The tumultuous political landscape of 2019 created massive uncertainty about what would happen regarding Brexit and with our own laws and policies. Now the dust has settled, and with the new year stretching out before us, we can set out with more clarity some of the developments we expect to impact on employers and employees over the next 12 months and beyond.
A number of changes have already been legislated for and will come into force on 6 April 2020 so employers should start now on the necessary preparatory steps to ensure they are in a position to meet their new legal obligations.
Off-payroll working and IR35
The off-payroll working rules will be extended to large and medium-sized companies in the private sector. Employers using agencies, consultants and contractors will need to review these working arrangements to identify whether they may be responsible for deducting tax and NI from payments made to these individuals.
All termination payments above the £30,000 threshold will be subject to class 1A NICs. If you are negotiating a settlement agreement or exit package this is something that both parties will need to consider as it places obligations on the employer and may result in a smaller financial sum for the employee.
Statement of terms for all workers
All workers, not just employees, will be entitled to a written statement of terms of employment from day one of their employment (or before), rather than within two months of starting. This information must also now include: details of all remuneration and benefits; any paid leave the worker is entitled to; any probationary period; the hours and days of the week the worker is required to work; and details of any training provided by the employer.
Changes to holiday pay calculations
The reference period to calculate a ‘week’s pay’ for those who do not have normal working hours or those whose pay varies will be extended from 12 to 52 weeks. If an employee has worked for less than 52 weeks then the reference period will be the number of weeks the employee has worked.
Changes to agency worker contracts
Employment businesses must provide agency work-seekers with a key information document before the terms under which they will work are agreed. The information to be given includes: minimum rate of pay; any deductions to that pay, how they will be paid and by whom; and annual leave entitlement.
The “Swedish Derogation” provision that appears in many agency workers’ contracts (which enabled businesses to opt out of equal pay requirements) will no longer apply. Temporary work agencies must advise workers of this in writing by 30 April 2020.
Statutory Parental Bereavement Pay
In April 2020, the Parental Bereavement (Leave and Pay) Act 2018 is expected to come into effect. This provides employed parents with 2 weeks’ paid leave if they lose a child under the age of 18, or suffer a stillbirth after at least 24 weeks of pregnancy.
In light of the changes set out above, now is a good time to review and update your current contracts, documents and policies. We can assist with this to ensure you are in a position to comply with the new legal requirements when they come into force in a few months’ time.
Brexit and the impact on EU workers’ rights
The UK is now almost certain to leave the EU on 31 January. Under the anticipated transitional arrangements, EU nationals will continue to be permitted to enter the UK without additional requirements until the transition period expires on 31 December 2020 and to apply for settled status before a deadline of 30 June 2021.
A new points-based immigration system which will apply equally to EU and non-EU migrants is planned for January 2021. The new regime promises to simplify ways for UK employers to access skilled migrant workers but there are currently no long-term plans relating to those in ‘low skilled’ occupations such as social care or hospitality. Employers will be expected to fill any gaps in their workforce by hiring UK workers where possible, or through temporary short-term routes.
What steps can employers take now?
• Plan ahead for the January 2021 changes – consider ongoing staffing requirements and if you may need workers from overseas after January 2021, consider applying for a sponsorship licence in advance of the changes coming into force;
• Stay up to date with new developments and government announcements regarding EU and other migrant workers – the UK Visas and Immigration page of the Home Office website can be a good place to start https://www.gov.uk/government/organisations/uk-visas-and-immigration;
• Be aware of the new checking requirements for establishing a right to work after the documentation deadline of June 2021 and make sure you have a robust internal procedure in place for ongoing right to work checks; and
• Exercise caution in making any significant decisions regarding EU workers during the transition period, remembering that general employment law principles still apply.
If you have any queries about current right to work checks, recruiting migrant workers or other business immigration matters then don’t hesitate to contact us.
The Queen’s Speech referred to a new Employment Bill which will protect and enhance workers’ rights as the UK leaves the EU. The proposals include the creation of a new enforcement body for workers’ rights; the right for all workers to request a more predictable contract; an increase in the leave entitlement for neonatal care and unpaid carers; the extension of redundancy protections to prevent pregnancy and maternity discrimination; and (subject to consultation) making flexible working the default unless employers have good reason not to agree.
We are likely to see further developments as the year progresses, but you can put yourself in the best position to keep on top of the forthcoming changes by taking steps now to ensure you have the correct documentation and processes in place. We can do the hard work of reviewing and updating your contracts and policies, so get in touch and we would be happy to discuss how we can help you.