Swedish derogation.

The Swedish derogation is being abolished from 6 April 2020. All agency workers will be entitled to equal pay with direct recruits after 12 weeks in the same role. Written notification that the derogation will no longer have effect must be provided by the agency to workers whose contracts have a Swedish derogation provision by 30 April 2020.

In addition, from 6 April 2020 all employment businesses will have to provide agency work-seekers with a key facts statement, before agreeing the terms by which the work-seeker will undertake work. The document must be headed “Key Information Document”, be separate to any other documents provided to the work-seeker, and include specified information. Guidance on the key information document is available here.

Changes to IR35 rules for the private sector

At present, the IR35 rules apply where an individual (worker) personally performs services for another person (client), through an intermediary (usually a personal service company), and if the services were provided under a direct contract, the worker would be regarded for tax purposes as being employed by the client. Currently, it is the intermediary’s responsibility to determine whether IR35 applies.

Changes to IR35 rules are proposed for medium and large businesses in the private sector to largely mirror changes that took effect in the public sector in 2017. Under the new regime, the onus would shift from the PSC to the end user client to make a status determination. Responsibility for accounting for tax and national insurance would be on the party who pays for the individual’s services, known as the ‘fee-payer’. For more information go to Brodies’ IR35 hub.

The changes were due to come into force from 6 April 2020, however there is now the possibility that the roll out will be delayed. Last week the Chancellor Sajid Javid said that the Conservatives would review the proposed changes to decide whether to take them forward or not. The shadow minister for small business Bill Esterson has said that the Labour party would halt the proposed IR35 changes; while the Liberal Democrats have pledged a review in their manifesto.

Holiday pay reference period adjustment

Currently, the holiday pay reference period is 12 weeks for workers with no normal working hours, or those with normal working hours but whose pay varies with the amount of work done, or according to the time of the work.

From 6 April 2020, the holiday pay reference period will increase from 12 weeks to 52 weeks for these workers. Employers will be required to look back at the previous 52 weeks where a worker has worked and received pay, discarding any weeks not worked or where no pay was received, to calculate the average weekly pay. Where a worker has been employed for less than 52 weeks, the reference period will be the number of weeks they have been employed.

The new legislation does not cover the calculation of holiday pay for workers with ‘normal working hours’ whose pay does not vary. For these workers, case law so far has said that any calculation of what commission and overtime etc. to include in holiday pay should be based on average pay over a ‘representative’ period. In practice, even although the new legislation does not apply to these workers, it might result in tribunals being more inclined to view 52 weeks as being ‘representative’.

Lower information and consultation threshold

The threshold required for a valid request to set up an information and consultation arrangement is being lowered from 10% of the workforce to 2%.

New right to parental bereavement leave

A new right to parental bereavement leave is expected to come into force in April 2020. If it does, bereaved parents will have the right to two weeks of leave following the loss of child under the age of 18, or a stillbirth after 24 weeks of pregnancy. Bereaved parents employed with a minimum of 26 weeks’ continuous service will also be entitled to receive statutory parental bereavement pay.

Employer NICs due on termination payments

Currently the first £30,000 of a termination payment which is taxable under section 403 of ITEPA 2003 is tax free, with the balance over £30,000 subject to income tax. No employer or employee National Insurance contributions are due.

Class 1A employer NICs are going to become due (at 13.8%) on the balance over £30,000. This is to have effect from a date set by HM Treasury by regulations – the government indicated in the Autumn 2018 budget that it would be 6 April 2020. There will be no change as regards employee NICs.

Other proposals and consultations

Look out for our 2020 HR to-do-list, which we will publish at the start of January, highlighting all of the forthcoming changes and current proposals and consultations on HR and employment law related issues.

In the meantime, please get in touch with any queries on any of the above. Workbox users can also have a look at the What’s new? page for more details.

Julie Keir
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