News & Insights

Are you prepared for 2020?

Christian Meredith reviews employment changes coming soon.

A sweep of changes to employment law are coming into force this year. From April 2020 we can expect a number of reforms.

We have set out a brief summary below of the major changes to be aware of. If you would like further information or advice on the changes, please get in contact with us.

Contract reform

From 6 April 2020 employers will need to make changes to comply with new rules in relation to section 1 statements. These changes will apply to any person who starts work on or after 6 April and these are detailed below:

  • The obligation on employers to provide section 1 statements will be extended to workers (as well as employees).
  • The one–month service requirement before an employee, and now a worker, is entitled to receive their section 1 statements will no longer apply. Employees and workers will be entitled to receive their section 1 statements from ‘day one’.
  • The minimum requirements for these statements have been extended and include information on matters such probation, days of the week worked, training etc.  Please contact us for a full list.

Holiday Pay

From 6 April, the reference period used to calculate statutory holiday pay will increase from 12 weeks to 52 weeks.  This will ensure that workers who do not have a regular working pattern throughout the year are not disadvantaged by taking their holiday at a quiet time of the year when their weekly pay might be lower.

The 52-week reference period will apply to all calculations of statutory holiday pay under the WTR 1998 in which the 12-week reference period would otherwise have been used (in other words, workers with no normal working hours, and workers with normal working hours whose pay varies with the amount of work done or the times or days on which it is done).

The government intends to launch a campaign to boost awareness of holiday and holiday pay rights among employers and individuals. This will include new guidance (produced in conjunction with Acas) with real life examples to support the interpretation of holiday pay rules.

Parental Bereavement Leave

Please see article below for further details.

Termination Payment Changes

As of 6 April, all ex-gratia termination payments above £30,000 will be subject to deductions NICs as well as income tax.

The first £30,000 of a termination payment is exempt from tax and NICs. Currently, tax is payable on sums above this amount, but NICs are not chargeable. As of April 2020, NICs will also be chargeable on payments above the £30,000. Payment relating solely to the termination of employment will continue to be exempt from employee NICs.

National Minimum Wage

Following the recommendations of the Low Pay Commission, the government will increase the national minimum wage from April 2020 to the following rates:

  • Apprentices: £4.15 an hour;
  • 16-17 year olds: £4.55 an hour;
  • 18-20 year olds: £6.45 an hour;
  • 21-24 year olds: £8.20 an hour;
  • National living wage (workers aged 25 and over): £8.72 an hour.

IR35

Changes to IR35 will also apply from April 2020. This will impact end clients above a certain size that use the services of individuals who are engaged through an intermediary (usually their own personal service company or “PSC”) but would be classed as an employee if they contracted directly with the client.  The rules are designed to combat tax avoidance by ensuring these individuals (often referred to as off-payroll workers) pay the same tax and National Insurance contributions as employees.  The changes impact all arrangements where payments are received on or after 6 April, therefore businesses, contractors and agencies will need to carry out any necessary steps to ensure compliance well before this date.