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Wednesday, March 4, 2020
We covered a number of the April 2020 changes at the end of last year but as ever its worth a further reminder just before they come into force.
6th April – Good Work Plan
At the end of 2018 the government published the ‘Good work plan’, a response to the Taylor review of modern working practices undertaken by Matthew Taylor, chief executive of the Royal Society of Arts. Whilst Brexit has proved a significant distraction for the government there remains a number of employment related changes scheduled to become law at the start of the new tax year.
Here are the headline areas;
Agency Workers
A key move has been the decision to abolish a loophole known as ‘Swedish derogation’ which covers rules governing the engagement of agency workers. Historically this loophole permitted agencies an opportunity to opt out of equalising the remuneration of agency staff with FT workers after 12 weeks engagement, as long as they were still paid between roles.
This anomaly will stop from 6th April when the Agency Workers (Amendment) Regulations 2019 come into force.
Calculating Holiday Pay
Holiday pay calculations have been a perennial issue for employers and this move is a welcome development. The result is the lengthening of the reference period for determining an average week’s pay, from the previous 12 weeks to 52
weeks. This will take effect from 6th April. The primary beneficiaries of the revised calculation will be seasonal workers who’ve historically been disadvantaged through the shorter-term calculation. Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018.
Statement of Terms
The third change under the Good Work Plan will see an extension of the entitlement to receive terms and conditions of employment which will now include workers as well as employees. As it stands an employee engaged for one month can expect terms and conditions within two months of their appointment. This becomes a right for workers and employees from the first day of their engagement. Employers should prepare for the onboarding of new employees at recruitment stage ensuring that the terms and conditions accurately reflect the role and expectations and essentially be clear as to the differentiation between employees and workers within the organisation. Employment Rights (Miscellaneous Amendments) Regulations 2019).
- Workers employed on or after 6 April 2020 will be entitled to a written statement of employment particulars.
- Employees and workers must be provided with their written statement on or before their first day of employment.
- There is additional information that written statements will need to contain, including:
the hours and days of the week the worker /employee is required to work, whether they may be varied and how
- entitlements to any paid leave
- any other benefits not covered elsewhere in the written statement
- details of any probationary period
- details of training provided by the employer
6th April – Tax on termination payments
From 6th April any termination payment and/or payment in lieu of notice (PILON) above £30,000 will be subject to National Insurance Contributions (NIC).
6th April – Extension of IR35 to private sector
[NB We cover this topic in greater detail, as a guide, to engage contractors in our third article this month]
The somewhat controversial and often ambiguous IR35 rules are subject of a revision following HMRC’s consultation which closed 19th February. In very simple terms the IR35 rules seek to prevent contractors, often working through Personal Service Companies (PSC), from paying less tax and NICs than similarly positioned employees.
Contractors themselves had been responsible for determining their liability however since 2017, public sector employers were given the direct responsibility for this task. In a move to unify the rules responsibility for accounting for tax and national insurance for non-public sector contractors will now also include private companies as the party who pays for the individual’s services, known as the ‘fee- payer’. This will apply IF they are a business with:
- More than 50 employees
- An annual turnover over £10.2 million
- A balance sheet worth over £5.1 million.
6th April – Parental bereavement leave and pay
We covered this positive piece of legislation in a recent update.
The Act provides for employed parents to have the right to 2 weeks’ leave if they suffer the tragedy of losing a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy. Parents will also be able to claim pay for this period, subject to meeting eligibility criteria.
2020 – Executive pay gap reports published
From the start of 2020, organisations with more than 250 UK employees are legally required to disclose their CEO pay ratios.
If you have any concerns regarding changes to legislation such as the above please feel free to drop Robert or Sally a line e-mail SallyFletcher@samuelphillips.co.uk
Written by Robert Gibson, Senior Consultant - Employment Law
Robert is a Senior Consultant at Samuel Phillips and specialises in employment and business matters. He advises in relation to employment and shareholder disputes, including pensions and related issues.
