Changes to employment law in April: what do employers need to know?

Issues relating to Coronavirus are high on the agenda for most employers at the moment, but there are also other changes due to take place in April. We have summarised some of the key issues that employers need to be aware of this Spring and beyond.

March

Changes to Statutory Sick Pay (SSP)

During the Budget on 11 March, the Government announced that changes would be made to the Statutory Sick Pay regime in response to the Coronavirus outbreak.

Details of the changes are set out in our updated guidance on Coronavirus. However, this is a fast moving area and employers should keep up to date with current Government guidance.

April

Changes to section 1 statements – Good work plan

Employers will need to ensure that their contract of employment are reviewed and amended for all employees starting work on or after 6 April. From that date, a written statement of terms must be given on or before the first day of employment (rather than within two months of employment starting). The amount of information that must be included in the statement will also increase. All workers (rather than just employees) will have the right to a written statement of terms.

Further detail about the changes can be found here.

Calculation of holiday pay – reference period increasing

Currently, where an employee has variable pay or hours, their holiday is generally calculated using an average of their pay over the previous 12 weeks. From 6 April, the reference period used in holiday pay calculations will increase to 52 weeks. This aims 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 holiday pay might be lower. The Government has updated its guidance on calculation of holiday pay in anticipation of the changes. Further detail can be found here.

Increased statutory payments

Rates of Statutory sick pay and other statutory benefit payments, including statutory maternity and paternity pay, will increase from 5 April 2020.

The National Minimum Wage and National Living Wage (NLW) will increase from 1 April 2020. In the Budget on 11 March, the Government announced a new target for the NLW to reach two-thirds of median earnings and be extended to workers aged 21 and over by 2024, provided economic conditions allow. The NLW currently applies to workers aged 25 or over, but this will be reduced to 23 from April 2021. Based on current economic forecasts, the rate of the NLW is expected to exceed £10.50 by 2024.

Details of the increased rates can be found here.

Increase in the cap on a week’s pay

For dismissals on or after 6 April 2020, the maximum compensatory award for unfair dismissal will increase from £86,444 to £88,519 and the maximum amount of a week’s pay will increase from £525 to £538.

The amount of a week’s pay is important for calculating payments including statutory redundancy payments and the basic award for unfair dismissal.

Tax on termination payments

Changes are due to come into force 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 6 April, this is due to change so that the balance over £30,000 will also be subject to employer National Insurance Contributions, making termination payments more expensive for employers. Any employer making a termination payment should consider seeking specialist tax advice on the tax status of the payment.

Parental bereavement leave and pay

Employees will have the right to take one or two weeks off work following the death of a child under 18 or a stillbirth that occurs on or after 6 April 2020. There is no minimum length of service for employees to qualify for this right. Leave may be used any time within the first 56 weeks after the death or stillbirth.

Employees will be required to give notice to the employer of their intention to take leave. During the first eight weeks, notice must be given before the employee is due to start work on the first day of leave. After the 8-week period, one week’s notice will be required. Employees will be protected from dismissal or detriment for exercising their right to leave.

Eligible employees will receive statutory parental bereavement pay. Employees must have at least 6 months’ continuous service and normal weekly earning of at least the Lower Earnings Limit. Pay will be at the same rate as statutory paternity pay, but will not be payable during a week in which the employee does any work for the employer.

Off payroll working rules

The Government has announced that the implementation of the off-payroll working rules into the private sector, which was due to come into effect on 6 April, will be delayed until 6 April 2021.

Gender pay gap reporting

The Government has announced that gender pay gap reporting deadlines will be suspended this year in light of Coronavirus. This means that there will be no expectations for employers to report their gender pay gap data in April.

Looking further ahead..

The Government is proposing a new Employment Bill which would introduce further changes to employment law. Details of the proposed changes can be found here. There is as yet no timescale for the introduction of the Employment Bill.

Comment

If you have any queries about these changes or other employment law matters, please contact us

25 March 2020

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