Eight legal changes that will affect your business in 2020

Posted by Lindsey Knowles

Partner, Head of Employment Law at Kirwans Solicitors

Mon 11th, Nov

As the end of another year approaches, businesses across the country are looking ahead to what 2020 will bring.

And while Brexit uncertainty looks set to continue – at least for now – there are certain legislation changes that we know are set to take place.

Lindsey Knowles, Head of Employment Law at Kirwans law firm said: “As a response to the Taylor Review, which examined the legal rights of employees and workers within the UK, the government published the Good Work Plan in December 2018. The plan proposes a number of reforms to provide workers with greater rights, and although Brexit has caused legislation to be delayed this year, 2020 will see the introduction of some of its key reforms.

“Of course, while there is still uncertainty about the final terms under which the UK will leave the EU and the small matter of a general election to consider, it can’t be assumed that these legislative changes will go ahead as planned.

“But for the time being, firms must prepare for the implementation of these new laws in order to avoid being caught off-guard.”

Here, Lindsey sets out the key employment law changes we can expect to kick in on April 6 next year.

1) Changes to the tax treatment of off-payroll labour

The original IR35 legislation, which was introduced to counteract the practice of businesses encouraging individual contractors to set up as a personal service company (PSC) in order for the business to avoid taxes, is being replaced with the off-payroll tax (also known as IR35).

From next April, medium and large-sized private sector clients will be responsible for deciding whether the off-payroll tax rules apply. For small businesses, however, the situation will remain the same, with the intermediary taking responsibility.

What you need to do: Review your off-payroll workforce, consider the changes you need to make, and think about seeking legal advice as the penalties for failing to comply are severe.

2) Written particulars becoming a ‘day one’ right

Under the Employment Rights Act 1996, all employees whose employment lasts at least one month or more are entitled to a written statement setting out conditions of employment.

This is known as a statement of written particulars of employment, a section 1 statement, or a statement of terms and, from April 6, 2020, must be provided to both workers and employees on or before the first day of employment, rather than just to employees and within the first two months as is currently required.

There are particulars that may currently be included in a supplementary statement but which will have to, from next April, be given in the principal statement. These include the notice periods for termination by either side and terms relating to absence due to incapacity and sick pay.

Certain terms can also be provided at a later date – as long as this is no later than two months from the start date - within additional documents rather than the principle statement.

What you need to do: Read up on the information that the written particulars should contain. If you need to make any changes to the contract, then employees and workers will need to be informed and revised contracts given. While employers don’t have to give existing employees the additional information as a matter of course, if there is a change to new provisions which were not in the employees’ section one statement, then they would need to be notified of the change.

You should also be prepared for requests to be made for new-style statements by employees and ensure you have capacity to meet their requests no later than one month after the request. Legal advice should be sought when adding in the new particulars in order to avoid costly errors. 

3)    Parental bereavement leave and pay

The Parental Bereavement Leave and Pay Act will give all employed parents a day-one right to two weeks’ leave if they lose a child under the age of 18, or suffer a stillbirth from 24 weeks of pregnancy. Employed parents will also be able to claim pay for this period, subject to meeting eligibility criteria.

What you need to do: Ensure your employment contracts and procedures are amended accordingly.

4)    New reference period rules for calculating holiday pay

When calculating holiday pay for workers with variable pay, employers currently base it on the pay that a worker receives during the 12-week period prior to taking the holiday.

However, an amended regulation (regulation 16) of the Working Time Regulations 1998 means that from April 6 2020, that reference period will change to 52 weeks, or the number of weeks that a worker has been employed for if it is less than 52 weeks, in order to better reflect a worker’s ‘normal’ pay.

What you need to do: Look at the way holiday pay is currently calculated in your organisation and decide how and when you want to implement the change in order to avoid complications around carrying over holiday pay.

5)    Abolishing the Swedish derogation

The Agency Workers Regulations (AWR) 2010 were introduced in order to protect all agency workers by giving them equal rights to their employed counterparts, by stating that temporary workers employed for more than 12 weeks by the same employer have a right to enjoy the same pay and employment conditions as permanent staff.

However, a Swedish derogation contract allows the agency, rather than the client, to employ the worker on a permanent contract, with a lower salary, less employment benefits, and up to four weeks reduced (often heavily) pay in between assignments.

The government believes that the Swedish derogation is being used by some recruitment agencies to avoid implementing equal pay and so, from April 6, all agencies and their workers must work in accordance with the AWR 2010, with no get-out clause attached.

What you need to do: Although the onus lies with the agency to ensure the worker is paid an equal wage, you can ensure that, while they’re working with your business, they are able to enjoy similar working conditions as your permanent members of staff.

6)    Lowering the information and consultation threshold

The Information and Consultation of Employees Regulations 2004 (ICE Regs) allow employees the right, subject to certain conditions, to request that their employer communicates and consults with them about issues within the business.

Currently, at least 10% of employees (with a minimum of 15 employees) have to make a valid request to set up information and consultation arrangements in order for employers to set up or change those arrangements. From April 2020, that threshold will reduce to 2%.

What you need to do: Read over the negotiation procedure in the ICE Regs in order to prepare for a request from employees.

7)    Taxation of termination payments

At the moment, termination payments above £30,000 are currently only subject to income tax. From April 6 2020, however, employer class 1A NICs will become payable too. Termination payments will remain exempt from employee NICs.

What you need to do: Nothing right now, but remember that there will be additional cost implications when negotiating settlements next year.

8)    Provision of a key information document

As set out in regulation 13A of the Conduct of Employment Agencies and Employment Business Regulations 2003 (the ‘Conduct Regulations’), all agency workers must be given a key information document before agreeing terms with an employment business. This regulation does not apply to agency workers already working for a business, but from April 2020, when they sign up with a new firm, they will be entitled to a key information document.

What you need to do: Familiarise yourself with the required information that must be set out on the key information document so you don’t fall foul of the regulations.

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