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What Employment Law legislation changes should I look out for in 2020?
- AuthorLouise Bodeker
The world of Employment Law is one that can move fast and with multiple Employment Law changes coming into effect from April 2020, as an employer, it’s important for you to be aware of them. Louise Bodeker, Solicitor in our Employment team, details the six key legislation changes to look out for in 2020 as well as how they might affect your business.
1). New National Living Wage and National Minimum Wage Rates
From April 2020, the National Living Wage is set to rise by 6.2 percent. This increase is more than four times the rate of inflation.
As a result, the National Living Wage for ages 25 and above will become £8.72 an hour.
The National Minimum Wage is also set to increase in April 2020. The new hourly rates are:
- For 21 to 24-year-olds: £8.20
- For 18 to 20-year-olds: £6.45
- For under-18s: £4.55
- For apprentices: £4.15
You must ensure that you adjust any employee’s pay that may be affected by these changes before the new rates come in to avoid a claim being brought against you.
2). Statement of terms
From 6 April 2020, you must supply section 1 statements before an individual’s employment starts, or at the latest, the first day of employment, much like the requirements for apprenticeship agreements.
You must give the statements in a single document and the change is applicable to both workers and employees.
There are exceptions to the “day 1” rule. This includes information about pensions, collective agreements, disciplinary and grievance as well as training. You can give information about these areas separately but you must provide them no later than two months after the start of employment.
3). Recording training hours
Training entitlement will be a section 1 requirement from 6 April 2020. You must supply this information within 2 months of someone starting employment with your business.
The statement should include:
- Information about any training entitlement you may provide,
- Details as to whether this training is mandatory or not,
- Whether the training must be paid for by the employee.
This will also have a knock on effect for any apprenticeship agreements. It is extremely important for you to ensure any apprenticeship terms are compliant from day one of the apprenticeship starting. Not doing so can have huge financial implications for your business. This change will also mean that your training information must be stated clearly in any apprenticeship agreement, including that which is part of the apprenticeship itself, as well any other training which the apprentice will be expected to undertake during their engagement with you.
4). Holiday Pay
The reference period used to calculate holiday pay for any of your workers with variable pay is changing on 6 April 2020. Currently, it is pay that a worker receives during the 12 weeks worked prior to taking a holiday.
From 6 April 2020, the reference period will be changed to 52 weeks, or the number of weeks you have employed the worker if they have been employed for less than the 52 weeks.
You should consider when and how to make the change: for the purposes of holiday pay, many businesses begin their year on 1 January. If that is the case, you need to decide whether to change the way you calculate holiday pay on 6 April, or at the start of your holiday year to avoid any issues. For example, it may be that Christmas brings high levels of overtime for your business, which could have repercussions on holiday pay if you switch to the new system in January. It could also mean that people who work the same hours receive different holiday pay, simply because of the dates they take their leave. If your financial year ends after 6 April, the value of accrued but untaken holiday will increase, meaning you may wish to limit how much holiday can be carried forward.
You should also adjust your HR systems as in some scenarios the 52 week reference period will need to be altered. Helpfully, however, you do not have to look back any more than 104 weeks prior to the holiday.
You should also review your variable pay policy. If you have not started to include variable pay in your holiday pay, now may be a good time to do so, given that the reference period was one of the few pieces of holiday pay case law that was unclear. If you decide to tackle this, it is important to assess what pay components you will cover and whether this could trigger claims for backdated holiday pay.
5). Company car tax: measuring carbon dioxide emissions from April 2020
The government has published draft legislation to change company car tax percentages for tax years 2020-21, 2021-22 and 2022-23.
These amendments reflect the change to measuring a car’s carbon dioxide emissions using the World Harmonised Light Vehicle Test Procedure (WLTP). This change was announced in the Autumn Budget 2017 and applies to all new cars registered from April 2020.
The draft legislation provides changes to the percentages for zero and very low emission electric cars and the percentages are dependent on the distance the car can be driven in electric mode without recharging the battery.
If you offer company cars to your staff, it is important to know that a taxable benefit arises if you offer it to them for their own private use. The amount of this benefit is calculated by multiplying the car’s list price when new by the percentage determined by the car’s carbon dioxide emissions.
6). Swedish Derogation
On 6 April 2020 The Agency Workers (Amendment) Regulations 2019 will come into force and will remove the Swedish derogation provisions set out in Regulations 10 and 11 of the Agency Worker Regulations (AWR) 2010.
The Swedish derogation is short for a type of employment contract provided for in Regulation 10 of the AWR. Its official name is a “pay between assignments” contract because if you have agency staff on these types of contracts, those workers give up the right to pay parity with comparable permanent staff in your business for a guarantee that they will receive a certain level of pay when they have gaps between assignments.
The Taylor Review recommended that the derogation be repealed with the underlying purpose being to encourage businesses to take on permanent employees, which will provide a greater level of certainty and security to those individuals.
This change means that any agency workers you have will be entitled to the same basic working and employment conditions as direct recruits of your business once they have undertaken the same role with you for 12 continuous calendar weeks. Failing to make these changes could result in a claim being brought against you.
By no later than 30 April 2020, any temporary worker agencies you use must provide workers whose contracts include a Swedish derogation provision with a written statement telling them that with effect from 6 April 2020, those provisions no longer apply. Agency workers can bring a claim in the Employment Tribunal against the agency where this statement is not provided on time.
Workers asserting rights under the new Regulations will also be protected from detriment and unfair dismissal.
While these changes will impact many businesses, there is not a generic approach to implementing them and you must make preparations for the changes well before the date they are due to take effect. If you have any questions about the above legislation changes, or would like further advice on how to implement them in your business, you can contact Louise on 023 8071 7448 or email firstname.lastname@example.org.
There are also important Employment Law cases that are being heard in 2020, and you can stay up to date with the proceedings of these cases and the world of Employment Law by subscribing to our weekly Employment Law Newsletter by emailing email@example.com. This article has been published as part of the latest issue of our Commercial Brief. To receive a copy of our Commercial Brief directly, you can complete our form to subscribe, or email firstname.lastname@example.org.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.