We recently provided a blog detailing several Government consultations in regards to potential changes to employment law, you can read that here. This blog provides information to employers regarding actual employment law changes in April 2020.
Written Statement of Particulars of Employment
Currently, all employees who work for more than one month are entitled to a Written Statement of Particulars of Employment. This document must be issued within 2 months of the employee starting work even if they leave before then. The information that must be contained within a written statement of particulars of employment is prescribed in law and is divided into two parts, the first being the ‘principle document’ The absence of this document can give way to a claim from an employee and if successful they could be awarded two weeks’ pay or if it is just and equitable in the circumstances, a higher amount of four weeks’ pay.
With effect from 6th April 2020, all employees and workers will have the right to receive this on day one of their employment. Currently, some of the information can be provided in installments, this will change and most information will have to be provided in a single document. The statement must include a reference to:
- normal working hours;
- the days of the week the worker is required to work and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determined;
- other types of paid leave such as maternity/paternity leave (i.e not limited to sick leave or holidays);
- probationary period, including any conditions and its duration;
- any training entitlement that the employer will provide which the worker is required to complete and any other training which the employer requires the worker to complete to which the employer will not bear the cost; and
- any other benefits provided by the employer.
With workers being entitled to a written statement of particulars of employment from day one, employers will need to amend the reference in their documents from employee to worker. There is significant case law in respect of employment status and as such employers must be careful that they issue the correct document for the purpose of the work being carried out.
Holiday Reference Period
Where workers do not have a set pattern of work an employer is required to calculate the previous average 12 weeks hours and pay to determine what is a ‘weeks’ pay for the purpose of holiday payment. This 12-week reference period must exclude all weeks where there is no payment, holiday or sickness. A worker should not be financially worse off for taking a holiday.
From 6 April 2020, the reference period used for determining a week’s pay when calculating holiday pay for workers with irregular hours increases from 12 weeks to 52 weeks.
Employers will be required to keep records going back 104 weeks to compensate for weeks with non-qualifying payments.
Where there are less than 52 weeks, all relevant weeks must be taken into account.
Our advice – ensure you have all of your records in place and that they are accurate and up to date as you will be relying on them. Determine how many employees are likely to require this calculation and provide guidance to them of how it will work in practice.
Termination Payments over £30,000
Currently, any termination payment over £30,000 is subject to income tax but not national insurance. With effect from 6th April 2020 this will change and employers will be additionally liable for Class 1A national insurance contributions. The employee is not affected by this change.
Parental Bereavement Leave
Primary carers and parents who suffer the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy and have 26 weeks’ continuous service will be entitled to at least two weeks’ pay at the statutory rate. The leave must be taken before the end of a period of at least 56 days beginning with the date of the child’s death. Parental bereavement leave can be taken in one block of two weeks or two separate blocks of a one-week period.
Employees without the qualifying length of service will still be entitled to the day one right to take the time off as unpaid parental bereavement leave.
A primary carer includes close relatives or family friends that have taken responsibility for the child’s care, foster parents, guardians and adopters.
Our advice – ensure you understand this fully and draft a policy for employees which informs them of the details and their rights.
Reform to Intermediaries Legislation (IR35) – Postponed until April 2021.
IR35 was originally implemented into the public sector in April 2017 and serves the purpose of tax avoidance which can result from ‘disguised employment’. On 6th April 2020, IR35 will be implemented into the private sector to medium and large-sized clients (organisations).
An employer that falls within this category will have the responsibility to determine the employment status of any contractor or worker providing services to it. If that worker is likely to be classed as an employee but for the intermediary which it provides the service then IR35 will apply. The client (organisation) will be required to deduct tax and national insurance contributions.
Employment status has always been topical and there is a significant amount of case law surrounding it. Whilst there should always be a contract between the parties relevant to the situation, it is what happens in practice which HMRC will consider. Some of the considerations to determine the employment status of a worker in terms of IR35 are:
- Does the worker have to carry out the work personally?
- Can the worker substitute his/her services?
- Does the client have to provide the worker with work?
- Does the client have control over the work, how, when and where it is performed?
- Is the worker his or her own boss and take responsibility for the success or failure of that business (intermediary)?
- Does the worker have a website, business cards, letter headed paper?
- Does the worker invoice for work completed?
- Has the worker provided terms and conditions of service to the client?
- Does the worker have business insurance?
- Does the worker provide services to more than one client?
HMRC has provided a factsheet which will help you further understand your responsibilities from April 2020.
Statutory maternity, paternity, adoption and statutory shared parental pay all increase on 5th April 2020, the proposed rate is £151.20 per week.
Statutory Sick Pay (SSP) is proposed to rise to £95.85 per week from 6th April 2020.
The Chancellor has announced today (11.03.2020) that businesses with less than 250 employees will have their SSP payments covered if they are related to coronavirus. The maximum time this payment will be covered for is 14 days.
Also, we are awaiting confirmation of the date that SSP will be paid from day one rather than day 4 having completed 3 waiting days.
National Minimum Wage
From 1st April 2020:
The national living wage increases from £8.21 to £8.72. (Those aged 25 and over)
The national minimum wage for workers increases where a worker is:
- aged at least 21 but under 25 from £7.70 to £8.20 per hour
- aged at least 18 but under 21 from £6.15 to £6.45 per hour
- aged 16 or 17 from £4.35 to £4.55 per hour
- apprentices from £3.90 to £4.15 per hour
Unfair Dismissal Rate
The maximum compensatory award for unfair dismissal rises to £88,519 on 6th April 2020.
Redundancy – the capped amount of a week’s pay rises to £538.00 and is also used for calculating the basic award in an unfair dismissal claim.
The new rates apply to payments made on or after 6th April 2020.
If you are worried about how your company might be affected by the latest Employment Law updates, then please call Jude Read-HR Consultancy on 01455 231982 or send us an enquiry.