The United Kingdom (UK) formally left the European Union (EU) on 31 January 2020. In this article, Stuart Chamberlain, author and senior employment law specialist at Croner-i examines the upcoming employment law changes, proposals in the Employment Bill and other Government initiatives on the horizon.
A transition period will run until 31 December 2020 during which the UK and the EU will negotiate their long-term relationship over a vast range of issues, including trade, fishing customs, and regulatory alignment. During this time all will remain the same as it was before 31 January 2020, including the supremacy of EU law over UK law. No changes can be expected in 2020 to any employment law derived from the EU; however, there are a range of domestic employment law developments on the horizon for 2020 and beyond.
Changes coming into force on 6 April 2020
There are a number of important changes to employment law coming into force on 6 April 2020, many as a result of proposals in the Good Work Plan. These changes are as follow.
Written Statement of Particulars of Employment
Under the present law (s.1 of the ERA 1996) all employees must be given a written statement of their particulars of employment within two weeks of starting work. From 6 April 2020 all workers as well as employees must be given a “s.1 statement” on their first day of work. Additional matters must now be included in this statement, such as the days of work and, if variable, how they will be varied ― any benefits, probationary period and any required training.
Holiday pay reference periods
Under the present legislation the holiday pay of a worker with irregular working hours is calculated by averaging the number of hours worked over the previous 12 weeks ― known as the “pay reference period”. Regulations amend the Working Time Regulations so that, from 6 April 2020, the pay reference period is extended to 52 weeks.
Where a worker has been employed for less than 52 weeks, the reference period is the number of weeks for which the worker has been employed.
The Good Work Plan suggested that agency workers were not benefitting from the opt-out from the legislation ― known as the “Swedish Derogation”. From 6 April 2020 this model will be abolished and agency workers, who have an employment contract with their agency guaranteeing pay between assignments, will now have the right to equal pay with comparable direct employees. Agencies must update their workers with a statement to notify them of this change by 30 April 2020.
Temporary agencies and employment businesses will also be required to provide agency workers with a “Key Information” document, which must include details of the type of contract, the expected pay, who will pay them and by what method.
Information and consultation thresholds
As part of the Government’s initiative to encourage engagement in the workplace, the percentage required for a valid employee request for an information and consultation agreement is lowered from 15% to 2% of the workforce.
From 6 April 2020 employer National Insurance contributions (NICs) will be payable on any ex gratia termination payments that exceed £30,000. This makes termination payments by the employer more expensive.
Such ex gratia payments will continue to be free of employee NICs.
IR35 in the private sector
IR35 (sometimes known as “off-payroll working”) is primarily a tax issue, but new rules do place new demands on the employer. From 6 April 2020, under new IR35 rules, where an individual performs services for a client through an intermediary, the responsibility for ascertaining whether the arrangement falls within IR35 passes from the individual to the engager. These new rules only apply to large and medium-sized businesses.
Parental Bereavement (Pay and Leave) Act 2018
A new right to two weeks' parental bereavement leave for parents who suffer the loss of a child under the age of 18 will also come into effect from 6 April. This will be a day one right, but parents with six months' service will also be eligible for statutory parental bereavement pay.
A new Employment Bill
An Employment Bill, announced in the Queen's Speech at the end of 2019, will introduce further changes. At the moment there is only limited information on these measures and no indication of the timescale of implementation. The main features of the Bill are summarised below.
Neonatal leave and pay
The Government consulted on this issue in 2019 and legislation will create a new right for parents to each take one week of neonatal leave and pay for every week that their baby is in neonatal care, up to a maximum number of weeks (a cap) for babies who have spent a minimum of two continuous weeks in neonatal care (because they are premature or sick) immediately after birth.
Redundancy protection for pregnant employees
Currently, if a woman's role is made redundant while she is on maternity leave, she is entitled to be offered suitable alternative employment by her employer or associated employer — provided such a vacancy exists. Essentially, she has priority over all other employees who are “at risk” of redundancy.
The Government believes that this priority period will be extended at both ends: the protected period will start from the point at which a woman notifies her employer that she is pregnant, and will be extended by an additional six months after she has returned to work
Unpaid carers’ leave
This was a proposal that was included in the Conservative Party’s Election Manifesto in December 2019. There is to be an entitlement to one week's leave for unpaid carers. Further details have yet to be announced
A more predictable contract
This proposal was in the Good Work Plan. It will introduce a new right for all workers to request a more predictable and stable contract after 26 week's service. It is likely to be similar to the mechanism surrounding the right to request flexible working.
Flexible working to be the norm
This was also in the December 2019 manifesto. The Government intends to make flexible working the default starting position unless employers have a good reason not to allow it. There will be further consultation on this proposal.
Labour market enforcement
A new single labour market enforcement agency is to be created to better protect workers' rights.
Tips and service charges
New provisions to require employers to pass on all tips and service charges to workers in full (without an administration fee deduction) to be supported by a statutory Code of Practice, to ensure that tips are distributed on a fair and transparent basis.
The Government also set out an intention to take action to reduce ill health-related job loss: for example, it is proposing to introduce a right to request work or workplace modifications on health grounds. This will allow requests to be made by non-disabled employees similar to the existing right to request flexible working.
Further likely legislative reforms
There are a number of areas of employment law where further legislative activity is expected. These include the following.
The issue of sexual harassment in the workplace continues to attract headlines. The Government is currently considering proposals to introduce a duty to prevent harassment in the workplace, re-introducing explicit protections against third party harassment and a new Statutory Code of Practice.
On 15 January 2020, the EHRC published new technical guidance on Sexual Harassment and Harassment at Work, which formed the first draft of the new Statutory Code of Practice, to be finalised later this year.
All employers should be familiar with this guidance and review their policies in the light of its advice.
Non-disclosure agreements (NDAs)
The Government is expected to introduce legislation on the use and misuse of non-disclosure (or confidentiality) agreements, “when Parliamentary time allows”.
The EHRC has produced guidance, The Use of Confidentiality Agreements in Discrimination Cases, focusing on settlement agreements.
Review of parental rights
Last summer the Government announced it is considering “high level” reform of the whole gamut of parental rights and accompanying leave. Reform proposals (at least headline level) are expected to be floated later this year.
The determination of employment status continues to be a hot topic. However, despite a public consultation in 2018, the momentum for change in this area of employment law appears to have run out of steam. Details on if and when a new statutory test for employment status is to be introduced never materialised.
Ethnicity pay gap reporting
At the end of 2018 the Government consulted on the possible introduction of mandatory ethnicity pay reporting along similar lines to gender pay gap. No information has yet emerged on what the final proposals will involve.
The focus of the Johnson administration this year will surely be on the negotiations with the EU during the transition period. The Government must also implement a new immigration system (announced 19 February) by 1 January 2020. It will be a busy and uncertain time. It is also a tight timetable, so employers should ensure that they are prepared for the changes outlined above that come into force on 6 April 2020.
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