April 2020: Employment Law Changes

April 2020 will be an important month for both employers and us as employment lawyers, with a number of changes to the law being implemented.

This article is intended to provide a heads up for employers as to those changes, so as to enable plenty of time to prepare.

Holiday reference period

From 6th April 2020, the holiday pay reference period that applies for calculating an average week’s pay where a worker has variable remuneration will change. Where a worker has been with their employer for at least 52 weeks, the reference period will increase from 12 weeks to 52 weeks. For those workers who have been with their employer for less than 52 weeks, their reference period will amount to the number of weeks that they have been employed.

In order to prepare for this change, employers should keep records of each employee’s pay for the 52 weeks prior to 6th April 2020, and should continue to keep records thereafter.

This change is particularly important to those employers whose employees work regular overtime, or receive commission payments.

The Parental Bereavement (Leave and Pay) Act 2018

From April 2020, parents and primary carers who suffer the loss of a child will be entitled to at least two weeks’ paid parental bereavement leave. This will apply to the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy.

Those employees with 26 weeks’ continuous service will be entitled to receive paid leave at the statutory rate and other staff will be entitled to unpaid leave.

Written statement of key terms/employment particulars

Another change that will be implemented as of 6th April 2020, is that employers will be required to provide employees with their written statement of key terms/employment particulars on the first day of work as opposed to within two months. This right will also be extended to workers.

Employers should therefore review their standard statement of key terms and employment contracts now to ensure that they can be amended and issued to employees and workers quickly.

National Insurance Contributions on termination payments

Termination payments in excess of £30,000 are currently subject to income tax, however from April 2020, they will also be subject to employer national insurance contributions (NICs).

Those payments under £30,000 will remain free from tax and NICs.

IR35 and off-payroll rules

From 6th April 2020, medium and large private sector organisations which engage workers through personal service companies (PSCs), will have to assess the individual’s employment status for tax purposes. Currently, this rule only applies to organisations within the public sector.

This new rule means that if a worker’s employment status indicates that they are an employee, as opposed to self-employed, the organisation that engages the individual will be responsible for deducting tax and national insurance contributions on payments made to the PSC. Previously, this onus has been placed on the PSC.

As mentioned, the new rules will apply to large and medium companies. For these purposes, this means any company which is not regarded as “small” under the Companies Act 2006. A “small” company must meet two of the following qualifying conditions:

  • have an annual turnover not more than £10.2m;
  • have a balance sheet total not more than £5.1m;
  • have no more than 50 employees.

If you would like more information about the changes addressed in this article or any other aspect of employment law, please contact us on 02920 345511 or at employment@berrysmith.com