Employment contracts: changes coming into force on Monday 6 April 2020
02 / 04 / 2020
The impact of COVID-19 on business means that the thought of new hires is the furthest thing from most employers’ minds. However, changes are coming into force that will impact the terms upon which future hires will take place and therefore, employers still need to have them on their radar.
Readers will be familiar with the government’s Good Work Plan, published at the end of 2018, in which the government committed to implement the majority of the recommendations from the Taylor Review, to create “fair and decent” work for all.
One of the changes that will take place from Monday 6 April 2020 will alter what needs to be included in ‘section 1 statements’ for those starting work on or after 6 April 2020.
Below we set out a summary of the current position and the changes and practical steps employers should be taking now, including some wider considerations.
What’s the current legal position?
At the moment, employers must provide employees with a written statement of particulars which satisfies section 1 of the Employment Rights Act 1996 (which is why it is known as a “section 1 statement”). Typically, this is done by way of an employment contract. This must be provided to those whose employment will continue for more than one month and must be provided within 2 months of commencing employment.
Certain particulars must be given together in one single document, but others can follow in a supplementary statement, or be given in another “reasonably accessible” document, such as a handbook.
What are the changes?
The following changes will apply to those commencing work on or after 6 April 2020:
- Extension to workers: The obligation on employers to provide a written statement of particulars will be extended to workers, as well as employees.
- No minimum service: There will no longer be a one month service requirement in order that a worker is entitled to receive a written statement of particulars. Previously, it was not necessary to give an employee a contract if they were going to be employed for less than one month.
- A “day one” right: An employer used to have 2 months in which to provide a written statement of particulars. Now, this must be given to all workers on or before their first day of employment.
The statement will be required to contain the following additional particulars:
|Hours of work||Whilst most employers already specify working days and hours, employers must now also set out whether the working hours may be variable and, if so, how any variation will be determined. This may be more of a challenge for employers with workers on zero hours contracts.|
|Probationary Period||Any applicable probationary period must be included within the statement, including any conditions (for example, the right to extend it) and its duration.|
|Benefits||Employers must provide details of any other benefits that are not already included in the statement (over and above sick pay, pension, holiday pay and other paid leave, described below), including those that are non-contractual. This would include benefits such as bonuses, private medical insurance and interest free loans.|
|Paid leave||The statement must contain details of any “other” paid leave, over and above sick pay and holiday. The examples given in the Good Work Plan are maternity and paternity leave and so our advice is to include all types of family related leave (including the new parental bereavement leave). Arguably, this should also include any other types of paid leave, such as sabbaticals, study leave or jury service. Again, this will apply to both contractual and non-contractual entitlements. It is possible to refer the employee to another reasonably accessible document, such as a policy in a staff handbook, rather than setting out full details within the statement itself.|
|Training entitlement||The statement must now set out any compulsory training that the employer will give to the employee and any compulsory training that the employee has to pay for themselves. The employer must also give details of any other training entitlement provided by the employer, but this can be set out in another reasonably accessible document, or otherwise provided within 2 months of the employee commencing employment.|
What if there are no applicable terms under one of these categories?
If an employer does not, for example, require an employee to undergo compulsory training, or does not wish to impose a probationary period (although that is usually a good idea!), that fact must be stated. The purpose of these changes is to make the contractual terms as clear as possible to a worker.
What about existing employees?
There is no need to re-issue contracts for existing employees, unless they ask for a new contract, in which case an employer should provide a new one, including the above changes, within one month of the request.
What if an employer does not comply?
A failure to provide a section 1 statement can result in an award to an employee of two to four weeks’ pay (subject to the statutory cap on a week’s pay, which will be £538 from 6 April 2020). However, it is not a standalone claim and can only be brought as an “add on” to another Tribunal claim, such as unfair dismissal. Otherwise, the employee can ask the Tribunal to make a declaration as to what it considers to be the appropriate particulars. This may be unpalatable for the employer, who would then be bound by the Tribunal’s changes to the contractual terms and may therefore be different to those which the employer wants in place, not to mention the time, costs and negative press attention that comes with a claim, and so we would highly recommend that contracts are brought up to date.
Workers will also be able to make this complaint to the Tribunal.
What steps should employers be taking?
- Ensure compliance: template employment contracts need to be compliant with the above changes and ensure it is absolutely clear which terms are contractual and non-contractual.
- Review other relevant documents: any handbook and policies should cover terms relating to entitlements to paid leave and training entitlement if not in the contract itself.
- Audit the workforce: ensure that workers and employees are accurately categorised and prepare a statement for workers where necessary.
- Be ready for new joiners: contracts need to be issued on or before the first working day.
- Remember obligations to existing staff: be aware of the obligation to provide an updated contract if requested by an existing worker, within one month.
- Use this as an opportunity: this may be a sensible time to make other changes to the contract, such as updating the confidentiality provisions in view of the #metoo movement (particularly those in regulated sectors) and consider whether the contract should include terms about short term working and temporary layoffs (perhaps including the right to furlough), which give businesses more options where there is a down turn in work and/or an outbreak such as the coronavirus. If changes are identified, consider whether this should in fact be rolled out to existing staff (and if so, seek advice before doing this).
If you have any queries about these new obligations, or you wish to discuss your existing contract terms, please contact Jemma Pugh or your usual Wedlake Bell contact.