As we start the new year with a new Government in the UK, we consider the important employment law changes that will, or may, come into effect in 2020.

New right to a written statement of terms

Currently, employees who have been continuously employed for more than one month must be provided with a written statement of terms within two months of employment commencing. From 6 April 2020, this right is being extended to include workers as well as employees. In addition, the right to the written statement will be a day one right, meaning that workers will be entitled to the statement from the first day of employment or engagement. Legislation also requires additional information to be included as part of the extended right.

Amendments to agency workers rules

Another change which will come into effect on 6 April 2020 is a change to the agency workers rules. Under the Agency Worker Regulations 2010 (AWR 2010), agency workers are entitled to receive the same pay and basic working conditions as direct recruits once they have completed 12 weeks’ continuous service working in the same role. However, there is an exemption to this known as the  ‘Swedish derogation’ which permits agency workers who are employed under a permanent contract of employment with the temporary work agency and are paid by the agency for periods between assignments, to be exempt from the requirement for equal pay. From 6 April 2020, the Swedish derogation will be removed, meaning that all agency workers who have satisfied the 12-week qualifying period will be entitled to equal pay to those workers who are engaged directly by the employer.

Another provision which is contained in the Conduct of Employment Agencies and Employment Business (Amendment) Regulations 2019 is a provision that all agency work-seekers must be provided with a key facts statement setting out the terms under which they will undertake the work.

Holiday pay reference period

The calculation of holiday pay for workers with variable pay is changing on the 6 April 2020. Currently, in calculating the holiday pay for an employee with variable pay, the employer must look back over a 12 week reference period. From 6 April 2020, the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 will increase the holiday pay reference period from 12 weeks to 52 weeks. Employers will be required to look back at the previous 52 weeks where a worker has worked and received pay, discarding any weeks not worked or where no pay was received, to calculate the average weekly pay. The Governments’ good work plan sets out that the changes will allow greater flexibility for those workers in choosing when to take holiday.

Changes to IR35 rules for the private sector

From April 2020, medium and large private sector businesses in the UK will become responsible for deciding the tax status of any contractor they engage via a personal service company (PSC), whether directly or indirectly. With that responsibility comes a potential liability to employment taxes (PAYE) and NICs. All businesses engaging contractors need to prepare for these changes. Under the current IR35 rules, it is the PSC that is responsible for determining the status of the individual and for operating PAYE and paying employer and employee NICs where there is deemed employment. The changes mean that the onus will shift from the PSC to the end user client to make a status determination.

These changes were included in the Finance Bill which was delayed due to the General Election. It is anticipated that the Bill will be enacted and that these changes will come into force in April 2020.

Reduction to threshold for a request to set up information and consultation arrangements

Currently the threshold required for a valid request to set up information and consultation arrangements under the Information and Consultation of Employees Regulations 2004 is 10% of employees. With effect from 6 April 2020 this threshold is being reduced from 10% to 2% with the minimum of 15 employees remaining.

Change to tax treatment of termination payments

The change will mean that employers will be liable to pay Class IA national insurance contributions on termination payments above £30,000 that are subject to income tax by the employee. This is set out in the National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019.

New parental bereavement law

The Parental Bereavement (Leave and Pay) Act 2018 is expected to come into force in April 2020. If it does come into force, bereaved parents will have the right to two weeks of leave following the loss of child under the age of 18, or a stillbirth after 24 weeks of pregnancy. The details of the new entitlement and those who will qualify will be set out in separate regulations. Bereaved parents will be entitled to take their leave in one two-week block or in two separate blocks of one week.

Bereaved parents employed with a minimum of 26 weeks’ continuous service will also be entitled to receive statutory parental bereavement pay. Those with less than 26 weeks’ continuous service will be entitled to take two weeks of unpaid leave.

Employment Bill

The Queen’s Speech on December 19 2019 included reference to an Employment Bill. This Bill will include many of the issues which the Government has previously proposed:  The introduction of a single enforcement body; extension of redundancy protection for pregnant employees and those returning to work after maternity leave; introduction of neonatal care leave for employees; one week’s leave for unpaid carers; and obligations on employers to allocate tips amongst employees.  The Bill will also contain provisions to protect workers’ rights with regard to EU employment rights.  It is not clear when the Bill will be introduced.

We will keep you updated on all the developments throughout the year.