A number of important changes to employment law have taken place this April, many of which will have a significant impact on agency workers. In addition to the current challenges we are facing with Covid-19, business leaders must ensure they are compliant with all new legislation.
The changes include:
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Changes to written statements of terms and conditions
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Increase to the national minimum wage
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Increases to statutory family-related pay and statutory sick pay
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Changes to the law on calculating holiday pay for workers with irregular hours
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Amendment to The Agency Workers Regulations
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Holiday pay for workers on variable hours
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Increase to Employment Allowance.
Read on for high-level information on the changes and guidance on what you, and your business, need to do to comply.
Changes to written statements of terms and conditions
Conditions for workers on zero-hours or casual contracts have been subject to much scrutiny over the last few years. In order to provide better protection and transparency, the UK Government has introduced a number of amendments and changes to terms and conditions.
From April 6, all employers are required to provide a written statement of terms of employment to both employees and workers. This includes the aforementioned zero-hours and casual staff on their books. This right is now applied from the first day of employment, whereas employers were only previously obliged to issue the document within two months and only after the employee had been with the company for one month.
It is important to note that the new regulation does not apply to workers who have an existing contract.
In addition to these changes, the required content of the statement has also been expanded. The statement must now include:
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Details of the expected length of time the job will last, or the end date of if it is a fixed-term contract
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The required notice time for both the employer and worker to terminate the agreement
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Details of eligibility for sick leave and pay
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Details of other types of paid leave e.g. maternity/paternity leave
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How long the probationary period will last and details of any conditions that apply
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Details of all remuneration including pay, health insurance, expenses etc.
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Details about the employee’s normal working hours. This includes the days of the week that the worker is required to work, any variations of this and how these variations are determined
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Information about all training provisions from the employer. This includes details of training that the employer will pay for, and training that the employee will be expected to finance themselves.
What employers need to do.
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Update internal recruitment and onboarding processes to ensure all staff are issued with the document from their first day of employment. This should include a record of receipt and acknowledgment from the employee.
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Review and amend all employment contracts to ensure all current, compliant information is included in every document.
Amendment to The Agency Workers Regulations 2019
From 6 April 2020, employers will no longer be able to pay agency workers less than their own workers. The amendment abolished the so-called “Swedish derogation” that was formerly in place.
Under the amended rules, workers who have completed over 12 weeks of employment will be entitled to the same rate of pay as co-workers who are on permanent contracts. Workers on existing contracts who were subject to the Swedish derogation must be supplied with an amended contract or documentation stating that that provision no longer applies. The deadline for this provision in writing was defined as April 30, 2020.
What employers need to do
Businesses that employ agency staff must review and update all documentation relating to the amendment and communicate the changes with all affected staff, including managers of teams with agency staff.
Increase to the national minimum wage
From 1 April 2020, the national minimum wage for workers aged 25 and over increased to £8.72 per hour. For workers aged 21 to 24 the hourly rate rose to £8.20. Workers aged 18 to 20 are now entitled to an hourly wage of £6.45. Workers aged 16 or 17 must receive a minimum hourly rate of £4.55.
What employers need to do
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Adjust all wages accordingly and inform affected employees in writing.
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Adjust all policies and procedures to reflect the amendments.
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Maintain records to prove compliance.
Holiday pay for workers on variable hours
This is an amendment to the Working Time Regulations 1998 and is another initiative to protect workers on zero-hours or casual contracts, or those with seasonal jobs. Previously, workers on variable hours had their holiday calculated from their average weekly wage over 12 weeks. This has now been extended to a year or 52 weeks. Workers who have been employed for under a year will have holiday calculated from their total employment time served so far.
What employers need to do
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Adjust all affected contracts, policy and process documents and holiday calendars.
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Inform all affected staff in writing.
Increases to statutory family-related pay and statutory sick pay
From 5 April 2020, the weekly rates for statutory maternity, paternity, adoption and shared parental pay increased to £151.20. From 6 April 2020 the weekly rate of statutory sick pay increased to £95.85. In response to Covid-19 the Government has introduced a requirement for employers to pay statutory sick pay from the first reported day of sickness, rather than after three days as it was previously.
What employers need to do.
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Ensure all employees who are on maternity, paternity, adoption, shared parental leave and sick leave are paid the statutory minimum rates.
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Review and adjust all relevant policies and documents accordingly.
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Ensure all staff who contract Covid-19 are paid from the correct time.
Increases to Employment Allowance
From 6 April 2020, the Employment Allowance increased by £1,000 to £4,000. Businesses that meet the criteria can avail of greater reductions on their Secondary Class 1 National Insurance Contributions liability.
“Some businesses will not be able to claim the employment allowance.”
Some businesses will not be able to claim the employment allowance. These include:
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Companies where the director is the only employee that’s paid above the secondary threshold.
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Businesses that get more than 50% of their work from the public sector. This does not apply to charities.
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Service companies operating under IR35 rules where the only income is the earnings of the intermediary.
Employers whose national insurance bill was £100,000 or more in the previous tax year are no longer eligible to claim the employment allowance.
What employers need to do
There are no actions to take at this moment, though it’s important to keep abreast of the situation in case this changes.
Of course, these changes differ to IR35, which came into effect in the private sector in April 2020.
While these payroll updates happen every year, they can still be a challenge to manage. This is particularly the case right now, when many businesses are being tested by changes brought about by the current health crisis.
However, maintaining compliance is vital at all times. Take the time to work through the actions outlined above, keep your staff informed and keep your finger on the pulse of all HR and payroll issues and you won’t go far wrong.
Want to know more about these important employment law changes? Ensure you’re ready with our new webinar.
