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Upcoming employment legal developments in April 2020
- AuthorClare Gilroy-Scott
There is a lot going on in the world of employment law in April 2020. Below is a summary of some of the main upcoming developments so that you don’t get caught out.
Statement of terms
One of the biggest changes coming into force on 6 April 2020 is the new requirement for employers to issue workers with a written statement of their terms (like they currently do for their employees - often known as a statement of employment particulars or section 1 statement?).
Additionally, there will be changes to the current requirements for employees. In summary, from 6 April 2020, the written particulars of their employment will need to be provided by the employer on or before day 1 of their employment (rather than within the 2 months as now). Further details will need to be included,such as details of any probationary period and training requirements as well as details of any paid leave and benefits entitlements, and all employees will be entitled to them (regardless of their length of service).
From 6 April 2020, employers must use a reference period of 52 weeks (rather than the current 12 weeks) to calculate holiday pay. This is an important development for workers who work variable hours as, under the current rules, their rate of holiday pay can vary significantly depending on when they take their holiday.. However, for employees who work stable hours, this change will have no impact upon them.
Currently, an ex-gratia payment that is made by an employer to an employee upon termination will not be subject to National Insurance contributions (“NICs”). From 6 April 2020, NICs will apply to any termination payment above £30,000 (just like the PAYE tax currently does). This will, of course, make it more expensive for employers when making such termination payments.
Again from 6 April 2020, agency workers will be entitled to receive a document known as a “Key Facts Page”. This document must contain specific details about their basic terms, including the minimum rate of pay they can expect and how they will be paid.
Also, a concept known as “the Swedish Derogation” is being removed with effect from 6 April 2020. Essentially this means that all agency workers must receive equal pay compared to permanent workers after they have completed 12 weeks of service. There will no longer be a mechanism to circumvent this right (as there is now under the Swedish Derogation method whereby agency workers are employed by the employment business).
In a nutshell, the IR35 tax rules are changing in respect of individuals who provide their services to medium and large private sector businesses through their own personal service company (PSC) or LLP. Currently, the PSC/LLP is responsible for determining whether the individual they provide to carry out services is working “inside” or “outside” IR35 by assessing the working relationship in practice, and for making the necessary PAYE tax and NICs payments.
From 6 April 2020, the end-user client of the services will become responsible for making a status determination (i.e. a determination as to whether the individual employed for tax purposes or self employed) and for passing that determination and the reasons for it down the supply chain to the entity with which they contract as well as the worker and the PSC (which may be quite complicated if there is an employment business in the chain). The “Fee Payer” in the chain, i.e. the organisation that pays the PSC for the individual’s services, will be responsible for paying PAYE tax and NICS if the determination is that the individual is, in fact, employed for tax. End-user clients must take “reasonable care” when making a determination about the employment status (for tax) of a worker as failure to do so will mean that the end-user client is liable for the worker’s tax and NICs. Blanket determinations are not permitted. Thought will need to be given to this issue prior to the implementation date to ensure that end-users, workers and recruitment agencies are ready for this change, including a full review of the status of all individuals providing services via PSCs or other intermediaries. End-user clients will also need to put a status determination disagreement process in place to address concerns by a worker or their PSC as to the determination given. The legislation sets out timeframes in which responses must be provided to any notification of disagreement received.
Note that the new rules will not affect the individual’s employment status in terms of employment rights. The PSC/LLP will remain responsible for the individual’s holiday entitlement etc. They are also not applicable to those who are self-employed and do not provide services through a PSC/LLP (where the usual IR35 rules will apply).
Information and consultation
There is already legislation in place which gives employees an entitlement to be involved with workplace discussions in certain areas and subject to certain conditions being met. Currently, for such an arrangement to be put into place, at least 10% of the workforce needs to support the request. From 6 April 2020, this will lowered to 2% (although there does still need to be a minimum of 15 employees).
Although no specific date has yet been announced, it is expected that new rights will be introduced in April 2020 to provide two weeks of bereavement leave and pay for parents who lose a child.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article, please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.