Last reviewed 2 January 2020
This new year is set to be a very busy one for employment law and employers need to be ready for this. As we welcome in 2020, Ben McCarthy, employment law writer at Croner-i, examines some of the key upcoming changes.
CEO pay ratio reporting
From 1 January 2020, UK listed companies which have in a year, on average, more than 250 employees are expected to compare their CEO’s most recent remuneration against that of their full-time employees. The information should apply to financial years which started on or after 1 January 2019.
The Government hopes that this disclosure, and the required disclosure of supporting and explanatory information, will allow interested parties inside, and outside, the organisation to understand how remuneration policies across the organisation compare to the executive pay policy.
Remember that this requirement will only apply to companies which are quoted on the UK Official List, New York Stock Exchange, NASDAQ and a recognised stock exchange in the European Economic Area. Companies listed on the Alternative Investment Market do not fall within this category.
Statement of main terms (SMT)
As part of the provisions of the Good Work Plan, the provision of SMTs will become a day one right for both employees and workers from 6 April 2020. Previously, employers have had two months in which to provide this to their employees, meaning that they will need to have the document ready straight away going forward. SMTs will also need to contain additional details for the first time, which are outlined below:
the terms and conditions relating to work will extend to cover terms relating to normal hours of work, days of the week the worker will be required to work and whether these days/hours may vary
terms relating to other forms of paid leave such as family-friendly leave
details of other employee benefits, not just those relating to pay, such as benefits in kind or financial benefits
terms relating to probationary periods including those in relation to length and conditions
details of training provision and requirements.
Failure to provide a statement, or where a statement is provided which does not contain the required information, could lead to the employee making a reference to an employment tribunal to determine their terms of employment. Additionally, an employee may receive compensation for a failure to be provided a statement where they win an alternative claim at the employment tribunal.
Extension of the holiday pay reference period
As part of another provision of the Good Work Plan, the holiday pay reference period, which is used to calculate the average pay of those who work irregular hours, will be extended from 12 to 52 weeks from 6 April 2020. The aim of this development is to provide a fairer approach to holiday pay when workers are working flexible hours. It will be important for organisations to keep track of employees’ working time throughout the year, including overtime, to ensure they are correctly remunerated whilst on annual leave.
From 6 April 2020, agency work-seekers will have a right to receive a key information document to help them make informed choices about the work they accept. This document is required to clarify specific matters including the type of contract the worker is employed under and their minimum rate of pay.
Employers will also no longer be able to make use of Swedish derogation contracts as these contracts, which allow employers to avoid providing agency workers with equal pay after 12 weeks of an assignment, will become unlawful. Once in force, all agency workers will become entitled to equality of pay, when compared to comparable full-time employees, once they reach 12 weeks’ service within one assignment. Employment businesses will have to notify their agency workers of this change by providing them with a written statement by 30 April 2020.
Parental bereavement leave
The right to parental bereavement leave will also become effective in April 2020. Although no exact date has been confirmed, we know that qualifying parents will be entitled to two weeks of paid bereavement leave following the death of a child under the age of 18. The Government consultation explains that ”bereaved parent” will be defined based on the employee’s caring responsibilities for the child to avoid excluding those who are not the child’s legal parents. To qualify, individuals aside from direct parents will need to have the following parental caring responsibilities for the child:
those with court orders providing daily care responsibilities
Although there have been no fixed implementation dates, the Government has pledged to improve redundancy protection for working mothers and alter existing legislation around the use of non-disclosure agreements. We are also expecting the results of separate consultations on preventing sexual harassment as well as restructuring the availability of family-friendly entitlements and statutory sick pay.
With many changes on the horizon, it is important that employers remain fully up to date with the legal requirements placed upon them and are prepared to act accordingly. With yet more provisions of the Good Work Plan still in the pipeline, and Brexit now very much a reality, employment law is likely to see even more developments over the next few years.