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IMPORTANT Changes in Employment Law due in 2020

Happy New Year! We hope everyone had a good Christmas and New Year break, although we can't quite believe it's been and gone already for another year!  Hopefully, like us, you feel refreshed and ready to get stuck into a new year and new decade.

Changes to Employment Law in 2020

  • April 2020 National Living Wage to increase by 6.2%

  • April 2020 New rules for Written Statements of Terms and Conditions 

  • April 2020 Changes to the Reference Period for calculating holiday pay when the Employee doesn't work the same hours each week

  • April 2020 Introduction of Parental Bereavement Leave

  • April 2020 IR35 Legislation extended to the Private Sector.

National Living Wage to increase by 6.2% on 6 April 2020.  This is likely to have a significant impact on industries, such as Manufacturing and Hospitality, who employ large number of unskilled workers at this level.  New rates will be:-

  • National Living Wage for ages 25 and over - up 6.2% to £8.72

  • National Minimum Wage for 21 to 24 year olds - up 6.5% to £8.20

  • For 18 to 20 year olds - up 4.9% to £6.45

  • For under-18s - up 4.6% to £4.55

  • For apprentices in first year aged under 19 - up 6.4% to £4.15

For employees aged 25 and above working 40 hours per week, the new basic annual salary will be £18,138 so make time to carry out an audit on your payroll to make sure any employee being paid above National Living Wage (currently £8.21) but less than £8.72, is identified and included in the increases in April.

Written Statements of Terms and Conditions or, as they are more often known as, Contracts of Employment, must be issued to new employees within 8 weeks of the start of their employment but from 6 April 2020, this will be a "first day right."  In other words every new employee must be given their Contract on the first day of employment at the latest.

At the same time, employers must include in all Contracts the following additional information:-

  • The days of the week the employee will be expected to work

  • Whether days or hours are variable and, if so, the basis on which they will be determined

  • All benefits provided by the employer

  • Probationary period details including duration and conditions for passing

  • Details of training entitlement and mandatory training necessary (including mandatory training not funded by the employer

For the first time, the right to a written statement will be extended to workers as well as employees.

Holiday Pay for shift workers, those on zero hour contract and anyone who does not work the same number of hours each week is currently worked out by using the average of the previous 12 weeks immediately prior to the holiday - this is known as the "pay reference period."  From 6 April 2020, the pay reference period will be extended to 52 weeks or, for employees with less than 52 weeks service, the total number of weeks they have worked.

Whilst this change has been introduced to take into account seasonal variations and avoid workers losing out where there are fluctuations in their hours of work, potentially the cost of holiday pay may increase for some employers.  Holiday pay for holidays taken in the summer has not previously been affected by high overtime at Christmas for example but this will now fall into any calculations.

Unless your holiday year runs 6 April to 5 April each year, you should also consider how you are going to work out entitlements this year.

Introduction of Parental Bereavement Leave for "primary carers" who tragically lose a child under the age of 18 or a stillbirth after 24 weeks of pregnancy.  Employees with at least 26 weeks' service will receive at least 2 weeks paid leave at the statutory rate and those without the qualifying service can take the same leave unpaid.

IR35 Legislation is already in place for the Public Sector but will be extended to include the Private Sector in April.  Businesses that use sub-contractors will be expected to determine whether IR35 applies. If it does, the business will place the contractor onto their payroll and will deduct income tax and National Insurance before paying the contractor. 

If a contractor is operating through an intermediary, such as a limited company, and other than for that intermediary they would be an employee of their client, IR35 kicks in.

However......you should continue to watch this space as the Government agreed to a review of the IR35 legislation during last month's General Election so this could still change!

Any Questions?

If you have any questions or concerns about these forthcoming changes and how they will impact your business, we would be happy to discuss this with you and advise on actions you may want to consider taking to be fully prepared.