We look back on what has been a challenging year for many businesses and discuss what we can expect for 2021.
Delivered by Partner & head of department, Sarah Collier.
In December 2019, the Government produced the Good Work Plan in response to the Taylor Review. The Good Work Plan details several employment legislative changes, some of which have taken effect from April 2020 and others throughout the rest of the year.
The Good Work Plan is set out below:
1 April 2020
Increase to the National Minimum Wage (NMW) and National Living Wage (NLW)
- Apprentice – increase from £3.90 to £4.15
- Under 18’s – increase from £4.35 to £4.55
- 18-20 year olds – increase from £6.15 – £6.45
- 21-24 year olds – increase from £7.70 – £8.20
- 25 and over – increase from £8.21 to £8.72
5 April 2020
Increase in Statutory Family-Related Pay
The weekly rate of statutory maternity, paternity, adoption and shared parental pay increases from £148.68 to £151.20 per week.
6 April 2020
Increase in Statutory Sick Pay (SSP)
The weekly rate of statutory sick pay increases from £92.05 to £95.85 from 6 April 2020.
Unfair Dismissal Compensation
The maximum compensation award for unfair dismissal increases from £86.444 to £88,519 for dismissals that take place on or after 6 April 2020.
Changes to written statement of terms and conditions of employment
The requirement to provide a written statement of terms and conditions extends to workers, not just employees. This includes casual and zero hours workers.
The statement of terms and conditions must be given to the worker on or before their first day.
What needs to be included within these terms, has also been broadened. In addition to the current information that must be provided for all new starters on or after 6 April 2020, the employment terms and conditions should also include:
- how long a job is likely to last, or the end date of a fixed-term contract;
- the duration and conditions of any probationary period;
- how much notice the employer and worker are required to give to terminate the agreement;
- details of eligibility for sick leave and pay;
- details of other types of paid leave;
- all remuneration (not just pay) including benefits that the employer or worker is entitled to;
- training entitlement provided by the employer, any part of that training entitlement which the employer requires the worker to complete, and any other training which the employer requires the worker to complete and which the employer will not bear the cost;
- normal working hours, also the days of the week the worker is required to work, and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determined.
Parental Bereavement Leave
Bereavement affects all aspects of a person’s life, not least their working life. The implementation of the Parental Bereavement Leave Regulations 2020 aims to alleviate this in one way. From 6 April 2020, parents who have lost a child aged 18 and under are entitled to up to two weeks paid parental leave, to be taken at any time within a period of 56 weeks from the date of the child’s death. These weeks need to be taken consecutively.
It is important that employers are aware of the rights of their employees and also to ensure they educate their staff on what is required to exercise this right. An employee must first notify their employer of their intention to take bereavement leave and this notice must include:
- The date of the child’s death;
- The date the employee wishes to begin their absence; and
- Whether 1- or 2-weeks leave are intended to be taken.
Further, this notice must be given to the employer before the employee is due to start work on the day they intend to be absent. Where this is not reasonably practicable to do so, it must be done as soon as possible.
Where the two weeks leave wish to be taken at separate intervals, an employee must give one weeks’ notice before the start of the second week of leave.
Protecting Agency Workers
After 12 weeks of service, an agency worker is entitled to receive the same level of pay as a permanent worker, unless the agency worker opts out of this right and instead elects to receive a guaranteed level of pay between their temporary assignments (often referred to as “the Swedish derogation”).
This opt-out will be removed from 6 April 2020 as agency workers often find themselves financially worse off, compared to employees, when taking the Swedish derogation route.
Key Terms for Agency Workers
Employment businesses will be required to provide every agency worker with a document known as a “key facts page”.
This will need to include certain details, such as the type of contract they are employed under, the minimum rate of pay they will receive and details of any fees that might be taken. This will help agency workers better understand their basic terms, which can be especially difficult where intermediary umbrella companies are involved.
By no later than 30 April 2020, temporary work agencies must provide agency workers whose existing contracts contain a Swedish derogation provision with a written statement advising that, with effect from 6 April 2020, those provisions no longer apply.
The reference period used to calculate holiday pay will be extended from 12 weeks to 52 weeks, which is an important development for those who work variable hours.
In response to recent case law, there will also be a campaign to ensure that individuals better understand their rights and a new holiday entitlement calculator will be launched.
Employer National Insurance Contributions on Termination Payments above £30,000
Termination payments are payments which are made in connection with the termination of a person’s employment. From April 2020, any non-contractual termination payments will be subject to 13.8% Class 1A to the extent that they exceed the existing £30,000 exemption which also applies for income tax.
Employers will need to bear in mind the additional costs that this charge will add to termination packages. From the employee’s perspective there is a risk such a substantial increase may result in employers reducing the value of termination awards which they are prepared to offer.
IR35 is a piece of complex tax legislation that was introduced in 2000 to target a tax loophole that HMRC considered may result in an underpayment of tax contributions.
The legislation was designed to make sure that an individual who works like an employee, but through their own limited company, pays broadly the same Income Tax and National Insurance contributions as those who are employed directly.
Due to the current events surrounding Covid-19, IR35 has been postponed to April 2021.
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