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2020 – Employment Law Changes

2020 is shaping up to be a year of significant change in the employment law arena.  Here, we map out some of the important things for your business to plan for, as well as a number of the key cases that we expect to be heard or decided in the coming 12 months.

Employee Written Statement of Terms

Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 (SI 2018/1378) will come into force on 6 April 2020

A written statement of terms, usually all covered in a contract must be given on or before the first day of employment to all new workers (rather than within two months of employment starting and only for employees).

In addition, more information than previously must be included in the statement. For instance the written statement will have to include working hours, paid leave, probationary period, training entitlement and benefits.

What does it mean for your business?

The requirement to produce statements on or before day one means that employers must know the full details of the job offered from the outset and amend internal processes to ensure contracts are issued before new staff begin. Clear communication between managers, recruiters and candidates will make all the difference.

Holiday Pay

Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 (SI 2018/1378) will come into force on 6 April 2020

The reference period for determining an average week’s pay for holiday pay purposes will increase from 12 weeks to 52 weeks, or if the worker has been employed for less than 52 weeks, the number of complete weeks for which the worker has been employed.

What does it mean for your business?

A review of current working practices and calculation methods will be important. If your company has an external payroll function, request confirmation that the changes have been factored into the calculation methodology.

Agency Workers

The Agency Workers (Amendment) Regulations 2019 (SI 2019/724) will come into force on 6 April 2020

Temporary work agencies must provide agency work seekers with a “Key Information Document”, which must include information on the type of contract, the minimum expected rate of pay, the mode of payment and who will be making the payment.

What does it mean for your business?

Whilst not anticipated to have a significant impact on the private, voluntary or public sectors, these changes will provide greater transparency for workers about the terms they are signing up to.

Pay Parity

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019 come into force on 6 April 2020

The “Swedish Derogation“ will be removed from the Agency Workers Regulations 2010. Employment businesses will no longer be able to avoid pay parity between agency workers and direct employees.  Before, if agency workers had a “Pay Between Assignment Contract”  they would give up the right to pay parity with comparable permanent staff in return for a guarantee to receive a certain amount of pay when they have gaps between assignments .

Agencies must also inform relevant agency workers by 30 April 2020 that the Swedish Derogation no longer applies.

What does it mean for your business?

 If your company currently hires agency workers who are employed under Swedish derogation contracts, then these changes could have significant financial implications.  In most cases, your company will have to pay worker at least the same rate as direct recruits after these Regulations come into effect.

Take the time to check with the agencies you contract with and understand the terms of their contracts with their agents.

Informing and Consulting with your Employees

The Employment Rights (Miscellaneous Amendments) Regulations 2019 (SI 2019/731) which will come into force on 6 April 2020

Employees have the right to request that their employer sets up or changes arrangements to inform and consult (I&C) them about issues in their organisation. The requirement to inform and consult employees does not come about automatically.

At present, in a business with 50+ employees, at least 10% of the workforce must request I&C for it to become a requirement, subject to certain exceptions.  In April, that threshold will reduce to just 2% of the workforce.

What does it mean for your business?

Even though this is European-derived legislation, the UK Government has decided to strengthen the requirement to I&C. Employers can take a pro-active approach and introduce an agreed I&C arrangement before any request.  

National Insurance Contributions

The National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019 come into force 6 April 2020

All termination payments above the £30,000 threshold will be subject to Class 1A National Insurance contributions (NICs).

That will affect Payments In Lieu Of Notice (PILON) and other payments and benefits that are received in connection with the termination of a person’s employment.

What does it mean for your business?

Currently, certain forms of termination awards are exempt from employee and employer NICs and the first £30,000 is free from income tax. This change will prevent employers seeking NIC exemption through disguised termination payments.

IR35

Draft Finance Bill which was published on 11 July 2019, changes expected in April 2020 if Finance Bill is passed.

The off-payroll working rules were introduced in 2000 and require that individuals who work like employees, but through their own company, pay similar taxes to other employees.

With the new reform, large and medium-sized organisations in the private sector will become responsible for assessing the correct employment status of the contractors they engage to work for them.

