2020 is set to be another year of change from an employment law perspective. Not only will employers have to deal with legislative changes affecting contracts of employment, pay and tax, they will also have to grapple with the political uncertainty created by Brexit and the impact of the General Election.
Paula Bailey, Partner and employment law expert at Howes Percival explains, “2019 has been a busy year for employment legislation and despite the political turmoil created by Brexit and the December General Election, we expect 2020 will be no different.
“While some of the proposals aimed at strengthening workers’ rights outlined in the Good Work Plan have fallen – because they had not completed the legislative process in time – there are still plenty of legislative changes employers need to prepare for. In addition to updates in statutory pay rates in April, a raft of amendments including changes to contracts of employment and taxation are expected to come into force.
“With so many legislative changes on the horizon, it’s essential that employers plan ahead to ensure they remain compliant. They should review their current employment contacts and resource models to ensure they have the correct relationship with individuals that they engage ahead of the changes.”
The busiest day in the 2020 employment law calendar is set to be 6 April, with several changes expected to come into force including:
Contracts of Employment
All employees and workers will have a ‘day one right’ to a written statement of terms. The statement has also been expanded and contains additional details previously available to the employee in a separate document.
Agency Workers
Temporary work agencies will be required to provide agency work-seekers with a Key Information document, including information on the type of contract, the minimum expected rate of pay, how they will be paid and by whom. In addition to this, with effect from 30 April 2020, the Swedish Derogation provision will no longer apply.
Average Holiday Pay
The reference period to be used to calculate average weekly pay for holiday pay will be increased from 12 weeks to 52 weeks.
Tax changes
The off-payroll working rules (relating to IR35) are scheduled to be extended to large and medium-sized companies in the private sector. Affected companies will be required to determine the employment status of individuals engaged through personal service companies or intermediaries. They will need to provide that determination to fee payers and workers and adopt a resolution process in the event of disagreement. They will also be responsible for the payment of tax and National Insurance contributions (NICs) where there is deemed employment.
HMRC have developed an online checking tool, the ‘Check Employment Status Tool’ (CEST), which, if completed correctly, they will accept. Whilst the new rules are scheduled to apply from 6 April 2020, the final legislation to introduce these changes remains incomplete and many businesses and professional organisations are calling for the changes to be postponed. However, at this time, the information available indicates that it is likely that the new rules will be implemented as expected.
As a result of the tax changes and the changes to the Swedish Derogation model, many organisations are looking at their resource models going forward.
All termination payments above the £30,000 threshold will be subject to class 1A NICs.
Information and Consultation
The threshold to request an information and consultation agreement will be lowered from 10% to 2% of the total number of employees.
Parental Bereavement Leave and Pay
This Act provides for parents to be entitled to 2 weeks’ leave and statutory bereavement pay if they lose a child under the age of 18, which includes where a child is still born after 24 weeks. However, the regulations to set out and implement this Act, i.e. when it can be taken and safeguards against detriment (redundancy or dismissal) have not yet been published.