Important – do not forget

The on-going large-scale impact that Coronavirus is having on the economy, organisations, teams and individuals is the main employment crisis we are all having to deal with at present.  However, it is important not to forget that there are some substantial new statutory changes that are implemented from this week as well.  Here are the other changes that the Government has now confirmed additional to the already published new National Minimum Wage rates (including the National Living Wage), new Statutory Sick Pay and Statutory Family Friendly Pay rates.       

Statutory Figures

The annual increase in compensation limits has just been announced.  The limits apply to dismissals, including redundancies, occurring on or after 6th April 2020.

  • £538.00 – the maximum amount of a week’s pay for calculating statutory redundancy pay and the basic award; (up from £525.00);
  • £16,140 – the maximum statutory redundancy payment or basic award, i.e. 30 weeks (up from £15,750.00);
  • £88,519.00– the maximum compensatory award which can be made for unfair dismissal (up from £86,444.00), or one year’s gross pay whichever is the lower;

These increases mean that the maximum total unfair dismissal award is now £104,659.00; although uplifts can add a further 25%.

Employees may be entitled to receive guarantee payments for up to five days of lay off in any three-month period.  The maximum amount of such a Statutory Guarantee Payment will increase to £30.00 (from £29.00) for any one day. In the current climate, this may be more than just ‘interesting’ if your business is adversely impacted by the Coronavirus, and a loss of customers, parts etc.

The new rates take effect where the ‘appropriate date’ for the cause of action (such as the date of termination in an unfair dismissal claim) falls on or after 6th April 2020.

Contracts of Employment

From 1st April 2020, all employers must:

  • Provide written statements of terms (contracts) to all workers and employees on day one or before;
  • Provide more information than currently required, such as information about probationary periods, training requirements and benefits;
  • This means not just employees, but also people who work for you, who do not really fit the category of genuinely self- employed;

This entitlement should bring clarity for many workers regarding their contractual terms from the outset of the relationship.

We have always advocated supplying such documentation on day one (if not before), so you should implement this now.

Other Changes

Agency Workers

If you use employment agencies to provide workers on some basis other than just a finder’s fee or introduction fee, then the rules are changing in the following respects:

  • Agencies must provide a Key Information Document to agency workers with details of their terms and conditions;
  • The ‘Swedish Derogation’ is removed, so all agency workers will have to receive pay parity (with your staff) after 12 weeks work;
  • Agencies must provide statements to agency workers that the Swedish Derogation no longer applies to them;

The Swedish Derogation is/was a device to allow for less than pay parity if they ere actually employed by the agency on a contract which provided for pay even if the agency had no work for them.

Holiday Pay Calculations

The Government has announced that the default position for calculating average holiday pay will be the last 52 weeks rather than the last 12 weeks.   

This is for workers with no normal working hours, or whose pay varies with the amount of work done, or who work additional hours. It is supposed to produce a fairer calculation for those with irregular/seasonal hours.

Assuming you have payroll software, it ought to be changed to calculate differently. We are not recommending that clients who pay on P60 earnings, or other long-term period, make any changes until the law becomes clearer.  For employees in their first year of employment, we would suggest you calculate this on their last 12 weeks/3 months earnings.

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.