Business owners are being reminded that they have just weeks to prepare for a raft of changes coming into force on April 6.
Lindsey Knowles, Head of Employment Law at Kirwans law firm is urging business people to ensure they have arrangements in place to ensure compliance by the start of the new financial year.
She said: “For many business owners, simply trying to make a profit consumes so much of their time and energy that legal matters are often forgotten about until it’s too late.
“However, with just weeks to go until a wave of new legislation is introduced, it’s vital that the region’s firms are prepared – or run the risk of being heavily penalised.”
Some of the upcoming changes have resulted from the Good Work Plan which was published in December 2018 and has been described as the Government’s “vision for the future of the UK labour market.
Here, Lindsey reminds businesses of the legal changes that will kick in on April 6th:
1) Written particulars becoming a ‘day one’ right
Those employees who have been employed for at least one month are currently entitled to a written statement setting out conditions of employment, and this must be provided to them within the first two months of work.
However, from April 6th, this statement must be given to both workers and employees on or before the first day of employment.
The particulars to be included in the written statement are also being extended. In addition to current information that must be provided for all new joiners on or after 6th April 2020, the statement must also include additional information. This includes notice periods for termination by either side, how long a job is expected to last, details of any probationary period, all remuneration (not just pay), details of any paid leave, training entitlements, normal working hours including any variability and terms relating to absence due to incapacity and sick pay.
2) Changes to the tax treatment of off-payroll labour for the private sector
The original IR35 legislation, which was introduced to counteract the practice of businesses encouraging individual contractors to set up as a personal service company (PSC) in order for the business to avoid taxes, is being replaced with the off-payroll tax (also known as IR35).
From April 6th, medium and large-sized private sector clients will be responsible for deciding whether the off-payroll tax rules apply. For small businesses, however, the situation will remain the same, with the intermediary taking responsibility.
3) Parental bereavement leave and pay
From April 6th, the Parental Bereavement Leave and Pay Regulations – otherwise known as ‘Jack’s Law’ in memory of Jack Herd whose mother Lucy campaigned tirelessly on the issue – will give all employed parents a day-one right to two weeks’ leave if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy. Employed parents will also be able to claim pay for this period, subject to meeting eligibility criteria.
4) New reference period rules for calculating holiday pay
The calculation of holiday pay can be particularly complicated for those who work variable hours and have variable rates of remuneration. An amended regulation (regulation 16) of the Working Time Regulations 1998 means that from April 6th 2020, the reference period on which employers base calculations for holiday pay for workers with variable pay will change from 12 to 52 weeks, or the number of weeks that a worker has been employed for if it is less than 52 weeks. The change is being made in order to better reflect a worker’s ‘normal’ pay. Any weeks not worked or where no pay was received are to be discarded when calculating the average weekly pay over the last 52 weeks.
5) Abolishing the Swedish derogation
The Agency Workers Regulations (AWR) 2010 were introduced in order to protect all agency workers by giving them equal rights to their employed counterparts, by stating that temporary workers employed for more than 12 weeks by the same employer have a right to enjoy the same pay and employment conditions as permanent staff.
However, a Swedish derogation contract allows the agency, rather than the client, to employ the worker on a permanent contract, with a lower salary, less employment benefits, and up to four weeks reduced (often heavily) pay in between assignments.
The government believes that the Swedish derogation is being used by some recruitment agencies to avoid implementing equal pay and so, from April 6th, all agencies and their workers must work in accordance with the AWR 2010, with no get-out clause attached.
6) Lowering the information and consultation threshold
As the moment, employees have the right, subject to certain conditions, to request that their employer communicates and consults with them about issues within the business, and if at least 10 per cent of employees (with a minimum of 15 employees) make a valid request, employers must set up or change information and consultation arrangements. From April 2020, changes to the ICE (Information and Consultation of Employees) Regulations reduce that threshold to 2%.
7) Taxation of termination payments
From April 6th, termination payments above £30,000 will become subject to employer class 1A NICs as well as income tax. Termination payments will remain exempt from employee NICs.
8) Provision of a key information document
As set out in regulation 13A of the Conduct of Employment Agencies, from April, when agency workers sign up with a new firm, they will be entitled to a key information document before agreeing terms with an employment business.
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