Are you preparing for changes in April 2020?

The Good Work Plan was published in December 2018 and sets out the Government’s proposals for employment law reforms, building on the consultations it has carried out following the Taylor Review.

It covers proposals relating to zero hours workers, employment status, continuity of employment, written statements of terms and conditions, holiday pay, agency workers, information and consultation thresholds and tribunal powers and enforcement. A number of the proposals contained in the plan contain very little detail and no indication of when draft legislation will be made.

However, some of the reforms contained in the Good Work Plan will be brought into force from April 2020.

These include:

– All workers (not just employees) will have the right to a written statement of terms.

– Written statement of terms must be given on or before the first day of employment (rather than within 2 months).

– The following additional information must be included in the written statement:

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,
Details of all remuneration and benefits,
Any probationary period,
Any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the worker.

– The reference period for determining an average week’s pay (for the purpose of calculating holiday pay) will increase from 12 weeks to 52 weeks. The aim is to ensure that workers who do not have a regular working pattern throughout the year are not disadvantaged by having to take their holiday at a quiet time of the year when their weekly pay may be lower.

– The “Swedish Derogation” in relation to agency workers will be removed. Broadly, the Swedish Derogation allows employment businesses to avoid giving agency workers pay parity with comparable direct recruits if they have an employment contract which gives them a right to pay between assignments.

– Employment businesses will have to provide agency work-seekers with a key information document setting out information including the type of contract, the minimum expected rate of pay, how they will be paid and by whom, any deductions or fees that will be taken, any non-monetary benefits to which they will be entitled, any entitlement to annual leave and payment and an illustrative example of what this might mean for their take-home pay.

– The threshold required for a request to set up information and consultation arrangements will be reduced from 10% to 2% of employees, subject to the existing minimum of 15 employees.

Comment

Employers should be reviewing their contracts of employment and policies now in anticipation of the changes coming into force in April 2020.

The Government has still not addressed one of the main aims of the Taylor review, which was to deal with the confusion around employment status for workers in the gig economy. There remains, therefore, a lack of clarity on this issue which the Good Work Plan does not resolve.

In addition, unrelated to the Good Work Plan, reforms to IR35 legislation will be introduced in the private sector in April 2020. To prepare for the reforms, medium and large organisations will need to assess the employment status of individuals who work for them via the individual’s own limited company. Where the new provisions apply, the organisation will need to deduct income tax and employee national insurance contributions.

And finally, changes are due to come into force in April 2020 dealing with the taxation of termination payments that are over £30,000. Currently, termination payments up to £30,000 can in certain circumstances be made tax free but the balance over £30,000 is subject to deduction of income tax. From April 2020, this is due to change so that the balance over £30,000 will also be subject to deduction of National Insurance Contributions. Any employer making a termination payment should consider seeking specialist tax advice on the tax status of the payment.

29 August 2019

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