Employment Law changes effective April 2020

The employment team at Teacher Stern have put together a round-up of the key employment law changes that will take effect at the beginning of April 2020. If you have any questions or require any advice in relation to these changes, then please contact our Employment team on emp@teacherstern.com.

Please note that the are employment law changes that have no connection with Covid-19.

Written statement of particulars/contracts

From 6 April 2020, employers must provide a written statement of terms and conditions of employment to employees on or before their first day of employment rather than within the first two months of their employment, as was previously the case. The written statements are normally included in a contract of employment or engagement letter. This right will now also be extended to ‘workers’ including casual and zero-hour workers.

The written statements/contracts must now include additional information including terms and conditions relating to the following:

1.      Further details of hours and days to be worked including whether such hours or days may be variable;

2.      Details of any probationary period including any conditions that apply;

3.      Benefits and other paid leave on top of holiday entitlements, such as statutory paid family leave; and

4.      Any training that will be provided by the employer, including mandatory training.

The above information must be contained in the written statement/contract provided to the employee and not given later or refer to some other location such as the staff handbook.

Workers’ contracts are likely to be different to those of employees in several respects including entitlement to benefits and the disciplinary/grievance procedures that may apply to them.

Employers should provide updated written statements/contracts to workers and employees and should be ready to deal with requests from their existing workforce who may request contracts that are up to date and comply with the above requirements.

Changes to taxation of termination payments

All termination payments above the £30,000 tax free threshold will be subject to class 1A National Insurance contributions (NICs).  Currently, only income tax is payable on sums in excess of £30,000. National insurance, until now, was not payable.

Employers will be required to pay employer NICs for the amount above £30,000 in all termination payment which will mean employers will need to factor in this cost when entering into settlement agreements.

The ‘Swedish derogation’ for agency workers

The ‘Swedish derogation’ currently permits a special type of employment contract between agencies and agency workers in which agency workers can opt out of the right to receive equal pay with direct employees of the hirer, after they have worked for the hirer for 12 weeks. This will be abolished and the ability to opt out of pay parity will no longer be possible.

Additionally, temporary work agencies must issue agency work-seekers with a ‘key information document’ before agreeing the terms of the contract; with such document to include information on the type of contract, minimum expected rate of pay, method of payment, details of benefits, deductions and paid holiday.

Changes to reference period for calculating holiday pay

The reference period for calculating holiday pay will change from 12 weeks to 52 weeks (or, alternatively, the period during which the worker was employed if it is less than 52 weeks).

This change is relevant for workers and employees without normal working hours such as zero-hour workers and those workers whose pay varies during the weeks that they work. The purpose of this change is to give a more representative figure for the average pay of casual and seasonal workers.

Parental bereavement leave and pay

Employed parents who have 26 weeks of continuous employment and lose a child under the age of 18, or, who suffer a still birth after the 24th week of pregnancy will be entitled to two weeks’ paid leave.

A bereaved parent with less than 26 weeks continuous employment will be entitled to two weeks’ unpaid leave.

Annual uplift to compensation limits and statutory rates

From April 2020, the Government intends to make the following changes to statutory awards and tribunal compensation.

Statutory rate/compensation Old limit New limit
Limit on amount of compensatory award for unfair dismissal. £86,444 £88,519
Maximum amount of “a week’s pay” for calculating a redundancy payment or for various awards including the basic or additional award of compensation for unfair dismissal. £525 £538
The weekly rate of statutory sick pay. £94.25 £95.85
The weekly flat rate of statutory maternity, paternity, adoption and shared parental pay. £148.68 £151.20
The national minimum wage -25 years and older £8.21 per hour  £8.72 per hour
The national minimum wage – 21-24 years old  £7.70 per hour £8.20 per hour
The national minimum wage – 18-20 years old  £6.15 per hour £6.45 per hour

Finally, the provision where off-payroll working rules (IR35) would extend to the private sector on 6 April 2020 will be delayed until 6 April 2021. The postponement is in response to the Covid-19 pandemic, and was stated to be a deferral, not a cancellation.

If you have any questions or require any advice in relation to these changes, then please contact our Employment team on emp@teacherstern.com.