Employment law changes

In this occasional article TBA members’ legal adviser Rachel Flynn looks at some changes to employment law coming into force in April 2020. 

Statement of main particulars of employment

All employees are currently entitled to receive a statement of main particulars of employment within 2 months of starting work, containing basic particulars including name of employer and employee, Job title, date employment began, place of work and address of employer, hours of work, holiday pay entitlement, sick pay arrangements, pension arrangements, notice periods, grievance and appeal arrangements, disciplinary rules and dismissal procedures.

From 6 April 2020, this right will be extended to workers as well as employees and must be given before the first day of employment. 

A word on ‘worker’ status.  This is often seen as a “half-way house” between employee and self-employed status. Workers are entitled to fewer rights than employees, but do have some key legal rights, including:

• Protection from unlawful discrimination.
• Protection against unlawful deduction from wages.
• Entitlement to the national minimum wage.
• Self-employed status – so no statutory employment rights.

The extent of the information set out in the particulars to be provided will be widened but not substantially. In practical terms, any well-informed and sensible employer will already be providing contracts to employees before they start work, which should cover the requirements that are coming into effect in April, so the changes are probably not ground-breaking.  But you will now need to remember to do the same for workers as employees.

Calculation of holiday pay

The reference period for determining an average week’s pay (for the purposes of calculating holiday pay) will be increased from 12 weeks to 52 weeks.  This change is designed to even out seasonal variations in pay. Alongside this change, the government has also clarified that the holiday pay reference period should include as many whole weeks of pay information as are available (if less than 52 weeks).

Off-payroll tax rules

Of significance to large businesses are changes to off-payroll tax rules in the private sector coming into force on 6 April, subject to the passing of the Finance Bill 2020. 

Broadly speaking, an entity contracting with a personal service company (such as the end-user client or the last agency in a longer chain) will become primarily responsible for applying PAYE deductions and, more significantly, for paying employer’s NICs. This is a huge shift in the burden of establishing whether a worker supplied by the PSC is providing services that are “deemed employment”.

This is big news in the quasi employment field, but likely to affect only the biggest studs, as there is an exemption for end-clients who are ‘small businesses’, meaning those meeting two or more of the following criteria:

• Annual turnover is no more than £10.2 million
• Balance sheet total is no more than £5.1 million
• No more than 50 employees.

Changes to National Living Wage and National Minimum Wage

The government has responded to the recommendations of the Low Pay Commission regarding increases to the National Living Wage (NLW) (for workers aged 25 and older) and the National Minimum Wage (NMW) (for workers aged 24 and under). And so, from April 2020, subject to Parliamentary approval, the following changes are set to take effect:

• The NLW for workers aged 25 and over will increase from £8.21 to £8.72 per hour.
• The NMW for 21- to 24-year-olds will increase from £7.70 to £8.20 per hour.
• The NMW for 18- to 20-year-olds will increase from £6.15 to £6.45 per hour.
• The NMW for 16- to 17-year-olds will increase from £4.35 to £4.55 per hour.

The apprentice rate for those aged under 19 or in the first year of an apprenticeship will increase from £3.90 to £4.15 per hour.

The NLW is expected to rise to around £10.50 an hour by 2024.

We are also expecting an Employment Bill in 2020 which may introduce significant developments such as flexible working as a default position and redundancy protection for pregnant women and women on maternity leave. No draft legislation has yet been proposed.