What to expect in employment law in 2020

The National Minimum Wage

At the time of writing, due to the timing of the UK General Election, the Government has not yet announced the increase to the NMW (or any of the other statutory rate increases) to apply from 1st April 2020.  The current National Minimum Wage rates are as follows:

-  £8.21 for workers aged 25 years and over

-  £7.70 for 21-24 year olds

-  £6.15 for 18-20 year olds

-  £4.35 for 16-17 year olds; and

-  £3.90 for apprentices aged under 19 or in the first year of their apprenticeship.

Contracts of Employment

Several changes to the right to receive a written statement of main terms and conditions of employment will apply from 6th April 2020 in respect of new recruits from that date (existing employees may request an amended statement to incorporate the changes).

Employers currently have two months to provide it to a new employee. The grace period will be removed meaning employers will have to give the written statement of terms and conditions to the employee no later than the commencement date of employment.

In addition, more details will have to be included in the written statement of terms and conditions, as follows:

-  Duration of and conditions attached to any probationary period.

-  All paid leave entitlements (including for example, maternity and paternity pay entitlements).

-  All benefits the employee receives (not just pay) including contributions in cash or kind e.g. vouchers and lunch.

-  An employee’s training entitlement, including whether any training is mandatory and/or must be paid for by the worker.

-  The days of the week the employee is required to work on and whether normal working hours are variable or not. If they are variable, information must be included on how they vary or what determines the variation.

Significantly, employers will have to provide a written statement to their ‘workers’ including “zero hours’ workers”, as well as their employees. Currently, only employees are entitled to receive this document.

These changes have been implemented via new legislation, following the government’s recognition in the “Good Work Plan” that too often issues arise during an employment relationship because both parties were not clear on their rights and obligations from the outset. These changes should be implemented in relation to any new recruit starting work on or after April 6 2020.
Updated template contracts for workers and employees, with relevant guidance notes, are available on the FSB Legal Hub.

Holiday Pay

The mandatory reference period for calculating holiday pay will increase for staff with variable pay, such as zero hour workers.

From 6th April 2020, employers will have to use a reference period of 52 weeks, (instead of the current 12 weeks) when calculating holiday pay for staff whose pay varies, including “zero hours” workers. This calculation method will result in a payment which balances out any peaks and troughs of working hours throughout the year. In complying with the statutory change to the holiday pay calculation reference period for variable pay workers, you will need to consider whether or not to make the change within your business ahead of April 2020. For example, if your holiday year starts in January, you may wish to consider implementing the change from January in line with your holiday year, or wait until April 2020.

“Disguised Employees”: The IR35 reform to the private sector - April 2020

The new tax rules (known as the “off-payroll” working rules) are set to apply from 6 April 2020. These will apply to all public sector clients (regardless of size) and medium or large-sized private sector businesses (i.e. those who meet 2 or more of the following criteria: their annual turnover is more than £10.2 million, their balance sheet total is more than £5.1 million or they have more than 50 employees). This means that small businesses are exempt from the new rules.  From that date, the business using the worker’s services will be responsible for deciding their worker’s employment status.  Where the worker is employed for tax purposes after applying the IR35 test, the fee payer (client) will be responsible for deducting employment taxes. The new rules apply if a worker provides services to a client through an intermediary (which is usually the worker’s own company i.e. personal service company), but would be classed as an employee if they were contracted directly.  HMRC has published an updated Check Employment Status for Tax (CEST) tool online.

The Parental Bereavement (Leave and Pay) Act

This is expected to come into force in April 2020, although the regulations have not yet been laid before Parliament.  This legislation creates a new right to two weeks’ bereavement leave and pay for employees whose child dies below the age of 18, or whose child is stillborn. 

EU Immigration and Brexit

A new “Australian style” points-based immigration system will apply from January 2021 to both EU and non-EU citizens coming to the UK. It will replace the current immigration system and current free movement for European citizens to the UK. Surprisingly, the Government has not yet provided details of the new proposed scheme so it is not yet possible to comment on what this would mean for employers. For EU citizens recruited before 1 January 2021, employers can rely on the existing right to work checks they carried out when they recruited based solely on the worker’s EU passport or EU identity card. Employers shall not be required to distinguish between EU citizens who moved to the UK before or after Brexit until the new, points-based immigration system is introduced from January 2021.

EU citizens already in the UK prior to Brexit are required to apply for settled or pre-settled status by 31 December 2020. The responsibility lies with EU citizens and their family members who arrive in the UK during the transition period (i.e. after Brexit but before 31 December 2020) to apply for leave (under the Euro Temporary Leave to Remain (“Euro TLR”) scheme that provides temporary leave for 36 months, or the new immigration system that provides indefinite leave, that will apply from January 2021) if they want to stay in the UK beyond 31 December 2020. If they do not apply by that time, in principle they would be working illegally, but the employer will have no obligation to check that, because it will still be able to employ someone based solely on their EU passport or EU identity card, if it was checked before their employment started during the transition period. At present, that would be the only right to work check required.

As always, if you have a legal query please get in touch with the FSB Legal Helpline on 0345 0727727 and we'll be happy to assist you.