As an Employer, What Changes Do I Need to Make as of April 2020?

Compensation
posted by KeithDaniel

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.

Written statement of key terms/employment particulars

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

In addition, an employer will need to include the following information within the statement of key terms/employment particulars:

  • The days of the week that the employee/worker is required to work, and if someone’s hours or days are variable, an employer will need to include details of how the variation will occur;
  • Any rights to paid leave, including maternity leave and paternity leave – it will be enough to sign-post employees to a staff handbook that contains policies concerning maternity leave and paternity leave;
  • Any probationary period, including its duration and any conditions;
  • Details of any training provided by the employer, any training the employee/worker is required to complete and any training of which the employer will not bear the cost;
  • Details of any other benefits or remuneration provided, e.g. health insurance, child-care vouchers;
  • Notice periods for termination;
  • Details regarding the length of temporary or fixed-term contracts;
  • Information concerning sick leave and pay; and
  • Whether or not the employer/worker will be required to work outside the UK for a continuous period of more than one month.

Action Points:

  • Review the organisations standard statement of key terms and employment contracts now to ensure that they can be amended and issued to employees and workers on or before the first day of work.
  • Review the organisations recruitment process to ensure that paperwork is either sent out with offer letters or signed on the first day of work (i.e. at the induction).

Holiday Reference Period

From 6th April 2020, the reference period used for determining a week’s pay when calculating holiday pay for workers with irregular hours 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.

Action Points:

  • Ensure that records of pay for the 52 weeks prior to 6th April 2020 are up to date and accurate;
  • Pay particular attention to those employees/workers who work regular overtime, or receive commission payments.

IR35 and off-payroll rules

As of 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.

Action Points:

  • Review the organisations current workforce to identity those individuals who supply their services through PSCs;
  • Meet with contractors to discuss whether the off-payroll rules will apply to them; and
  • Implement processes to help you determine if the off-payroll rules will apply to engagements in the future.

National Living Wage and National Minimum Wage

As of April 2020 the National Living Wage (for over 25 year olds) will increase 6.2% from £8.21 to £8.72.

The National Minimum Wage for all age groups will also increase as follows:

  • A 6.5% increase from £7.70 to £8.20 for 21-24 year olds
  • A 4.9% increase from £6.15 to £6.45 for 18-20 year olds
  • A 4.6% increase from £4.35 to £4.55 for under 18s
  • A 6.4% increase from £3.90 to £4.15 for Apprentices

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.

Parental Bereavement Leave

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 under the Parental Bereavement (Leave and Pay) Act 2018. 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.

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