As a business operating in the UK, whether you have a couple of contractors working for you or have several employees, it is imperative that you are aware of your employment law obligations. Your employees may be smiling now – they may even nod emphatically when you beam indulgently and remind them that ‘a smile is the curve that sets everything straight’ – but they won’t be smiling for long if you don’t comply with your obligations in the workplace.
Here is a brief summary of the employment law changes which have already taken effect in 2019, which you should already be implementing within your business (if they are applicable to your business):
Pay gap reporting
- UK listed companies with more than 250 employees are required to report annually on the pay gap between their chief executive and average UK worker (first reports due by 2020).
- Certain public authorities, including government departments, the armed forces, local authorities, the NHS and state schools with more than 250 employees are required to report annually on their gender pay gap. The first report was due on 30 March 2019.
- On 4 April 2019, private and voluntary firms in the UK, with at least 250 employees, were required to publish their annual information on the gender pay gap within their organisation.
- On 30 March 2019, the EU settlement scheme opened. EU citizens must apply for either settled status (if they have been in the UK for 5 years or more) or pre-settled status (if they have been in the UK for 5 years or less), whether or not they already have permanent residence in the UK. From January 2021, a new immigration system will apply to both EU and non-EU citizens.
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Changes to employee pay
- On 1 April 2019, new national minimum and national living wages were set:
|Workers aged 25+||£8.21 per hour (national living wage)|
|Workers aged 21-24||£7.70 per hour|
|Development rate for workers aged 18-20||£6.15 per hour|
|Young workers rate for workers aged 16-17||£4.35 per hour|
|Apprentice rate (workers under 19 or in first year of apprenticeship)||£3.90 per hour|
- There have also been changes to pay slips. Pay slips now must include the total number of hours worked, where pay is dependent on hours worked (such as a zero hours contract or a variable hours contract). Pay slips must also now be given to all workers, not just employees.
The following changes are due to be implemented in 2020
You should keep abreast of developments in these areas to determine whether your business needs to be making proactive changes to accommodate for them:
Changes to confidentiality agreements / non-disclosure agreements (NDAs)
The UK Government is intending to legislate on employers’ misuse of confidentiality clauses in employment contracts and settlement agreements. This particularly relates to confidentiality clauses used to cover up sexual harassment and racial discrimination, but will also pertain to other situations.
The Government’s key proposals include:
- NDAs should not be used to stop information being disclosed to the police, legal professionals or health professionals
- Limits in NDAs must be set out very clearly in contracts and settlement agreements
- Employees already need to receive independent legal advice before signing a settlement agreement. This requirement will be further strengthened
Changes for agency workers
- Agencies have been operating under an opt-out, which allowed them to opt-out of paying agency staff equal pay when they had been with the same employer for more than 12 weeks. This opt-out will end on 6 April 2020.
National insurance changes
- The UK Government previously planned to make termination payments over £30,000 subject to employers’ national insurance. This was delayed from April 2018, and will now come into force on 6 April 2020. This could significantly impact decisions as to termination payments.
The rights of parents
- During the course of 2020, it is expected that the UK Government will pass a new law providing employees who lose a child under the age of 18, or suffer a stillbirth from the 24th week of pregnancy, to 2 weeks’ unpaid leave. This right will be provided from day one of employment. Leave will be paid at the statutory rate if the employee has 26 weeks’ service.
- In July this year, the UK Government proposed to provide pregnant employees, employees returning from maternity or adoption leave within the previous 6 months, or parents returning from shared parental leave, with redundancy protection. The protection will require employers to offer these individuals a suitable alternative vacancy, in the event of redundancy. These changes could be brought in within the next couple of years.
- The most talked-about issue in employment/contractor law in 2019 – the IR35 changes. We published a blog post on this in July.
- From 6 April 2020, the IR35 rules will be extended to the private sector, and aim to reduce tax avoidance for off-payroll contractors working through personal service companies. From this date, private sector businesses will be responsible for determining if IR35 applies to a contractor, and for deducting income tax and national insurance where a contractor is more like an ‘employee’ than a separate service provider.
If you would like to discuss these upcoming changes, seek advice from our Employment Law Solicitors.
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The author of this blog post is Barbara Jamieson. Barbara Jamieson is qualified in Scotland, New York and California, and has worked at top Scottish law firms Maclay Murray and Spens LLP and Brodies LLP. Barbara also spent three years working in-house at investment management firm Martin Currie, advising on financial services and commercial contracts.