New employment legislation from 6 April 2020
While we have all been in lock-down, new employment legislation has come into force, which was expected but which seems to have gone un-noticed while everyone's attention has been elsewhere. Below is a quick summary of the key changes. If you have any questions or would like to know more detail, the contact form is at the bottom of the page.
Day One Rights for Workers
Employees have had the right to receive a Statement of Terms of Employment for many years, which had to be given within the first 8 weeks of joining. Now, it has to be given on day one of employment. This right has also been extended to workers, who also need to be given a statement of the key terms of their association with the organisation they are working for. It has always been good practice to issue this document before employment starts, so that a new employee can compare and contrast with their existing employment before they make their decision to move. In fact many people will not hand in their notice without having received the full offer in writing. We do sometimes however play catch-up with the documentation as some employees start work very quickly and because we have had 8 weeks to issue the paperwork it has been ok to do it later. That delay will no longer be lawful.
The list of things that statutorily have to be included in a Statement of Particulars of Employment (or contract) has been in place for a long time, but a couple of key elements now have to be included. These are:
- Any paid leave the employee or worker is entitled to
- Any training entitlement, whether it be mandatory or paid for by the employee or worker.
Where we have produced Statements of Terms for our retained clients, any changes that are required will automatically be made, where those things are not already included. If you are not a retained client and would like your Statements (or contracts) updated, please get in touch. We will be delighted to assist you.
Calculating Holiday Pay for those with variable hours
The long running saga of holiday pay calculations for those on variable earnings has finally been resolved. The reference period for averaging entitlement has increased from 12 weeks to 52 weeks. For those on variable hours this should ideally be calculated on a rolling 12 month basis. We have produced articles previously regarding the complexities of calculating holiday pay so this will undoubtedly help, but if you are still confused, give us a call.
Extension of the time period for a break in service
The period for calculating a break in service has been quite short but complicated, requiring approximately a two week break in employment before continuity of service is severed. This has now been clarified and extended to four weeks. This means that if you are using zero hours or casual workers fairly regularly, you will need to be aware that if there is not a break of 4 weeks between their periods of employment, their service entitlement will continue to accrue.
Parental Bereavement Leave
Employees who suffer the bereavement of a child under 18 or suffer a still birth from the 24th week of pregnancy nowhave the statutory right to 2 weeks unpaid leave from day one of employment. Many employers already offer paid bereavement leave, usually of around 5 days, so this will not change that policy where it is in place already. What it will do is add the right to a second week of bereavement leave. This is a day one right for employees and, if there is no bereavement policy already in place, will be unpaid leave.
However after 26 weeks of service, where there is no policy already in place, bereavement pay is added to the leave at the statutory rate (currently £145.18).
Where our retained clients already have bereavement policies in their handbooks, we will update them automatically for you, to include the second week. Where no bereavement policy exists, we will introduce one and liaise with you over whether you wish to enhance this entitlement.
IR35 changes for the private sector
The changes to IR35 status that took place in the public sector in 2017 were due to be implemented in the private sector with effect from 6 April 2020, but with the lockdown and the focus on dealing with the pandemic, this has been postponed until April 2021. We would advise all employers to consider the employment status of all contractors and other workers on a case by case basis, as this is likely to have a huge impact. The delay will give employers time to put their houses in order. From what we have read about the implications for contractors, consultants and employers of HMRC's approach to reviewing the employment status of this type of worker, the bills for unpaid NI contributions from both parties could be huge. Blanket decisions to employ, or not, your contractors will not be considered lawful so time will be required to properly consider the correct employment status for each person.
There are some exemptions to this change, so it will not apply to all businesses. If you wish to know more and to prepare in time, please get in touch. HMRC claimed an estimated £550m in the first year in tax and NI contributions, so this is an issue that will be back on the agenda.
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