The most salient UK employment law changes in 2020

You’d be wrong to think that the impact of Brexit overshadows everything in the world of employment law in 2020. While there’s no doubt that the Withdrawal Agreement Bill sits firmly at the top of the Government’s agenda, there are many other changes which employers need to be aware of. Here is our overview of those changes coming into effect in April this year.

New IR35 rules

Until now, IR35 legislation states that the responsibility of determining if a contract is inside or outside IR35 sat with the individual freelance contractor. Changes to the law mean that the end-client will now determine the status of the engagement. And if the organisation’s ‘Status Determination Statement’ outlines that they are deemed inside IR35 – they have a legal obligation to deduct equivalent taxes to a PAYE role. Employers must ensure that they are prepared for this change, and review and amend their documentation without delay. You can download your copy of our IR35 Guide NOW. 

The Swedish Derogation to be abolished

This model of employment is where an agency hires an individual, rather than the organisation where they work. However, the Government’s Agency Workers Regulation (AWR) 2010 states that temporary agency workers must earn the same basic pay and be treated in the same way as any staff on a permanent contract. And as an agency is only obligated to pay a minimum of the national minimum wage, this way of working falls outside of the AWR. So, organisations need to decide what to do about any agency workers currently engaged in this type or contract.

Two weeks parental bereavement leave

Perhaps the most significant change to take place as it’s a world first with the UK leading the way in employment law. Employed parents who suffer the loss of a child under the age of 18 will now have the right to two weeks leave. Those also entitled are employees with parental responsibility and also parents who lose a child through stillbirth. As this is such a landmark change in employment law, we have created a further, more detailed guide, for employers {here}.

Holiday pay reference period increase

The amount of pay a worker received for their holiday has previously been based upon their last 12 paid weeks – to reflect what they would have earned had they been at work. A fair amount of entitlement for the majority of the UK’s workforce who are full-time employees. But for the workers with no fixed work or regular hours, or those who have taken holiday during a quiet period, the calculation based on the past 12 weeks does not provide a fair representation, And so, the new law means the reference point will be increased to 52 weeks.

Written statements for all – from day one

The Government’s Good Work Plan originally stated that any employee working for one month or more should receive a written statement of terms within two months. The new law introduced in April this year will mean that, in addition to employees, all workers should receive a written statement – from their first day of engagement.

Information and consultation rights threshold decreased

The Taylor Review highlighted that employee engagement improved organisational performance and productivity. Currently, at least 10% of an organisation’s workforce are required to make a request to share information and consultation within the workplace. The employer is then obliged to take steps to comply. The latest legislation to come from the Good Work Plan will lower the threshold to set up information and consultation agreements to just 2% of employees.

Termination payments to be subject to NI

From April 2020, the charge on termination payments of £30,000 or more will not only be limited to income tax, but also Class 1A NIC liability at 13.8%. This means that termination payments become even more complex, and expensive, for employers.

So, a significant year ahead in terms of legislative changes to employment law, with many changes for employers to navigate from April 2020. And with further changes on the horizon, the onus – more than ever, is on employers to ensure legal compliance and to protect the welfare of their workers.

Are you ready?

If this roundup of new employment legislation due in April 2020 has left you wondering how you will tackle the changes, please contact us on 0330 041 5255 or complete our online Contact Form for guidance and support.