The 2020 Employment Law changes you need to be aware of
In addition to Brexit and a new Conservative government, the UK will usher in the New Year with a series of important employment law changes.
Effective this April, employers will need to act quickly if they are to accommodate the changes.
We have outlined below the main changes that will impact employers with recommendations on how best to prepare.
Holiday Pay
Employers should already know that salary paid during a holiday should be paid at the employee’s normal rate of pay. Normal pay includes commissions, bonuses and overtime (if sufficiently regular). Currently in order to calculate the average rate of normal pay the employer should factor what has been paid to the employee in the prior 12 week period.
As at 6 April this prior reference period will be increased from 12 weeks to 52 weeks (or the number of weeks worked if less than 52).
| Action required For any employee with a variable component to their earnings there will be a requirement for payroll to track their average rate of pay on a rolling 52 week basis. |
Written Statement of Employment
Currently an employer has two months in which to provide a new employee with written particulars of their employment. The ‘particulars’ contain the main terms of employment – key items such as the commencement date, salary, name of employer etc.
From the 6 April this statement must be provided to the new starter on or before their first day of employment and will require the following additional information:
- Greater detail on the days of the week that an individual is required to work and whether this could be subject to change
- Details of paid leave other than holiday and sick leave (such as maternity and paternity leave etc.)
- Details on probationary periods (duration and applicable conditions)
- Details on notice of termination
- Details on expected duration of the employment
- Full details on all aspects of remuneration (not just basic pay)
- Details of any training entitlements or details of required training
- Detail on the terms relating to sickness absence
- Detail on the terms relating to any work outside of the UK for a period of more than one month.
Currently the ‘particulars’ can be provided in instalments, however under the new conditions all of the ’required information’ must be contained in one written statement.
There will be no requirement to issue extended statements to existing employees (those already hired before the 6 April 2020). However an existing employee is entitled to request one, and this right extends to three months after the termination of their employment. Following a request the employer is required to provide the written statement to the individual within one month.
| Action required Employers will need to ensure that their recruitment process can deliver fully negotiated and finalised terms of employment before the first day of employment. Additionally any existing employment contract templates will need to reviewed and, where required, amended to accommodate the additional information and ensure it can be provided in one go. |
Agency Workers and the removal of the Swedish Derogation
Agency workers can currently opt out of their right to pay parity with comparable permanent employees in return for receiving a guarantee of pay during gaps in assignments (referred to as a Swedish Derogation). Recent surveys suggest that as many as 130,000 individuals are working under a Swedish Derogation in the UK.
From the 6 April a Swedish Derogation will no longer be lawful and all new and existing contracts will be required to ensure equal pay - for the latter this will require the supply of a written statement to each individual advising them of their right to equal pay.
| Action required Businesses using agency labour should check-in with their agencies to understand whether any individuals are subject to a Swedish Derogation – if they are then it is likely that the agency will require information on the compensation payable to comparable permanent employees which may result in increased fees. |
Increase in statutory rates
Effective from 1 April the National Living Wage (for individuals aged 25 and above) will increase to £8.72 per hour. The National Minimum Wage will also increase to £8.20/hr for workers aged 21 to 24, to £6.45/hr for workers aged 18 to 20 and to £4.55/hr for those over compulsory school age but below 18.
At the timing of writing this, the rates for statutory sick pay, redundancy pay, maternity, paternity, parental and adoption leaves have yet to be announced
Lower threshold for agreement to inform and consult with staff
Under the terms of the Information and Consultation of Employees Regulations 2004 (ICE) individuals working for employers with 50 or more employees have the right to request formal arrangements to inform and consult them on issues facing the employer’s business, such as its economic situation and any planned major changes.
The arrangements are not automatic and have to be formally requested by the employees and currently this requires the support of at least 15 employees or 10% of the workforce, whichever is greater.
As of the 6 April this threshold is to be reduced from 10% to only 2% of the workforce.
| Action required In light of an increased possibility of requests, employers with 50 or more employees should consider how such a request could be accommodated. |
For more information on how Crowe can help, contact Stuart Buglass.
