New reference period rules for calculating holiday pay
The reference period used to calculate holiday pay for workers and employees with variable pay has changed. Previously, the calculation period included pay that a worker received during the 12 weeks worked prior to taking a holiday.
The reference period has now changed to 52 weeks, or the number of weeks of employment if a worker has been employed for less than 52 weeks.
This will result in a more consistent payment for workers across the year, where, previously, holiday pay may have been significantly increased if festive hours were taken into account across the 12 week period, or significantly lower if during an off-season period.
Changes to the tax treatment of off-payroll labour
The intended changes to tax legislation regulating off-payroll working (commonly known as IR35) have been deferred until 2021 in the wake of the ongoing COVID-19 disruption.
Written particulars of Employment will be a “day one right” for workers and employees
Section 1 of the Employment Rights Act 1996 (ERA) has been amended to require that all workers (not just employees) are provided with a written Statement of Particulars of Employment containing certain basic details on the first day of employment.
This becomes a “day one right” for those employed after 6 April 2020, and the statement must cover additional information, such as probationary periods, any variation in working hours and “any other benefit provided by the employer”.
Additionally, any existing worker can request an updated set of written particulars of engagement – this must be provided within four weeks of the request.
While many employers provide contracts which go above the requirements of section 1 of the ERA, businesses with more basic contracts should take time to consider whether what they have is fit for purpose.
Parental Bereavement Leave has now been introduced by the government.
This new entitlement means that parents, or primary carers (which includes adoptive parents, foster parents and guardians), are entitled to at least two weeks’ leave following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy.
Employees with a minimum of 26 weeks’ continuous service and weekly average earnings of over £118 per week will receive paid leave at the statutory rate and other staff will be entitled to unpaid leave. The statutory rate for 2020 is the lower of £151.20 per week or 90% of average weekly earnings.
Removal of the Swedish Derogation
Finally, the "Swedish derogation" in the Agency Workers Regulations 2010 has been removed by the Agency Workers (Amendment) Regulations 2019. All agency workers will now be entitled to equal pay compared with direct employees after 12 weeks with a company.
Businesses are also now required to provide agency work-seekers with a key information document, including information on the type of contract, the minimum expected rate of pay, how they will be paid and who will pay them. In addition, by no later than 30 April 2020, such employment businesses must provide agency workers whose existing contracts contain a Swedish derogation provision with a written document advising that this no longer applies.
National Living Wage and National Minimum Wage increases
From this month, the rate of National Living Wage, applicable to workers over 25 years of age, has increased from £8.21 to £8.72 per hour.
National Minimum Wage has also increased across all age groups:
- From £7.70 to £8.20 per hour for those between 21-24 years old
- From £6.15 to £6.45 for those between 18-20 years old
- From £4.35 to £4.55 for those under 18
- From £3.90 to £4.15 for Apprentices
Salary premiums (such as overtime hours and bank holiday pay) have additionally been removed from the calculation of annual pay and basic hours.
How can we help?
Our specialist Employment team can review your existing particulars of employment for compliance with the updated Employment Rights Act minimum particulars at a fixed fee of £400 plus VAT (subject to our usual terms). We can also provide legally compliant templates for your organisation to complete itself for fixed fee of £250 plus VAT.
For more information about any of the above, or for specific advice, please call 0141 303 1100 and ask to speak to a member of our Employment team.