Not even three months in to 2020 and we are already seeing massive global transformation affecting businesses. Brexit day in January followed by the Coronavirus epidemic, both made their marks on profit and business operations worldwide. Yet, there are more changes to come.
2020 is also a year with many new UK employment law changes, many of which will affect our clients. Some of these changes are coming into effect as early as next month, and in order to stay compliant, there are a number of actions that must be taken.
We have outlined the 10 most important changes affecting UK employers.
Changes in Employment Laws due 6 April
6 April, also known as the beginning of the new tax year, is fast approaching. This corporate threshold does not only entail major financial action to companies, but for the year ahead there are also multiple changes in terms of employment law that you need to be aware of.
1. “A day one right” and employment contract content change
For employment planned to last more than a month, UK employees and workers are now entitled to a written statement of employment particulars from their very first day of employment. This differs from past legislation, when the statement was due within two months after initial employment. Aside from this, there are also changes in terms of directives of what must be stated in the contracts, dependant on whether the individual is an employee or a worker.
2. Extended holiday reference period
For the benefit of those employees working variable hours, the reference period for holiday calculation will be lengthened from 12 weeks to 52 weeks. Additionally, there is a number of directives to address when calculating the holiday pay.
This will particularly apply to our clients who have employees working without fixed hours or seasonally, such as retail stores and the restaurant industry, who need to thoroughly track and register working hours in order to maintain a reliable calculation base. Here, absence management plays an important role.
3. “Jack’s Law” – Parental Bereavement Leave
All employers must provide a minimum of 2 weeks paid leave to bereaved parents or primary carers when meeting certain qualifications.
4. Termination payments changes
As of April 2020, termination payments exceeding £30,000 are subject to Employers National Insurance Contributions (NIC) on top of income tax. For businesses, this will not only increase costs, but also complicate exit strategies.
5. IR35 legislation change
The IR35 legislation applies “if a worker provides their services to a client through an intermediary, but would be classed as an employee if they were contracted directly” (gov.uk). The reasoning behind the legislation is to make sure contractors who are working through an intermediary are being taxed and charged for National Insurance similarly as if they were employees.
Commencing 6 April, changes have been made in terms of who is responsible for determining whether the IR35 rules apply to the individual case. The change puts more pressure on medium and large-sized private clients rather than the intermediaries directly employing the contractor. The risk of hefty financial penalties is thereby transferred to those clients.
Update on March 17, 2020:
Changes to the off-payroll working rules (IR35) to large and medium-sized employers were due to take place on 6 April 2020. However, Chief treasury secretary Steve Barclay announced this evening that the government has postponed the IR35 reforms until April 2021 to help ease the strain the coronavirus outbreak is already putting on businesses.
6. Abolition of the “Swedish Derogation”
Previously, agency workers have been able to work under “Swedish Derogation”, meaning they have received pay in between assignments, thus offered a permanent contract of employment by their agency. In return they have given up the right to being equally paid with comparable permanent staff. The removal of these Swedish Derogation contracts will affect about 120,000 UK workers and increase costs of up to £380M across UK employers.
Other Employment law changes
The Employment Law Bill 2019, announced by H.M. the Queen herself in May, included 40 new laws which will all come into effect within the near future. Though no dates have been determined when these laws come into force, employers need to start preparing.
7. Flexible working by default
As a part of the Employment Bill, all employees have the right to flexible working by default, with the exception for certain business reasons. In order to determine whether an employer’s operations fall under the exemption category, it is time to take measures and prepare beforehand.
8. Extended redundancy protection for women and new parents
Another law included in the 2019 Employment Bill was directed towards preventing pregnancy and maternity discrimination by extending redundancy protections. The extension includes legal protection against redundancy by another six months commencing at the end of the maternity leave period.
Policy Changes Affecting Court Ruling
9. Bullying and Harassment
A new technical guidance published by the Equality and Human Rights Commission (EHRC) will be used similarly as the ACAS Code of Conduct in court. Going forward, companies need to make sure their policies are up to date and to train their staff accordingly and thoroughly. Whether companies accomplish these guidelines will then be used when judged and penalised in a harassment court case.
10. Prevention of confidentiality clauses in certain cases
Equality and Human Rights Commission’s released a paper in 2019 with directives for the Use of Confidentiality Agreements in Discrimination Cases. The directives will further prevent the use of confidentiality clauses and Non-Disclosure Agreements (NDA’s) when settling employment disputes in connection to whistleblowing cases in court.
How do these changes affect your business?
Complying with current employment laws and directives are not just crucial from a legal standpoint, but also from a Corporate Social Responsibility one. Companies must prioritize to be a good and responsible employer for the sake of their stakeholders, who also are increasingly aware of corporate behaviour.
The upcoming changes will mean an increased workload for reviewing and adjusting both current and new contracts. Employers are wise to start this process immediately, as this can be a time consuming activity. For example, current employees have the right to request an updated statement of particulars delivered within a month after 6 April, meaning the particulars must be clearly established before this date. New laws will also require time to adjust onboarding and exit strategies, including creating routines for staff training and policy making according to the updated guidance related to workplace harassment.
What can you do?
With bi-annual changes to employment laws and regulations, it is extremely time consuming and costly to continuously be up-to-date in order to stay compliant. Operating in multiple different countries might also make the situation more complex and difficult to manoeuvre in-house. At Goodwille, we have a team of seasoned HR professionals with vast experience across industries, country of origin, company stages and sizes. With the new employment laws in mind, our HR department can help you to:
- Review, adjust and create employee contracts and policies updated with the latest UK laws and guidelines.
- Determine type of employment and take consequential actions to contracts.
- Arrange Training Workshops for your employees.
- Track absence management.
- Help you with any of your employment related issues, including flexible working requests and terminations.
With the law changes coming into effect within a month, time is scarce. If you are concerned with your compliance, do not hesitate to get in touch with our HR team today!