Employment Changes coming up in 2020!

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13 January, 2020

Emma Swan
Partner and Head of Commercial Employment

April tends to be a busy and stressful time of the year for many businesses who have the end of their financial year around this time, multiple employees on annual leave over the Easter holidays, together with changes to make in line with new legislation - particularly in respect of your employees!

Be prepared - April 2020 is going to bring a lot of change to Employment Law and there is nothing like being prepared and ahead of the game in business! In order to assist, we have rounded up the key changes that employers need to be aware of and in particular, those that will impact on the construction industry.

Off-payroll working rules (IR35)

Arguably this is the biggest disrupter to the UK private sector contracting for 20 years so get this at the top of your to do list!

If your organisation engages "off-payroll" workers, engages contractors through a personal service company or other intermediary, then it will become responsible for determining those individual's employment status and paying National Insurance Contributions for those who are deemed to be employees. These changes may result in your organisation paying higher fees. It is due to come into effect from 6 April 2020 with exceptions only for small companies.

We are speaking at an event for the CIPD on 4 February 2020 on this change and if you are interested in finding out more then please check out the event information at https://obs.acas.org.uk/ViewEvent.aspx?EventId=202019.

Changes to written statements of employment particulars

Many construction organisations engage temporary staff on zero hour/casual contracts to allow for flexibility, avoid statutory employment rights as far as possible and mainly to cover work for projects or over the peak seasons.

As the law currently stands, you only need to provide employees (as opposed to the wider group of workers) with contractual details of their employment and this must be done within two months from their start date. For the record, all employees are workers, but not all workers are employees - perhaps a topic for a different day!

From 6 April 2020 you must give all employees and workers a written statement which sets out certain prescribed information about the terms and conditions of their engagement i.e. a contract of employment. Furthermore, this must be provided on the first day of their employment or earlier. There are no exceptions to this rule.

Usually, contracts of employment (for employees only) refer to being compliant with S1 of the Employment Rights Act 1996 (ERA), which outlines the various terms that must be included in this document - however, further to the changes outlined above, you are now required to go even further and therefore, it may be time for an overhaul of these key HR documents!

If you do not provide a written statement of particulars in accordance with s1 of ERA workers and employees could receive up to four weeks' pay as compensation from an Employment Tribunal, where other claims are being brought against the employer.

Changes to holiday pay

Holiday pay calculations can be complicated at the best of times, particularly for those with variable hours and variable rates of remuneration. Currently, for workers who don't have normal working hours, holiday pay is worked out with reference to the average rate of pay over a 12 weeks reference period. This can sometimes mean that employers are stung, where a worker who has done a lot of overtime over the 12-week reference period and tactically choose to take annual leave straight after to benefit from a higher rate of holiday pay.

From 6 April 2020, the holiday pay reference period will increase from 12 weeks to 52 weeks. As such, you will be required to look back at the previous 52 weeks where a worker has worked and received pay, discarding any weeks not worked or where no pay was received, to calculate the average weekly pay.

While this change brings with it more of an administrative burden, it is hoped that this change will help to even out the variation in pay for workers, particularly those in seasonal or atypical roles. You should make sure that your payroll teams are aware of this change and have the ability to implement the changes and calculate holiday pay accordingly.

Agency workers

If you use temporary agency staff, you may notice that rates increase after 6 April 2020. This is due to the Government's plans to repeal "Swedish Derogation" contracts of employment so that agency workers will have a right to pay parity after 12 weeks. In addition, from 6 April 2020 all agency work-seekers must be provided with a key facts statement setting out the terms under which they will undertake the work.

Next steps

If your business is likely to be affected by the above changes, we would highly recommend taking specialist employment advice and support to ensure compliance with the legislation and to implement a smooth transition for all involved. There is nothing worse than uncertainty in business, but this can also impact on individuals where there is uncertainty around their employment or changes to their employment that they may not fully understand. In these circumstances communication is always key and that is where we can help.

For more information contact Emma Swan in our Employment & HR department via email or phone on 01254 222354. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

Learn more about our Employment & HR department here

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