Aside from the Covid-19 legislation and the new HMRC government schemes to support employers and employees during these unprecedented times, there have been several other legislative changes and employment law developments in April 2020. These changes may have gone under the radar given the current circumstances affecting the workplace. This article is intended to provide a catch up for employers, employees and workers alike in case any of the legislative changes were missed.
Right to written statement of particulars of employment extended to workers
Additional information to be included in employment statement
Abolition of Swedish derogation for workers
Deferral of off-payroll IR35 rules to April 2021
Change to holiday reference period for workers with variable pay under the Working Time Regulations 1998
Paid parental bereavement leave as a statutory right
National minimum wage, statutory rates, Vento Bands and compensation limits have increased
Right to a Written Statement of Particulars of Employment
From 6 April 2020, the requirement to provide a written statement of terms and conditions under section 1 of the Employment Rights Act 1996 (‘ERA 1996’) has been extended to include workers, not just employees, and must be provided from day 1 rather than two months from the start date of employment.
Prior to this, only employees were entitled to a written statement of employment particulars undersection 1 ERA 1996 and employers had to provide the written statement within two months after the employee started their employment.
The wording in section 1 of ERA 1996 has now replaced ‘employee’ with ‘worker’. This includes agency workers and zero hours workers and means that workers now have the same statutory right to a written document summarising the main terms of their employment as employees. This was designed to provide transparency and clarity for workers and clarity of terms can be beneficial for both the employee and employer, as there is less scope for any confusion over employment terms and can avoid the risk of disputes over working arrangements where terms are unclear.
As workers are now entitled to the written statement from day 1, employers will need to ensure that the written statement is issued to the worker on or before the work begins and the majority of the information that needs to be contained in the written statement must be contained in a single document.
Additional information that will need to be included for new employees and workers
In addition to the existing information that needs to be provided in a written statement of particulars, foremployees/workers joining on or after 6 April 2020, employers need to provide additional information relating to the following:
the days of the week the worker is required to work, whether the working hours may be variable and how any variation will be determined;
any paid leave to which the worker is entitled (such as maternity or paternity leave);
any other benefits provided by the employer that are not already included in the statement;
any probationary period, including any conditions and its duration; and
any training entitlement provided by the employer, including any training that is mandatory and any training that the worker must bear the cost of.
There is no obligation to provide a new statement or the additional particulars toexisting employees. However, if an existing employee requests an updated statement on or after 6 April 2020, they will need to be provided with the updated statement within one month of their request.
Agency Worker Rights – Swedish derogation clauses abolished and equal pay
On 6 April 2020, The Agency Workers (Amendment) Regulations 2019 came into force and abolished Swedish derogation clauses set out in Regulations 10 and 11 of the Agency Worker Regulations 2010 from that date. Agency workers are also now entitled to the same pay and the same annual leave as permanent colleagues after 12 weeks work. A Swedish derogation clause provides that a temporary worker gives up the right to pay parity with comparable permanent staff from the agency in return for a guarantee to receive a certain amount of pay when they have gaps between assignments. This arrangement is commonly used where large numbers of workers are needed such as in retail and manufacturing. These clauses were designed to give workers stability between work, however, this often led to exploitation of workers by agencies in reality for those workers who did not receive equal pay in between these periods, as agencies could agree the rate with the worker and this was often a lower rate than they would earn if they were on a work assignment.
From 30 April 2020, agencies must provide a written statement to workers with an existing contract that contains a Swedish derogation clause which informs them that this provision will no longer apply. Agencies will therefore need to ensure that they comply with this and may need to update contracts with workers and clients where necessary.
Deferral of off-payroll IR35 rules
The reforms to off-payroll working rules, known as IR35, were due to be implemented in April 2020 but the Government announced in March 2020 that this has now been postponed until 6 April 2021, as part of its response to Covid-19.
IR35 was introduced in April 2000 to ensure that someone working like an employee but through their own limited company, pays broadly the same tax as someone employed directly and was essentially created by the Government to try to circumvent tax avoidance.
