2020: Employment Law Updates

2020 may mark the start of a new decade, but it will, undoubtedly bring some interesting developments in employment law – it is a field of law that is constantly moving and evolving. We have, in fact, already seen a landmark ruling from employment tribunals that Veganism is a Philosophical belief under the Equality Act 2010. 

With that said, it can be hard for employees, workers and businesses alike to keep on top of the minefield that employment law has become, especially when you get into the intricacies of some of the most topical points of law. So, what’s happening next?; what’s changing?; what’s the plan?, well, let me tell you about some of the key areas of employment law that you should keep a look out for this year.

The following areas of legislative reform will have a big impact on employees, workers and businesses. It is apparent that Employment law is somewhat of a moving target that can be hard to keep track of, especially given our current political climate, but as a former UK Prime Minister once said, “To improve is to change; to be perfect is to change often".

1.    Brexit

Yes, that’s right – Brexit. I’m sure you’ve heard about it… The Withdrawal Agreement has passed. Brexit is happening on 31st January 2020. It is unlikely that we will see significant employment law changes during this years’ transitional period and we will, therefore, continue to apply the law in the same way as we do now – UK tribunals will still consider EU legislation and findings from the CJEU will remain authoritative.

Focus should remain on EEA workers, ensuring they are applying for/obtaining settled/pre-settled status; without this, they will not be able to work in the UK after the 31st December 2020.  Further immigration systems/guidance is expected this year.

Legislation will be introduced to ensure employment law can operate effectively and smoothly after the UK leaves the EU; the legislation will amend wording and references but will not include significant legislative reform.

2.    IR35

IR35 has been in place since April 2000 in the public sector and is due to come into force in the private sector in April 2020; given the recent political changes, it was thought that there may be a delay in the implementation of IR35, but recent reports suggest that an April 2020 implementation date is likely. 

The rules are designed to ensure that anyone contracted to work for a client through an intermediary (Ltd Company, partnership or PCP) have tax and NI deducted as though they were an employee. Currently, the decision as to whether an 'off-payroll' worker should be treated as being inside or outside the scope of IR35 sits with the worker's intermediary; with IR35, this responsibility shifts to the Company paying the intermediary - they will be required for making the decision to deduct and, eventually, deducting any monies owed.

As the new legislation becomes law, businesses will become responsible for establishing and deducting tax and NI for 'off-payroll workers'. To determine if a worker is within the scope of IR35, you will be required to complete a Check Employment Status for Tax (CEST) assessment using the tool provided by HMRC; the tool is self-explanatory and easy to use - it essentially looks at the direction, control and supervision a business has on a worker and provides an outcome on whether a worker should be classed as employed or self-employed for tax purposes. The CEST tool is available on the Government website here: https://www.gov.uk/guidance/check-employment-status-for-tax.

3.    Parental Bereavement Leave and Pay

Research suggests that 1 in 10 employees will be impacted by the death of a loved one; 7,600 babies, children and young people died in 2017. Despite this, there is no legal obligation for an employer to provide paid time off for bereaved parents. Whilst this is a poignant and difficult topic to discuss, as well as a situation you never want to be in, the new legislation, which will entitle employees to paid time off if they suffer the loss of a child, will bring changes that will allow parents time off to grieve in times of great sadness.

Employees will be entitled to:

• Two week’s leave within 56 weeks of the death of a child (leave can be taken in one- or two-week blocks) from day one of their employment
• Parental Bereavement Pay for the duration of Parental Bereavement Leave if they meet the 26-week qualifying period.

No legislation has been published, but it is expected to be implemented in April 2020.

4.    Tax on Termination Payments

From April 2020, employers will be responsible for paying Class 1A NI contributions on termination payments that exceed ￡30k that are subject to income tax by employees.

5.    Rates and Statutory Limits Increase

In April 2020, the National Minimum Wage and National Living Wage will increase. Additionally, family friendly statutory amounts will increase; statutory sick pay will also be increased.

6.    Good Work Plan:

In response to the Taylor Review on Modern Working Practices, the Conservative Government, under the reign of Theresa May, published the 2018 Good Work Plan – it detailed proposed legislative reform to ensure that work in the UK was fair and decent with a realistic scope for development. Whilst the Good Work Plan is fairly comprehensive, the following changes are expected:

Written Statement of Particulars

In line with the Employment Rights Act 1996, employers have a legal obligation to provide a written statement of particulars to employees within two months of commencing employment. In the interest of fair and decent work, from 6th April 2020, businesses will be required to provide a written statement of particulars to both employees and workers from day one of their employment. 

In addition to the provisions that currently need to be contained within a statement of particulars, businesses will also need to include extra information relating to variable working hours, paid leave, benefits, probationary periods and training.

This will likely be welcomed by employees and workers – it will provide them with significant clarity in terms of their rights, but will also take strides in determining the appropriate employment status that applies to working relationships.

Holiday Pay

Following the landmark ruling in Bear Scotland v Fulton that the UK’s method for calculating holiday pay was non-compliant with the Working Time Directive 1993, the accepted mechanism for calculating a week’s pay for the purposes of holiday pay was the performance of an average calculation over a 12-week reference period. 

The Taylor Review, as well as the Advocate General in Bear, noted that a 52-week reference period would be more appropriate means of calculating normal remuneration for the purposes of holiday – it promotes fairness for individuals working atypically and where working hours and pay fluctuates. 

In the Good Work Plan, the Government proposed to increase the reference period from 12 weeks to 52 weeks. The Guardian reported that workers are missing out on ￡1.5bn of holiday pay per year and this change is being introduced on 6th April 2020 to prevent this from happening.

Continuity of Service

With the Good Work Plan being heavily focused on fair and decent work, it is not surprising that continuity of service is an area of focus. Currently, workers are required to have a break in service of at least one week before their continuity of service is broken. The Government proposed to increase the gap to four weeks – employees will need to have a four-week gap in employment before their service is broken. This legislation will allow for intermittent workers to benefit from increased rights. There is no scheduled implementation date for this but watch this space.

Contract Stability

Another area of legislative reform proposed in the Good Work Plan relates to a workers’ right to request a more stable and predictable contract. Workers in situations where work/working hours are irregular will have a legal right to request a more stable and predictable contract after achieving 26 weeks’ continuous service to enable to achievement over when, how often and how long they work. No implementation has been provided but, following the Queen’s speech in 2019, it would appear to be a key element of employment law that the Government will focus on.

In addition to the above, the Government proposes to launch a Single Labour Market Enforcement Agency to provide support and guidance to employers and workers; the agency will also be responsible for handling disputes. Further information is expected on the role of the agency, as well as the powers it will have.