What can we expect in employment law in 2020?

January 27, 2020

What can we expect in employment law in 2020?

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With a number of legislative changes proposed for April this year, 2020 is likely to mark the start of a period of change in employment law.

It is crucial that employers are aware of the proposed changes and what actions may need to be taken. Here are 7 changes that are on the way in 2020:

1. New right to a written statement of terms:

Currently employers have up to two months to issue a written statement of terms of employment to any employee working for them for more than one month. However, new regulations will require a written statement of terms to be given to an employee on or before the first day of employment. This change will take effect from 6 April 2020 and will extend the right to a written statement of terms to all workers, rather than just employees.

In addition, employers must be aware that for any worker starting work on or after 6 April 2020, the following new information must be provided in their written statement of terms:

• the contractual hours and days the worker is required to work

• entitlements to any paid leave

• any other benefits

• details of any probationary period including conditions for passing and its duration

• details of training provided to the worker

2. New reference period for calculating holiday pay:

From April 2020, the Government will lengthen the holiday pay reference period for calculating an average week’s pay from 12 weeks to 52 weeks. This reform is intended to improve the holiday pay for seasonal workers, who tend to lose out over the way it is currently calculated, and to even out the variation in pay for workers.

 3. IR35 – Taxation of contractors working through personal service companies:

From 6 April 2020, all medium or large-sized private sector businesses will be responsible for deciding upon contractors’ employment statuses for tax purposes under HMRC’s “IR35” rules. This includes some charities and third sector organisations.

 In order to prepare for these changes, businesses should review their engagements of any contractors who are paid via a PSC rather than with PAYE and NI deductions, and plan their process for making determinations on whether or not IR35 applies. HMRC’s IR35 CEST is a useful online tool that can be used to determine whether IR35 applies, but it is important that businesses maintain a strong paper-trail of the process followed to support their final conclusion.

 There are some exemptions from these changes, including small businesses which meet at least 2 of the following conditions:

• Turnover of less than £10.2 million;

• A balance sheet figure of less than £5.1 million; and

• Less than 50 employees.

 4. Parental Bereavement (Leave and Pay) Act 2018:

This Act will come into effect on 6 April 2020 and will entitle all working parents who lose a child under the age of 18, or after 24 weeks of pregnancy, to two weeks’ leave, as a right from day one of their employment. The leave will be paid at the statutory rate provided the worker has 26 weeks’ service. The Act provides for a minimum of two weeks’ leave to be taken within a period of 56 days (8 weeks), beginning with the date of the child’s death. 

The employer must always ask the worker how much information they wish to give their colleagues, as all workers have the right to keep such details confidential. Consider having a written bereavement/compassionate leave policy in place, as this can provide certainty and security for workers at a difficult time.

5. Changes to the National Living and Minimum Wage:

The following changes to the National Living Wage and National Minimum Wage are set to take effect from April 2020:

the rates will increase to:

• £8.72per hour for workers aged 25 and over

• £8.20 per hour for 21-24 year-olds

• £6.45 per hour for 18-20 year-olds

• £4.55 per hour for under-18s

• £4.15 per hour for apprentices.

6. Employment law post-Brexit:

It is difficult to estimate the long-term impact of Brexit on employment law. It is unlikely that any significant changes will occur during 2020, as most EU law will continue to apply to the UK when we will be in a post-Brexit transition period. The post-Brexit transition period will run from exit day until 31 December 2020.

 7. Removal of safeguards on workers’ rights in the Withdrawal Agreement Bill 2019-2020:

The new, revised version of the European Union (Withdrawal Agreement) Bill 2019-20 no longer contains clauses on the protection of EU-derived workers’ rights. The Government has said that it intends to legislate separately to protect and enhance workers’ rights, but it is not yet clear how the Government intends to do so in its proposed forthcoming Employment Bill. The Employment Bill would need to be passed by the end of the post-Brexit transition period in order to protect workers’ rights derived from EU law.

With these changes on the way, employers should review key procedures and implement any necessary changes in order to comply with the requirements that will take effect from April 2020.