With spring (hopefully) not too far away, here is a quick reminder of some important employment changes in the law coming into effect in April 2020 to coincide with the new tax year.
1. Section 1 Written Particulars
From 6 April 2020 new requirements will come in for the statement of written particulars of employment. This is a document in which the employer sets out the main terms of the employment relationship (often in the form of a contract, though it doesn’t have to be). It is also known as a statement of terms or a section 1 statement.
1. Employers will be obliged to provide written particulars to all workers, not just to employees.
2. Workers will no longer have to satisfy a minimum service requirement in order to have the right to receive written particulars, irrespective of how long they will be working for an organisation. Written particulars will need to be provided on or before the first day of work.
3. The written particulars will need to include the following additional information:
- Days of the week the worker will be required to work.
- If the working hours are variable and how the variation is determined.
- Paid leave entitlements, such as parental leave.
- Additional benefits and/or remuneration available to the worker.
- Probationary periods.
- Training requirements, including training that the employee requires the worker to complete, and training which the employer requires and will not pay for.
For more information, see our blog piece on the changes.
2. Agency Workers
The so-called “Swedish derogation”, an exemption to the Agency Workers Regulations 2010, will no longer apply after 6 April 2020.
In practice, this will mean that all agency workers who have completed 12 weeks’ continuous service will be entitled to the same pay and basic working conditions as workers who are engaged directly by the employer (with no exceptions).
Read more in the section on Agency Workers in our blog here.
3. Holiday Reference Period
A new calculation will be introduced for employers when calculating a worker’s holiday pay reference period.
From 6 April 2020, the period for calculating the holiday pay reference period will increase:
- From 12 to 52 weeks for workers who have been employed for at least 52 weeks.
- For workers employed for less than 52 weeks, the number of weeks they have been employed.
Find out more here.
Changes to IR35 rules (also known as the “intermediaries” or “off-payroll” legislation) will come into effect from April 2020 for the private sector.
Private sector employers (unless exempt) will have to decide if any workers who provide services through an intermediary are “deemed employees” under the IR35 rules for tax purposes. If so, employers will need to account for any employment taxes on payments the business makes to the worker providing services.
The government has recently confirmed (here) that these changes will only apply to payments made for services provided on or after 6 April 2020. Previously, the position was that the rules would have applied to any payments made on or after that date, regardless of when the services were carried out.
More guidance from the government is expected on this imminently and we will issue further updates in due course.
Further detail can be found here.
5. NICs for Termination Payments over £30,000
Termination payments over £30,000 will be subject to employer’s National Insurance Contributions (NICs).
From 6 April 2020, employers will have to pay employer NICs on termination payments over £30,000 (currently the tax charge above this amount is limited to income tax). Only the part of the termination payment that exceeds £30,000 will be subject to Class 1A NIC liability, which is currently at a rate of 13.8per cent. Employers should be aware that this will add additional costs to termination payments over £30,000 and be prepared to make the necessary changes to the payroll system.
There will continue to be no charge to employee NICs.
If you require further information about anything covered in this blog, please contact Hugh Young, James Swaden, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, February 2020