Employment Law Updates from 6th April 2020

Don’t forget the new Employment Law Updates taking effect from 6th April 2020

Each April, businesses across the UK must be aware of and comply with the latest updates in employment law. This year, as well as responding to daily developments with coronavirus (Covid-19), there are numerous key legislative changes taking effect in relation to the Good Work Plan.

The Good Work Plan follows a series of major consultations on the recommendations of the Taylor Review of modern work practices in 2017. The government published these last year as their “vision for the future of the UK labour market” designed to give greater protection to those working under more flexible work arrangements. Whilst the majority come into effect this month, many have no implementation date as of yet.

If you’ve not had chance to prepare your business, we have a summary of the main changes that came into force from this month to help you better understand what you need to do immediately and what’s coming up in the future.

1. Increase in National Living Wage and National Minimum Wage

From the 1^st of the month, the new Regulations have increased the hourly rates of national living wage (NLW) and national minimum wage (NMW). Employers should be sure to update contracts with agency workers, as well as considering the impact on calculations for employees on furlough.

Don’t forget that the new regulations don’t just affect workers on an hourly rate of pay, but all salaried workers (including apprentices) at their hourly equivalent too. The changes include amendments to “salary premiums”, such as London weighting, unsociable hours or bank holidays, which will no longer be included when calculating minimum wage.

There is also a change introducing a requirement that an employer makes, or intends to make, a separate payment to cover goods and services that a worker is obliged to purchase from the employer in order to avoid it being a reduction to basic pay. This takes effect for the first pay reference period after 6th April 2020.

The new rates are:

2. Written Statement of Terms

Under the Employment Rights (Miscellaneous Amendments) Regulations 2019 from 6 April 2020, all employees and workers will be given the right to a written statement of employment particulars (that is, a contract of employment). This must be provided on or before their first day of employment and there are certain things it must contain – such as the hours and day they are required to work, entitlements to any paid leave, any other benefits, details of any probationary period and details of any training provided. We recommend you check your current contract of employment to make any necessary updates and make sure your recruitment procedures issue necessary documentation on or before the candidate’s start date.

3. Holiday Pay Reference Period

Currently, the holiday pay of a worker who has irregular working hours is calculated by using an average of the hours they have worked over the preceding 12 weeks (‘the pay reference period’). From 6^th April, the new regulations change the pay reference period to 52 weeks (or the total number of weeks worked for those who have worked less than 52 weeks). The aim is to stop workers missing out on holiday pay due to seasonal fluctuations.

4. Protection for Agency Workers

Previously, agency workers have been entitled to the same rates of pay as permanent employees after 12 weeks. The exception is for those working under the ‘Swedish Derogation’ – specific contractual arrangements whereby they receive a minimum rate of pay when they are between assignments. This right has now been abolished and all agency workers whose existing contracts contain a Swedish derogation provision must be issued a written statement to confirm this change before the end of the month.

The government has also introduced new obligations for recruitment agencies to provide agency workers with a Key Information Document (KID) containing essential information about their contract, rates of pay and pay arrangements before they are placed in an assignment. Agency workers who are considered to be employees will also be protected from unfair dismissal or suffering a detriment if the reasons are related to asserting their rights under the Agency Worker Regulations (AWR).

5. Parental Bereavement Leave and Pay – “Jack’s Law”

From 6 April 2020, all employees who lose a child under the age of 18 or suffer a stillbirth after 24 weeks of pregnancy will be entitled to 2 weeks’ statutory leave to be taken in one block or as two separate blocks of a week. Employees with at least 26 weeks’ service, who meet minimum earnings criteria will also qualify for Statutory Parental Bereavement Pay (at the same rate as Statutory Paternity Pay).
Employees have up to 56 weeks from the date of the death (or stillbirth) to use up their leave entitlement.

6. Taxation of termination payments

Employers should also be aware of recent clarification to the treatment of termination payments. All PILON (payment in lieu of notice) should be classed as earnings and therefore subject to tax and national insurance in the usual way. All termination payments above £30,000 will be subject to class 1A NIC’s which gives liability to the employer only and this threshold can be varied by HM Treasury.

In addition to updates in 2019 concerning executive pay ratio reporting and pay slip changes, more significant consultations are underway that may result in further government legislation later this year.

These concentrate on proposals regarding flexible working (such as a right to compensation when shifts are cancelled without reasonable notice), protection for unwell and disabled workers to reduce ill-health related job losses, and the potential for a single labour enforcement body.

The government may propose additional protection for employees under the Good Work Plan such as a review of parental rights (including neonatal pay, parental leave and redundancy protection for new parents and expectant mothers).

If you need help preparing for or implementing the new employment law updates, please contact the team at Grassroots for advice and support.