Five employment law changes you need to be aware of in 2020

As we head into the start of a new year, we look at five critical employment regulation changes every UK commercial enterprise needs to be aware of heading into 2020. What important UK employment law changes come into effect in 2020?

With the Government mired in the complications of Brexit, many employment law developments in the UK have stalled. But there are still some crucial changes that businesses should be preparing for. So what is on the agenda for employers in 2020?

Amendments to agency workers rules Effective 6 April 2020

Current law The Agency Worker Regulations 2010 (AWR 2010) entitles agency workers to receive the same pay and basic working conditions as direct recruits once they have completed 12 weeks’ continuous service working in the same role. The ‘Swedish derogation’ currently provides an exemption to the right to equal pay, if agency workers are employed under a permanent contract of employment with the temporary work agency and are paid by the agency for periods between assignments.

New law From 6 April 2020, the Swedish derogation is removed. Once agency workers have satisfied the 12-week qualifying period, they will be entitled to equal pay to workers who are engaged directly by the employer. On or prior to 30 April 2020, agency workers whose existing contracts contain a Swedish derogation provision must be provided with a written notification by the agency that it will no longer have effect. In addition, from 6 April 2020 all agency work-seekers must be provided with a key facts statement setting out the terms under which they will undertake the work.

New right to a written statement of terms Effective 6 April 2020

Current law Currently, employees who have been continuously employed for more than one month must be provided with a written statement of terms within two months of employment commencing.

New law From 6 April 2020, all new employees and workers will have the right to a statement of written particulars from their first day of employment. Additional information will have to be included as part of the extended right. Given the new obligation is to provide particulars on ‘day one’, employers should begin preparation of the revised statement of particulars during the recruitment stage and ensure that these include every element of the new requirement. Employers will need to consider who might qualify as a worker, issuing contracts of employment only to employees and using a separate template when issuing particulars for workers

Changes to IR35 rules for the private sector Effective 6 April 2020

Current law At present, the IR35 rules apply where an individual (worker) personally performs services for another person (client), through an intermediary (usually a personal service company, or PSC), and if the services were provided under a direct contract, the worker would be regarded for tax purposes as being employed by the client. Currently, it is the intermediary’s responsibility to determine whether IR35 applies.

New law From 6 April 2020, changes to IR35 rules will be implemented for medium and large businesses in the private sector and will largely mirror changes that took effect in the public sector in 2017. Under the new regime, for all contracts entered into, or payments made on or after 6 April 2020, the onus will shift from the PSC to the end user client to make a status determination. Responsibility for accounting for tax and national insurance will shift to the party who pays for the individual’s services, known as the ‘fee-payer’. In anticipation of these changes, it is essential that medium and large businesses carry out an assessment to determine whether the new rules under IR35 apply to their independent contractors and review their contracts and pay arrangements. Small businesses will not be caught by the changes.

Holiday pay reference period adjustment Effective 6 April 2020

Current law The calculation of holiday pay can be complicated, particularly for those with variable hours and variable rates of remuneration. Currently, the holiday pay reference period is 12 weeks.

New law From 6 April 2020, the holiday pay reference period will increase from 12 weeks to 52 weeks. Employers will be required to look back at the previous 52 weeks where a worker has worked and received pay, discarding any weeks not worked or where no pay was received, to calculate the average weekly pay. It is hoped that this change will help to even out the variation in pay for workers, particularly those in seasonal or a typical roles.

New parental bereavement law Effective 6 April 2020 (not confirmed)

Current law There is no current law.

New law The Parental Bereavement (Leave and Pay) Act 2018 is expected to come into force in April 2020. If it does come into force, bereaved parents will have the right to two weeks of leave following the loss of a child under the age of 18, or a stillbirth after 24 weeks of pregnancy.

Details of the new entitlement and those who will qualify will be set out in separate regulations. Bereaved parents will be entitled to take their leave in one two-week block or two separate blocks of one week. The leave must be taken before the end of a period of at least 56 days beginning with the date of the child’s death. Bereaved parents employed with a minimum of 26 weeks’ continuous service will also be entitled to receive statutory parental bereavement pay. Those with less than 26 weeks’ continuous service will be entitled to take two weeks of unpaid leave.