As the New Year dawns, some changes to the detail of your employment contracts, leave arrangements and holiday pay will need to be made in April. Furthermore you will need to start to think about how you are going to resource your business with changes in how ‘temps’ are paid and, further down the line, how your company is going to employ contractors.
Employment contracts
Two changes may be necessary depending on your current contracts and your process for issuing them to new starters after April 6th 2020.
Firstly, all new starters (including employees, zero hours’ workers, casual and seasonal workers) after this date need to be issued with a written statement on or before the first day of employment (rather than within the first 8 weeks of employment as is currently the case)
Secondly, for new employment contracts issued after 6th April 2020, the mandatory information that needs to be included has been extended to include the following:
- normal hours of work, days of the week the worker will be required to work and whether these days/hours may vary
- forms of paid leave such as family-friendly leave
- details of other employee benefits, not just those relating to pay, such as benefits in kind or financial benefits
- terms relating to probationary periods including those in relation to the length of probation and conditions pertaining during the probationary period and what happens on successful and unsuccessful completion of the probationary period
- details of training provision and requirements.
ACTION: Ensure your processes ensure new starters have their written statement on or before their first day of employment and that the statement includes the additional mandatory information.
Holiday pay
From 6th April the reference period will be extended from the current 12 weeks to 52 weeks to allow a fairer approach to holiday pay when workers carry out flexible working hours. This means that a day’s holiday pay will need to reflect an average day’s ordinary pay over the average of the previous year’s earnings to ensure that the individual is not penalised for going on holiday.
Although not a change (though bear in mind that case law is continually clarifying the position), where there are additional payments such as overtime or profit related pay or regular commissions or other such payments and these are ‘sufficiently regular and settled’ and so effectively amount to ‘wages or salary’ then these will count as normal remuneration and should be taken into account for holiday pay calculations if needs be going back 52 weeks.
ACTION: Determine whether various types of remuneration form part of a worker’s ordinary pay by considering whether it is sufficiently regular and settled or whether it is exceptional or not usually paid.
Bereavement leave
After 6th April 2020, a bereaved parent will be able to take statutory bereavement leave of at least two weeks if the employee suffers a stillbirth after 24 weeks of pregnancy or loses a child below the age of 18.
ACTION: Update the leave section of your Employee Handbook to include this provision.
Resourcing your business
Two changes are in the air – one effective in April regarding ‘temps’, the other down the line, regarding use of contingent workers, which will affect larger private sector businesses from April and likely the SME sector in coming years.
Temps
From April 6th 2020, all agency workers (those provided by an employment business) will become entitled to equal pay when compared to comparable full-time employees, once they have reached 12 weeks’ service within one assignment. Whereas the employment business (‘agency’) will have to notify the worker of this, you the SME end-user need to be aware of this potential increase in cost as you plan the relevant assignments.
Contingent workers
From April 2020 large (more than 250 employees) private sector employers are being told to ask themselves whether their contingent worker is really an employee and so assess if the worker is covered by IR35 rules and, if so, to make the appropriate tax and NIC deductions at source.
It is important to note that this only affects large organisations this year. It is likely to impact smaller businesses in the future.
ACTION: Be careful on how you use temps to avoid a sudden, unexpected increase in cost. Where you rely on using specialists on a regular basis consider what changes you may have to make to fall within the rules as they are rolled out in the coming years.
Changes to statutory rates
On different dates in April, as in previous years, the following statutory rates will change due either to government policy or inflationary revisions.
Statutory rates for Sick Pay, Maternity, Paternity, Adoption and Shared Parental Leave Pay are all likely to increase. New rates relating to the national living/minimum wage have also just been announced. From April 2020, the new rates are: The National Living Wage for ages 25 and above – up 6.2% to £8.72. The National Minimum Wage for 21 to 24-year-olds – up 6.5% to £8.20. For 18 to 20-year-olds – up 4.9% to £6.45.
Some of these changes will affect all businesses across the board and are part of the on-going changes to statutory terms and conditions. Other changes are more nuanced, and the impact on your business will need to be based around the facts relating to your specific circumstances.
For a confidential telephone discussion on how these changes may affect your business please contact our specialist business adviser Stephen Cowburn either via email stephen.cowburn@lgbusinessadvisors.co.uk or on 07974 425 361
Disclaimer:
This blog provides a wide range of advice across topics of interest to business owners. We hope you find it interesting and relevant. However, please note that the blog postings are not legal advice, nor should they be taken or relied upon as such. Individual circumstances will vary and we would advise that a discussion takes place with a professional advisor to ensure they understand the facts of your situation, and can then provide you with appropriate advice specific to your business situation.
