6 April 2020 Changes – Equal treatment for agency workers

As part of the various commitments set out in the Good Work Plan, the Agency Workers (Amendment) Regulations 2019 and the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2019 came into force on 6 April 2020.

WHAT ARE AGENCY WORKERS?

An agency worker contracts with an employment business to work for one or more of their clients (or hirers), they are therefore not directly recruited by the businesses where they work.

WHAT ARE THE CHANGES?

  • Removal of the Swedish derogations

The Swedish derogation provided an exemption from the right to equal treatment. In fact, agency workers that had a “Pay Between Assignment Contract” could 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 had gaps between assignments.

  • Equal Treatment for all Agency Workers

All agency workers will have a right to pay parity after having worked for the company for the qualifying period (12 weeks).

  • Protection from Unfair Dismissal and Detriment

Where an agency worker is an employee, they will be unfairly dismissed if the principal reason for their dismissal is that they have (or they are suspected to have):

  • Brought proceedings or given evidence at proceedings under the Agency Workers Regulations.
  • Alleged that a temporary work agency has breached the Regulations.
  • Refused to forgo a right under the Regulations.

Agency workers also have the right to not be subjected to a detriment for taking such action, or being suspected to have taken such actions.

WHAT STEPS DOES YOUR BUSINESS NEED TO TAKE?

If you are an Employment Business (Agency):

  • Requirement to provide statement to existing agency workers

By no later than 30 April 2020 you must provide agency workers, whose existing contracts contain a Swedish derogation provision, with a written statement advising that, with effect from 6 April 2020, those provisions no longer apply.

Agency workers will have the right to bring a claim in the employment tribunal if you fail to do so.

  • Requirement to provide a Key information document for new agency workers

From 6th April 2020, you must provide agency work-seekers with a document that must be headed “Key Information Document. It must be easily understandable and on a maximum of two pages.

The document must include information about:

  • The identity of the employment business.
  • The type of contract
  • Minimum pay and methods of payment.
  • Non-monetary benefits.
  • The nature and amount of any potential deductions
  • Annual leave and payment in respect of such leave

If your business uses Agency Workers

If your company currently hires agency workers who are employed under Swedish derogation contracts, these changes could have significant financial implications if you have to pay them at least the same rate as direct recruits.

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

April 2020 Employment Law Changes – A Recap of What’s New

Even before the COVID-19 pandemic, 2020 was shaping up to be a year of significant change in employment law.  Notwithstanding the many developments which are being brought in to support companies in responding to the threat of Coronavirus, other major changes planned for this year have still taken place (with one major exception).  Here, we revisit some of the important changes affecting your business in 2020.

Employee Written Statement of Terms

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

A written statement of terms, usually all covered in a contract of employment, must now be given on or before the first day of employment to all new workers – this previously had to be given within two months of employment starting and only to employees.

In addition, more information than previously must be included in the statement. For instance the written statement now has to include a description of 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 now 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) came into force on 6 April 2020

The reference period for determining an average week’s pay for holiday pay purposes has now increased from 12 weeks to 52 weeks (or, if the worker has been employed for under 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) came 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 came into force on 6 April 2020

The “Swedish Derogation“ has now been removed from the Agency Workers Regulations 2010.  Employment businesses are no longer 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 had 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 previously hired agency workers under Swedish Derogation contracts, then these changes could have significant financial implications.  In most cases, your company will now have to pay worker at least the same rate as direct recruits.

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) came 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.

Following these changes, in a business with 50+ employees, only 2% of the workforce now need to request I&C for this to become a requirement, subject to certain exceptions.  Prior to April 2020, that threshold was 10% 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 came into force 6 April 2020

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

That will affect 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 of a compensatory payment on termination is free from income tax. This change will prevent employers seeking NIC exemption through disguised termination payments.

Parental Bereavement

The Parental Bereavement (Leave and Pay) Act 2018 came into effect on 6th April 2020

Employed parents or carers who have lost a child (under the age of 18 or a stillbirth after 24 weeks of pregnancy) are entitled to two weeks’ leave (irrespective of their length of service).  This may be taken in one block or in two separate blocks of one week. Where an employee is eligible, the leave is 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.

IR35

Draft Finance Bill which was published on 11 July 2019, changes were expected in April 2020 but have been postponed to 2021

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.

From April 2021, 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.  Although the changes have been postponed, it would be prudent for businesses to continue to prepare as best they can, seeking advice from qualified specialists.

Potential job losses – how to speak to employees

Simon Mayberry

Insights from Simon Mayberry, Senior Associate, LexLeyton.

These are difficult times for employers across the country, especially in industries where homeworking is not an option. Managers are having to hold extremely difficult conversations, but positive results can come from these with a good deal of preparation, a sense of humanity and an authentic and open-minded approach on both the part of the employer and the employee.

It is tempting for employers to panic and resort to redundancies. However, this might not be necessary, especially following the announcement of the Chancellor’s support package on Friday. Employers should take time to consider what options are open to them, such as employees agreeing to temporary unpaid leave, relaxing rules on time off for dependants, encouraging the use of annual leave or, now, furloughing staff. There are many options other than redundancy and we have seen tremendous support from employees in the retail and hospitality sectors in agreeing to short-term measures to save jobs in the long-term.

Sustainable businesses rely on their people. I think we were all touched by the Chancellor’s words on Friday when he spoke of wanting to look back and think of kind deeds done by all during this difficult time. Our experience has been that where businesses engage with their employees with humanity and respect, they stand a much better chance of pulling together for the good of the everyone.

