2020’s Employment Law Changes
The annual employment law changes usually happen twice a year in April and October. As HR professionals or business owners, you need to be one step ahead to ensure you comply with your responsibilities. In this blogpost we outline what to expect from 2020’s employment law changes.
October 2019 didn’t present any employment law legislation changes. However we did have quite a few substantial changes in April 2019; these were the:
Increase in National Minimum Wage Gender pay gap reporting deadline Changes to employee payslips Increase in statutory maternity, paternity, adoption and shared parental pay Changes to statutory redundancy pay calculations
If you are unsure of whether you and your company are currently complying with the April 2019 changes, you can talk to our team on 08450 50 40 60 or can
email them here. You need to prepare and become knowledgeable on 2020’s employment law changes as they’re going to affect you. What’s more, at the end of December 2018 the Government issued their Good Work Plan; deemed the largest upgrade in a generation to workplace rights. Issue Employment Contracts From Day 1
Your employees will be entitled to an employment contract upon day 1 of their employment. Currently, employers have 8 weeks after the first day of employment to provide their employee a contract of employee. Employment contracts are what confirm and form the basis of your working relationship. They also set out the ground rules of your business such as payday dates, dress codes and other company policies. You need to discuss and agree your employment contracts with your employees for them to fully understand your business.
This change will not apply to Northern Ireland.
Holiday Pay Changes For Variable Workers
The reference period that you use to calculate a variable hours employee’s holiday is changing from April 6
th. The current reference period of 12 weeks is going to significantly jump to 52 weeks. If your employee has been employed for less than 52 weeks then their number of weeks employment is their pay period.
This change reflects the seasonal nature of casual and zero hours workers. It allows workers to make the most of their full holiday pay entitlement.
As an employer you will need to ensure records of hours worked and amount paid are retained back until you hit the 52 week mark.
This change will not apply to Northern Ireland. However, a recent case in the Northern Ireland Court of Appeal did use a 12 month reference period so this is one to watch.
The Abolishment Of ‘Swedish Derogation’
Swedish Derogation is a legal loophole many companies use. You may use this loophole to avoid paying agency staff the same as your permanent staff. If your agency staff have worked with you for more than 12 weeks (and have been paid between assignments) they will now be entitled to rights relating to their pay. Put simply, your agency staff will be entitled to the same wage as your permanent workers in the same job role. This abolishment creates a fairer working environment for employee. However for employers it means your monthly payroll is likely to rise.
Tax Increase On Termination Payments
You will often pay a sum of money to an employee on their termination of employment. They’re often used in settlement agreements and are currently tax free. However, that is soon to change. From April 6
th, any termination payment over £30,000 will be subject to employer’s National Insurance Contribution (NIC). Your payment will also be subject to income tax. This means that there will be an additional cost to you when it comes to termination payments above the threshold. For employees, it could mean that termination payments are decreased in order for employers to avoid the NIC tax. IR35 Tax Changes
th sees changes to off payroll working (IR35) rules. Currently, it is up to the actual IR35 company to self-assess their IR35 status as well as NIC contributions. However not surprisingly, this has led to companies manipulating the system to avoid paying NIC and other premiums. From April, it’s the end user who is responsible for determining whether a contractor sits in IR35 rules; not the Personal Services Company. IR35 private sector rules will now be consistent with the public sector. This means it is the company’s responsibility to account for tax and national insurance. UPDATE 18/03 – The Government has announced they are delaying the IR35 tax changes until April 2021 in light of the COVID-19 outbreak Executive Pay Gap Reporting
Not exactly a legislation change, but the executive pay gap report will be published in 2020. The executive pay gap requires all companies with over 250 employees to report their executive pay ratios. If you haven’t yet submitted your executive pay gap report, we suggest you do so as soon as possible.
Parental Bereavement Act 2018
April will see the
Parental Bereavement Act 2018 introduced which gives employees the right to two week’s paid time off from day one of employment. However the leave will be paid at the statutory rate (provided the employee has been employed for at least 26 weeks). The Act will be applicable to parents and primary carers (adopters, foster parents, guardians, close relatives and family friends) should there be the death of a child under the age of 18. National Minimum Wage Changes
The new National Minimum Wages brackets will be as follows:
18 – 20 years old – £6.45 21 – 24 years old – £8.20 Over 25 years old – £8.72 Brexit
It’s happening, however there are no employment law changes at present. EEA nationals that are resident in the UK by the end of 2020 will have until June 2021 to apply for settled status. Employers need to ensure their workers obtain settled status in line with legal obligations.
Bank Holiday Changes
The usual May Bank Holiday has changed this year; it is now Friday 8th May. This includes Nothern Ireland.
Northern Ireland Introducing Early Conciliation
The Labour Relations Agency is introducing early conciliation from January 27th. Anyone that intends to lodge a claim with the Industrial of Fair Employment Tribunal must first notify the Labour Relations Agency. They will then have the options to conciliate before commencing the claim. There will be no option to bring a claim without early conciliation.
There are certainly a lot to take in when it comes to 2020’s employment law changes. You may be confused as to what you should do next; it’s understandable. Our employment law consultants are on hand to talk you through the above changes as well as help you comply with your responsibilities as an employer. For more information call our team on 08450 50 40 60.