Employment law – what to look forward to in 2020
04 / 02 / 2020
With Brexit looming and an increased focus on the domestic agenda, 2020 promises an upturn in new legislation. Here we look ahead to the most likely key changes:
1. Off-payroll working rules: (Subject to final consultations) from 6 April 2020, the off-payroll rules will come into force for large and medium-sized businesses operating in the private sector (having already been implemented in the public sector). The rules aim to ensure that the correct tax is paid for those individuals providing ‘self-employed’ services via a personal service company (“PSC”). Under the current regime, the PSC is generally responsible for determining tax status and accounting to HMRC for any liability. Under the new rules, the responsibility will shift to the end user business (or potentially its intermediary) who will be required to make a formal determination on employment status (HMRC have created an online tool to assist) and account to HMRC for any liability. The current regime is attractive to the end user business as it relatively low risk and can allow disguised employment to thrive. However, the increased administrative burden and potential increased cost will make such arrangements much less popular. Now is an opportune time to audit existing arrangements.
2. Good Work Plan: following a government report, from the 6 April 2020, the following changes will come into force to improve general worker protection:
- Day one right to a written statement of terms – currently, employees must be provided with a written statement of terms within two months of their employment commencing. Going forward, this statement must be provided on day one for not only employees but now also for workers.
- Additional information in written statements of terms – this includes information on the length of time a job is expected to last, the notice period, eligibility for sick leave and pay, other rights to leave, any probationary period, all pay and benefits, and specific days and times of work.
- Improved rights for agency workers
- the “Swedish derogation” in the Agency Workers Regulations 2010 which allows employment businesses to avoid pay parity between agency workers and comparable direct employees where the agency workers receive pay between assignments will be abolished. Therefore, once agency workers have satisfied the 12-week qualifying period, they will be entitled to equal pay to workers who are engaged directly by the employer.
- the introduction of a Key Information document for agency work-seekers, including information on the type of contract, the minimum expected rate of pay, how they will be paid and by whom.
- Holiday pay reference period – the reference period for determining an average week’s pay (for the purposes of calculating holiday pay) will be extended from 12 weeks to 52 weeks.
3. Parental bereavement leave and pay: from 6 April 2020, in the sad circumstance where a child aged under 18 passes away (including a still birth from the 24th week of pregnancy), employees will be entitled to take two weeks’ leave. Leave will be paid at the statutory rate if the employee has 26 weeks’ service. Those with less than 26 weeks’ continuous service will be entitled to take two weeks of unpaid leave.
4. Taxation of termination payments: from 6 April 2020, the element of an ‘ex-gratia’ termination payment which exceeds £30,000 will be subject to not only tax but also employer’s national insurance contributions.
5. Extending redundancy protection to prevent pregnancy and maternity discrimination: under current government proposals, the period of additional redundancy protection will be extended from the point an employee notifies their employer of their pregnancy until six months after the end of their maternity leave.
6. National Living Wage: The government will increase the National Living Wage for people over 25 to £8.72 per hour from 1 April 2020, a rise of 6.2%. Chancellor of the Exchequer, Sajid Javid, has also pledged to change the National Living Wage to apply to workers aged 23 and above from 2021, and aged 21 and over within 5 five years.
7. Post-Brexit: To be continued….