The message must be for employers to assess which roles are required to keep operating, to engage and reach agreement with those who are not in this group (and who cannot work from home) and to work together to minimise job losses. The Government’s Coronavirus Job Retention Scheme will play a large part in this, but it is not a panacea. Job losses will be necessary for many employers, but where these are unavoidable they should be managed in as compassionate a manner as possible. Unlike some well-publicised companies, I would hope that, like the Chancellor, we would all wish to look back and think that we had acted with kindness during this crisis.

If you need help form one of our lawyer on this subject request a free consultation here

Gender Pay Gap Reporting Deadlines suspended for this year

Due to the ongoing Coronavirus outbreak, it has been announced yesterday that enforcement of the gender pay gap reporting deadlines will be suspended for this year.

As a result, employers who had a duty to publish their gender pay gap report for 2019-2020 will not be expected to do so (although they can do so if they wish).

The deadline for publishing reports for relevant public sector bodies was next week (30 March 2020) with private and voluntary sector employers shortly after on 4 April 2020.

In a joint statement, the Minister for Women & Equalities and the Equality and Human Rights Commission Chair, said:

“WE RECOGNISE THAT EMPLOYERS ACROSS THE COUNTRY ARE FACING UNPRECEDENTED UNCERTAINTY AND PRESSURE AT THIS TIME. BECAUSE OF THIS WE FEEL IT IS ONLY RIGHT TO SUSPEND ENFORCEMENT OF GENDER PAY GAP REPORTING THIS YEAR.”

More details on the announcement can be found here.

Why should I have an employee handbook (or why should a lawyer review my handbook?) – Part 2

workforce management

In our first article on employee handbooks, we discussed how having one can help satisfy your minimum legal obligations as an employer. Let’s look at how an employee handbook can lay the foundations for a better workforce management strategy.

Make things run smoothly

Employees like to be communicated to in a straightforward way so an employee handbook is a great place to collate all your internal policies and procedures. It’s your handbook, so you can put in it what you like! Anything that could be helpful to the smooth running of your business from an employee management perspective can be included.

Cleary stating in your handbook what your policy is on things like expenses, company cars, booking annual leave etc. improves the chances that your employees will get their admin sorted in the way it needs to be,  without wasting management time by continuously raising the same question over and over again because there is no central place of reference.

Giving some thought to the tone of voice, design of your handbook and how it will be distributed and embedded into your business are all important factors to work through so that it fits with and supports your culture, as well as being useful to and accessible by your employees.

Help your managers as well as your employees

Employment law is complicated; that’s why we are here to help.

Although a handbook is aimed at individual employees – it’s a key tool for managers who are responsible for the performance and wellbeing of your workforce, providing a useful framework for their management and support and to ensure that they are dealing with matters consistently.

Having policies in place on things like disciplinaries, grievances, maternity/paternity/shared parental leave, and flexible working etc. ensures that you have a practical guide for the managers of your business to help them do their job. How they manage day to day issues involving your workforce can have an immediate impact on the wider culture of the business, it’s day to day operational and financial performance and if handled badly, expose you to financial and reputational risk from employee claims.

Setting the standards

A handbook is the perfect place to set out the standards that employees are expected to meet and what will happen should they fail to meet those expectations. It can incorporate procedures around things like reporting sickness absence, timekeeping, uniform or substance misuse etc. Anything (within reason) that your business may want to enforce can ideally be set out in the handbook - whether it relates to the efficiency of your business, or how you expect your employees or customers to be treated.

It is helpful when an employer needs to take disciplinary action against an employee that it can point to a clear rule in an employee handbook, supported by a record of the employee having received and read it (always something to think about when you are on-boarding a new employee or changing your policies and procedures).

Building your culture and setting the tone

A great way for a business to ‘set the tone’ and its cultural aspirations is by including an overview of its mission and values at the beginning of an employee handbook. The way a business does things ‘around here’ is important to the development of its internal culture, and potentially a valuable business asset which can benefit your employee attraction and retention strategies.

Making sure your handbook reflects your business, who you are and how you want to be seen both internally and externally is a fantastic opportunity to codify your cultural positioning and use that to add value to your business.

For example, do you have a bring your dog or pet to work policy (we love dogs in our office!)? Something that you might already be doing even informally, like allowing pets in to the workplace, might actually have some legal implications for your employees that you should think about addressing in a policy.  Also, having a policy on something like bringing animals to work for both existing and future employees might be seen as a real benefit of working for your company.

It’s brilliant for us to see employers thinking much more expansively about how they can use their employee handbook to benefit employee attraction and engagement, and more and more are doing so with some great results. However we also see handbooks that are setting a tone in ways which that were not really intended... which can be really unhelpful.

Employment law is one of the fastest moving areas of law.  Some of the significant changes in recent times include new equality legislation, abolition of the mandatory retirement age, increases in permitted unpaid parental leave, the introduction of shared parental leave and entitlements to request flexible working to mention just a few. By spring 2020 further legislative changes will be introduced to require paid parental bereavement leave and increases to the reference period for calculating holiday pay.

Unless your business is really diligent about keeping its handbook up to date, it may miss ensuring that all the changes find their way into the handbook which can leave it out of date and potentially fall foul of the law.

When facing a claim from an employee, often the starting place for the Employment Tribunal is the employee handbook, the policies contained within it, how those policies are followed and consistency across the business.  Don’t get caught out by having a handbook as a tick box exercise only as Tribunals frown on this and defending a claim can often be an uphill battle.

LexLeyton can help you draft or update your existing employee handbook. If you would like a free review and consultation with one of our expert employment solicitors to help you get started with a set of bespoke recommendations please register here

Read the first part of our series on the employee handbook:

Why should I get an employee handbook (or why should I get a lawyer to review mine)? – Part 1