There will be a number of important employment law developments in 2020.
National Minimum Wage Rate Increases
The National Living Wage is to rise by 6.2% in what the Government says is “the biggest cash increase ever”. The rise is more than four times the rate of inflation.
The Government will increase the National Living Wage (NLW), which applies to workers aged 25 and over, from £8.21 per hour to £8.72 from 1st April 2020.
At the same time, the National Minimum Wage (NMW) rates will be increased as follows:
- from £7.70 to £8.20 to per hour for 21 to 24 year olds;
- from £6.15 to £6.45 per hour for 18 to 20 year olds;
- from £4.35 to £4.55 per hour for 16 & 17 year olds; and
- from £3.90 to £4.15 per hour for apprentices;
If you provide some form of staff housing as part of the contractual arrangements, then the daily accommodation offset will apply. It has not been announced whether it will change from the current rate of £7.55 per day.
The rates for Statutory Redundancy Pay, Statutory Guarantee Pay, Lower and Upper Earning Levels and Tribunal Awards are not yet announced; we will send an update as soon as the new rates are published. They are expected in March.
Increased Statutory Rates
The weekly rate for Statutory Sick Pay is expected to increase from £94.25 to £95.85 from 6th April 2020.
The current weekly rate of Statutory Maternity Pay is £148.68 or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate. This rate is rising to £151.20 from 5th April 2020.
Also on 5th April 2020, the rates of Statutory Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay will also go up from £148.68 to £151.20 (or 90% of the employee’s average weekly earnings if this is less than the statutory rate).
Statement of Main Terms (Contracts of Employment)
As part of the provisions of the Good Work Plan, these will become a day one right for both employees and workers from 6th April 2020. Previously, employers have had two months in which to provide this to their employees, meaning that they will need to have the document ready straightaway going forward. Contracts will also need to contain additional details, which are outlined below:
- the terms and conditions relating to work will extend to cover terms relating to normal hours of work, days of the week the worker will be required to work and whether these days/hours may vary;
- terms relating to other 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 about probation periods, including those relating to length & conditions;
- details of training provision and requirements;
Failure to provide a statement, or where a statement is provided which does not contain the required information, could lead to the employee making a reference to a Tribunal to determine their terms of employment. Additionally, an employee may receive compensation for a failure to be provided with a statement where they win an alternative claim at the Employment Tribunal. We have been advising our clients to do this for many years because it avoids uncertainty. We recommend that it is sent along with your Handbook, with the offer letter, so avoiding slip ups on day one, and also because it looks professional. Therefore, if you are not currently issuing contracts and Handbooks prior to employment, this will now need to be part of the day one induction process.
Extension of the Holiday Pay Reference Period
As part of another provision of the Good Work Plan, the holiday pay reference period, which is used to calculate the average pay of those who work irregular/ variable hours, will be extended from 12 to 52 weeks from 6th April 2020. The aim of this development is to provide a fairer approach to holiday pay when workers are working flexible hours. It will be important for employers to keep track of employees’ working time throughout the year, including overtime, to ensure they are correctly remunerated whilst on annual leave. This may make it easier for some employers to calculate out average holiday pay, especially where pay varies seasonally. It is believed that the change is to the default position of 12 weeks, so we are not recommending any change until the law is clarified.
From 6th April 2020, agency workers will have a right to receive from the agency a document known as a “Key Facts Page”. This document must contain specific details about their basic terms, including the minimum rate of pay they can expect and how they will be paid. This will be similar to a contract with key information to help them make informed choices about the work they accept. This document is required to clarify specific matters, including the type of contract the worker is employed under, and their minimum rate of pay. It must be provided on Day One.
Employers and agencies will also no longer be able to make use of Swedish derogation contracts as these contracts, which allow employers to avoid providing agency workers with equal pay after 12 weeks of an assignment, will become unlawful. Once in force, all agency workers will become entitled to equality of pay, when compared to comparable full-time employees, once they reach 12 weeks’ service within one assignment. Employment businesses will have to notify their agency workers of this change by providing them with a statement by 30th April 2020.
Parental Bereavement Leave
The right to parental bereavement leave will also become effective in April 2020. Although an exact date has still not been confirmed, we know that qualifying parents will be entitled to two weeks of paid bereavement leave following the death of a child under the age of 18. The weekly rate will be the same as the other family friendly statutory rates of SMP, paternity leave etc. The Government consultation explained that ”bereaved parent” will be defined based on the employee’s caring responsibilities for the child to avoid excluding those who are not the child’s legal parents. To qualify, individuals aside from direct parents will need to have the following parental caring responsibilities for the child: adoptive parents, legal guardians, those with court orders providing daily care responsibilities, foster parents, kinship carers.
Public Holidays 2010
To mark the 75th anniversary of the day that Nazi Germany surrendered (VE Day), the Government has decided to move May Day from its usual first Monday in May spot. The holiday will take place on Friday 8th May, repeating the move in 1995 when it was changed to mark the 50th anniversary. The decision was announced in June 2019. Unfortunately, the message failed to reach many publishers in time and, as a result, millions of diaries and calendars have been sold carrying the wrong date. Travel firms have already noted a surge in bookings for the “incorrect” date with people clearly expecting to be on holiday on the Monday. This will leave some employees reliant on either the goodwill of the airline or travel company with regard to making changes, or they will need to talk to their employer.
The Government has reminded everyone that employers are not required to give Bank/Public Holidays as paid leave, and can choose to include them as part of a worker’s statutory annual leave. Employees often incorrectly feel that they have the right to paid time off on Bank/Public Holidays. However, this will be down to the wording of their employment contracts.
As the Government has advised, employers may require staff to work on Bank/Public Holidays providing they still receive the appropriate amount of annual leave in return. Employers will need to decide on their approach, specifically whether they will let staff take the Friday off instead, or insist that the workplace is closed on Monday as in previous years. This needs to be communicated fully as soon as possible.
The Government are still sort of committed to streamlining the employment status tests, so they are the same for employment and tax purposes, to avoid employers misclassifying employees/workers as self-employed. There will be a significant change with the extension of IR35 to the private sector, and we will be notifying clients of this in more detail in our next Client Newsletter.
Changes, such as CEO pay reporting, will only affect those clients who employ more than 250 employees, thus classing them as large employers.
Even though the Government is still embroiled with issues surrounding Brexit, some of the changes listed above are actually of real significance so are not be ignored.
You are welcome to raise any concerns with our Consultants, who would be pleased to advise you on any element of the issues arising from this newsletter.