As the sparkle and fizz of the festive period disappears over the horizon as quickly as the six bottles of prosecco that didn’t make it past Christmas Eve, Prettys’ Employment Team welcomes you to a New Year - and a new e-briefing.
Whilst the bad news is that you still have approximately 356 days to keep up your News Year’s resolutions; the good news is there is plenty else to keep you occupied as the New Year progresses.
In this e-briefing, we set out below the most significant employment changes occurring this year and suggest some next steps to help you prepare. Unless otherwise stated, these changes come into force from 6 April 2020.
1. Contracts of Employment
Section 1 Statement
All workers (not just employees) will be entitled to receive a Statement of Particulars of Employment (“Section 1 statement”) setting out key terms of the engagement either before, or from day one, of starting work.
There are also additional requirements for the Section 1 statement, which will need to include:
- The days of the week the worker is required to work and whether working hours or days may be variable, with details of how they may vary.
- Any entitlement to paid leave, including maternity leave and paternity leave.
- Any other remuneration or benefits provided by the employer.
- Any probationary period, including any conditions and its duration.
- Any training provided by the employer which the worker is required to complete and any other required training in respect of which the employer will not bear the cost.
It will no longer be possible for particulars relating to notice pay, incapacity and sick pay, temporary or fixed-term work and/ or work outside the UK for a period of more than one month, to be provided in a supplementary statement.
Note: These requirements only apply to those engaged on or after 6 April 2020. They do not apply to your existing workforce. However, if they wish, existing staff can request an updated Section 1 statement.
Holiday pay reference period
The reference period for calculating holiday pay for workers with no normal working hours rises from 12 weeks to 52 weeks (or the number of complete weeks worked if fewer than 52).
Agency workers
There are various changes affecting Agency workers. In particular:
- Employers can no longer avoid the pay parity provisions of the Agency Workers Regulations 2010. Agency workers affected by this provision must be informed, in writing, of the changes to their rights by 30 April 2020.
- Temporary work agencies must provide agency work seekers with a Key Information Document to confirm the type of contract they are on, minimum rates of pay and when (and from whom) they will be paid.
Next steps:
- Audit your workforce – identify who are your employees, your workers and your agency staff.
- Review and amend your contracts to ensure they contain the additional information required under Section 1;
- Consider having different templates for “workers” and “employees” to maintain the distinctions between the employment statuses.
- Review your recruitment processes to ensure you can issue particulars either before the start date or on day one.
- Prepare letters to agency staff to advise them of their rights to parity of pay.
- Update payroll software to apply the new holiday pay reference period.
2. Families
The Parental Bereavement (Pay and Leave) Act 2018 is expected to come into force in April. This will give bereaved parents two weeks’ leave to allow them to grieve and (subject to 26 weeks’ qualifying service) statutory bereavement pay. Detailed Regulations are expected shortly.
3. Tax Issues
Off payroll working
It is expected that, on 6 April 2020 medium and large private sector organisations which contract with Personal Service Companies (PSCs) for the provision of workers’ services will (subject to a mandatory determination being made as to the workers’ employment status) have to account for tax and National Insurance contributions through PAYE.
Under the new rules, the obligation will fall on the end-user client to give the worker and the party the client contracts with a “status determination statement” (using the usual tests for assessing employment status) and to confirm whether or not they think the off-payroll rules apply. Who the “end-user client” is for this purpose will depend on the type of labour supply chain that is in place and the relationship between the parties.
Responsibility for operating PAYE then falls to the fee payer. The “fee payer” is the entity immediately above the PSC in the contractual chain. This could be an agency or it could be the end-user client – again, depending on the type of labour supplychain in place.
Note: the IR35 rules will still apply as before to individuals providing their services to a client directly (e.g. individual consultants).
Next steps
There are various steps employers need to take to prepare for these changes. We advise making a start as soon as possible, particularly for organisations who rely heavily on a consultant or agency workforce. As a minimum we suggest that you:
- Appoint someone to be responsible for compliance with the new rules.
- Conduct an audit of your contracts/terms of business to identify those using PSCs or agencies engaging workers via PSC’s.
- Identify your supply chain and contracting terms to identify who is the “end user client” and who is the “fee payer”.
- Communicate with your contractors and agencies in good time – requesting status determination test from “end-user clients” or providing the status determination statement to workers, agencies and PSCs if you are the end-user client.
- Attend training – Prettys LLP expect to roll out training early in the New Year. Further details to follow.
Termination Payments
All termination payments above £30,000 will be subject to employer NICs (as well as income tax).
Next steps:
- Review your settlement agreement templates – ensure they are clear that employer NICs will be deducted from payments exceeding £30,000.
- Audit existing settlement agreements with a delayed termination date on or after 6 April 2020. Ensure that appropriate tax is deducted and advise the departing employee of the same.
- Liaise with your payroll office, as appropriate.
For further advice, information and assistance in relation to any of the matters contained in this note, please contact Prettys Employment Team at employmentexpert@prettys.co.uk.