Furthermore, all payments made to personal service companies will be treated as payments of employment income on which the client (or a third-party intermediary) must account for tax. This shifts responsibility for IR35 tax compliance from the personal service company to the client or intermediary that uses the services of the personal service company.

What does it mean for your business?

The Government is keen on making sure everyone is paying the proper amount of tax for their work and there can be substantial financial impacts for your company if it appears there are errors in the employment status of the contractors you engage to work for you. As at 7 January, the Government has announced a review of the off-payroll rules, so the future of this regime remains frustratingly murky. Businesses must continue to prepare as best they can, seeking advice from qualified specialists.

Parental Bereavement

The Parental Bereavement (Leave and Pay) Act 2018 (expected to come into effect in April 2020)

Employed parents or carers who have lost a child (under the age of 18 or a stillbirth after 24 weeks of pregnancy) will be entitled to two weeks’ leave (irrespective of their length of service) either be taken in one block or in two separate blocks of one week to allow them time to grieve away from the workplace. The leave will be paid at the same rate as statutory paternity pay i.e. £151.20 per week or 90% of weekly earnings if lower.

What does it mean for your business?

This reform not only concerns biological parents but also includes adopters, foster parents and guardians, as well as close relatives or family friends who have taken responsibility for the child’s care in the absence of parents. It is therefore very important to think very carefully before deciding who to grant this leave to.

Offering time and flexibility to bereaved families at a time that best suits them might also be extremely beneficial to bereaved parents.  Providing this support at such a difficult time demonstrates the values and culture of a business, as well as strengthening the relationship between the company and its employees.

Cases to watch out for in 2020:

Vicarious Liability for Leaking Data – Various claimants v Wm Morrisons Supermarket:

Awaiting the Supreme Court Judgement. The Court of Appeal upheld the High Court’s ruling that Morrisons is vicariously liable for a data leak by their employee Andrew Skelton. The breach resulted in around 5000 staff members having their personal data stolen and shared with the public.

Equal Pay – Asda Stores Ltd v Brierley & others:

Awaiting the Supreme Court hearing date. The claimants, mostly women working in the stores, brought equal pay claims based on comparisons with the pay of male employees working at the depots. According to the claimants, the terms and conditions of distribution workers doing work of equal value were superior to theirs. The Court of Appeal dismissed Asda’s appeal and held that workers in retail stores were employed under comparable terms and conditions to those working in separate distribution depots for the purposes of equal pay claims under the Equality Act 2010 and the Equal Pay Act 1970.

Discrimination – Lee v Ashers Baking Co Ltd & Others:

Awaiting European Court of Human Rights hearing date. The ECtHR will consider whether it was directly discriminatory on the grounds of sexual orientation, religious belief or political opinion for a bakery and its Christian owners to refuse to provide a cake bearing the words “Support Gay Marriage” to a gay customer.

Ali v Capita Customer Management and Chief Constable or Leicestershire v Hextall:

Awaiting the Supreme Court hearing date. The Court of Appeal considered whether it was direct or indirect sex discrimination, or a breach of the equal pay sex equality clause, for two employers to fail to pay two male employees enhanced shared parental pay. The Court dismissed Mr Ali and Mr Hextall’s appeals.

Sleeping on the Night Shift – Royal Mencap Society v Tomlinson Blake; Shannon v Rampersand:

Due to be heard by the Supreme Court in February 2020.  The Court of Appeal considered the correct approach to determine whether employees, who sleep-in in order to carry out duties if required, engage in “time work” for the full duration of the night shift. It held that, in this case, care workers were merely available for work during their sleep-in shift rather than actually working. They were therefore only entitled to the national minimum wage when awake for the purposes of working.

Uber workers? – Uber BV and others v Aslam and others:

Due to be heard by the Supreme Court in July 2020.  The Court of Appeal upheld an Employment Appeal Tribunal ruling that Uber drivers are workers for the purposes of the Employment Rights Act 1996, the National Minimum Wage Act 1998 and the Working Time Regulations 1998. It held that there was no contract between the driver and passenger.

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