IR35 legislation applies to large and medium sized end user organisations and will only apply where two of the following criteria is met:
They have 50 or fewer employees;
They have total assets of not more than £5.1million; and/or
They have a turnover of not more than £10.2m
The new rules will require end user organisations to determine a contractor’s employment status and if a contractor is in scope, the end user organisation must deduct PAYE for that worker. Whereas presently, if in scope, the obligation to pay tax and national insurance contributions is with the contractor’s personal service company. Genuinely self-employed contractors will be unaffected.
The implications of this change will mean that large and medium-sized businesses must determine the employment status (for tax purposes) of all off-payroll workers, and if IR35 applies to those workers, then they will need to operate PAYE and pay national insurance contributions for that worker. The key question is whether the contractor would be classed as an employee if the end user organisation contracted with them directly as opposed to via the intermediary.
Workers will need to be notified of their status determination and they can challenge this if they wish to do so but ultimately the decision will be of the end user organisation. Employers will need to audit arrangements with existing contractors and make an assessment about which workers will or could fall in the scope of the rules about deemed employment.
Paid Parental Bereavement Leave
The Parental Bereavement (Leave and Pay) Act 2018 introduces a new statutory right for all employed parents to two weeks’ leave and statutory bereavement pay where they lose a child under the age of 18 (including a still birth after 24 weeks of pregnancy).
The two weeks do not have to be taken consecutively and the employee will be paid at the lower of £151.20 a week or 90% of their salary.
In practice, many employers will have a compassionate leave policy or allow their employee a reasonable amount of time off in these circumstances anyway and pay at their usual rate during this period, so this legislation will mainly bite employers who would have been reluctant to allow their employee two weeks’ paid time off in these circumstances.
Changes to Holiday Pay calculations
From 6 April 2020, the reference period used to calculate a workers’ holiday pay for workers with no normal working hours or whose pay varies has increased. Previously, where a worker has variable pay or hours their holiday pay was calculated using an average from the last 12 weeks in which they worked, but this has now increased to the previous 52 weeks of work.
Employers must now count back across the last 52 weeks that the employee has worked and received pay to calculate their holiday pay. If a worker has less than one years’ service, then the calculation period is their period of employment in complete weeks.
This change will ensure that workers with irregular working patterns are not disadvantaged if they take their holiday at a quieter time of year when their pay may be lower and this is equally beneficial to employers who may have had to pay a worker higher holiday pay if a worker took their holiday immediately after a busy 12 week period.
The Government has released detailed guidance this month on how to calculate holiday pay in light ofthese new changes and employers should ensure that their payroll staff are aware of this change in the regulations.
National Minimum Wage Rates, Statutory Rates, Vento Bands and Compensation Limits increased
From 1 April 2020, the national minimum wage rates have increasedand the new rates are as follows:
25 years and above: £8.72
21-24 yearolds: £8.20
18-20 yearolds: £6.45
16-17 yearolds: £4.55
From 5 April 2020, the rates in relation to statutory maternity pay, statutory adoption pay, statutory shared parental pay and statutory paternity pay are now as follows:
For Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP) and Statutory Shared Parental Pay (SHPP), the weekly rate for first 6 weeks is 90% of the employee’s average weekly earnings and for the remaining weeks, the lower of £151.20 or 90% of the employee’s average weekly earnings
For Statutory Paternity Pay (SPP), the weekly rate is £151.20 or 90% of the employee’s average weekly earnings, whichever is lower
For claims presented on or after 6 April 2020, the Vento bands for injury to feelings awards have also increased to:
Lower band: £900 to £9,000
Middle band: £9,000 to £27,000
Upper band: £27,000 to £45,000
For effective dates of termination after 6 April 2020, the following caps now apply:
The statutory cap on a week’s pay is now £538 per week
The cap for unfair dismissal compensatory award is the lower of £88,519 or 52 weeks’ pay
The maximum basic award for unfair dismissal purposes and statutory redundancy pay is £16,410
We have an experienced Employment Law Team at Curzon Green that can advise you on any the above changes and how they may affect your business or employment rights. We can provide tailored, up to date advice to support your business and can also assist with drafting contracts or drafting written statements of particulars toassist you with putting the legislative changes into practice. Please contact us for assistance and advice: email@example.com