April 2020 may seem a long way off but, if you are an employer, you need to mark the date in your calendar. In April next year new employment legislation will come into force and there are some significant changes resulting from the ‘Good Work Plan’ that could affect your business.
As with any new legislation, it’s important to get your ducks in a line to avoid a panic in six months’ time.
Our team of employment solicitors give you the key points that you need to focus on before April.
Review your employment terms and conditions
We always recommend that businesses regularly review their policies and contracts, so if you haven’t recently, now is a good time to do so. Under the current system employers have up to two months to provide a written statement of employment to new employees if they have worked for them for longer than a month. In April this will change and employers will be expected to provide the written statement on the first day of the job.
The new legislation converts ‘employee’ to ‘worker’ which means ‘workers’ as well as ‘employees’ will be entitled to written statements from their first day working for you.
Changes in holiday pay calculations and continuity of employment
Changes in holiday pay calculations will affect employers who use seasonal workers or who have staff that work longer periods during different periods of the year. Current legislation determines an average week’s pay from a 12 week period during the year. From April 2020 this calculation will change to take in a 52 week period.
This could be a positive for many employers as there is a likelihood that the average weekly pay will go down, however it is important to speak to your HR team and accountant to ensure that you are ready and covered.
Changes to continuity of service
A significant change to temporary workers’ rights will be coming in to force which could have a significant impact on employers who use temporary and agency workers.
This relates to the breaks between periods of employment required to prove continuity of service.
Currently, any break that is longer than one week stops continuity of service. From April this break will be extended to four weeks. This change makes it easier for temporary staff to accrue two years qualifying service, the period required to engage in unfair dismissal proceedings for example.
Any affected employers will need to monitor closely workers on temporary assignments, ensuring that they sign them off finished projects and tracking any that may accrue qualifying service. For any long term temporary workers, you will have to consider carefully how you end their service as you could find yourself dealing with a claim against you and your business.
IR35 hits the private sector
IR35 has been in the public sector for a while, but from April 2020 will hit the private sector.
Essentially, IR35 is a tax rule, designed to reduce tax avoidance by businesses and contractors. If you run a business that employs off pay-roll workers through private companies you could be affected.
One of the most important aspects of IR35 is that the onus of responsibility falls on businesses. If you run a medium to large scale business, you will be required to assess the employment status of your off-payroll workers. You therefore need to talk to contractors and consider whether the off-payment rules apply to them and if so put processes in place covering future engagements.
It’s worth checking HMRC’s guidance and also getting some professional legal advice. Conversely, if you are a contractor operating under a private limited company, please get in touch too.