To implement its Good Work Plan (which is aimed at clarifying and strengthening workplace rights) the government is making a number of changes to employment law. Important changes taking effect from 6 April 2020 (new Bereavement Leave rights are TBC) are set out below. Businesses should also be aware that as of this date, the reforms to IR35 legislation are taking effect. This could result in your business being liable for PAYE and NI in respect of payments for work done by contractors working through their own limited companies.
Statement of Terms and Conditions
Currently, under s.1 of the Employment Rights Act (“ERA”) employees must be provided with a statement of their main terms and conditions if they are engaged for more than one month. This will now be a right from day one. The s.1 Statement will also have to include more information than before e.g. the days to be worked (or if days/hours worked may vary), particulars of paid leave (not just holiday entitlement) and of all other remuneration and benefits (not just pay.) In addition, “Workers”, as defined under the ERA, will now be entitled to a s.1 Statement. Workers are a category of staff who aren't employees (usually because they work on a more casual basis and less control is exercised over how/when or where they do their work) nor are they self-employed (principally because they aren't operating a business/aren't regarded as having clients/customers. Workers have some of the same rights as employees including entitlement to paid holiday, the minimum wage and workplace pensions (and can have also have rights to paid leave if NI contributions are payable in respect of them under tax legislation, which can be the case). Businesses need to make sure that staff contracts are up to date and properly reflect the correct employment status and commensurate entitlements.
Agency Worker Rules
Under the Agency Worker Regulations (AWR), after 12 weeks working on the same job agency workers are entitled to the same basic pay and benefits as directly employed staff. As of 6 April 2020 agency workers must be given more information about their engagements, including with regard to this right to pay parity. However, more importantly, the existing provisions which exclude this right if agency staff are paid between assignments will no longer apply. Employment agencies will have to change their terms of business with clients provided with staff upon the basis that they didn’t have pay parity rights, with client costs increasing. Businesses often seek to avoid AWR legislation and its related costs altogether, but this is never without legal and commercial risk and specialist advice should always be sought in this regard.
Information and Consultation with Employees (“ICE”) Regulations
The ICE regulations require that businesses put in place procedures to inform and consult with employees about their activities and outlook and related organisational changes/threat to jobs. At present these regulations only apply where at least 15 employees constituting at least 10% of the workforce make a request for such procedures to be put in place. This will now change, with only 2% of the workforce needing to make the request (although the minimum requirement of 15 employees remains). Evidently many relatively small businesses may have to put in place formal information and consultation procedure with staff (which can be complex and time consuming).
Statutory Bereavement Leave and Pay
All Employees who lose a child under the age of 18 or suffer a stillbirth after 24 weeks or pregnancy will be entitled to take 2 weeks leave within 56 days of the child’s death (and must not suffer any detriment for taking such leave). Employees and Workers in respect of whom NI contributions are payable will be entitled to statutory bereavement pay for this period, the eligibility criteria and rate of pay in this regard mirroring those that apply to statutory paternity leave.
Holiday pay reference period change
In calculating holiday pay entitlement for those with variable rates of variable hours/pay, this is currently calculated by reference to the average amount payable during a 12 week period (although this period may be extended to take account of wees where nothing is payable). To protect workers who may take a holiday when they aren’t busy/are paid less, this reference period will now be 52 weeks.
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The author of this blog post is Jonathan Hemmant. Jonathan is a senior employment and commercial services lawyer. Qualifying as a solicitor in 2000 he has worked for almost all his career for full service City Firms or niche firms run by lawyers with a Magic Circle/US firm background, acting as the employment department head for two of the firms he has worked for, one of which he helped to establish. Jonathan advises on a wide range of contentious and non – contentious employment law issues and also carries out commercial work, having particular expertise advising on arrangements for the provision of staff and services that fall outside of the standard employment model.