What changes will there be to Employment Law in 2020?

Whether you’re an employer or employee, it’s crucial that you remain up to date on the UK’s employment law.

2020 is almost here and with the New Year comes changes. In this post, our specialist employment law solicitors explore the changes in employment law any business owner, employee or self-employed person should expect in 2020. This includes:

  • The publishing of executive pay gap reports
  • Parental bereavement provision
  • Changes to the IR35 rule
  • Introduction of the ‘Good Work Plan’
  • Termination tax changes

Executive pay gap reports set to be published

As of 1 January 2019, UK-listed companies with more than 250 UK employees were legally obliged to annually disclose the salaries of their chief executives and compare them against the average UK worker.

What information needs to be reported?

Companies need to report on the pay difference between a CEO and the full-time UK employees from the 25th, 50th (median) and 75th pay percentile. In addition, this pay gap must be justified, meaning that directors have to show what effect an increase in share price will have on executive pay and whether they are doing enough to earn their pay packets. They also have to justify any changes to the ratios compared to the previous year and whether the current median ratio is consistent with the company’s broader policies on employee rewards, pay and progression.

As this requirement applies to the financial year beginning on or after 1 January 2019, companies should start publishing their pay ratios in 2020. There isn’t a fixed deadline for all companies’ reports to be published.

Parental bereavement provision

In October 2017, the government confirmed its plans to pass a new workplace right of leave for bereaved parents. The Parental Bereavement (Leave and Pay) Act entitles employees who have lost a child under the age of 18, or have suffered a stillbirth from the 24th week of pregnancy, to two week’s unpaid leave from the start of their employment as a right. The leave is set to be paid at the statutory rate if the employee has accumulated 26 weeks’ service. This Bill is set to come into force in 2020.

Changes to the IR35 rule

From 06 April 2020, the IR35 tax rule will be extended to private sector businesses with an annual turnover of over £10.2 million or more than 50 employees. The IR35 tax rule makes sure that intermediary workers’ pay broadly the same tax and National Insurance contributions as permanent employees.

This rule may apply to you if:

  • You provide a service through an intermediary
  • You are an agency providing workers’ services
  • You are a client who receives workers’ services through an intermediary

It is the government’s aim to cut tax avoidance for off-roll payroll contractors working for personal service companies (PSC). From April 2017, it has been the discretion of public sector employees to decide whether the IR35 rule applies.

The Good Work Plan

The Good Work Plan is a commitment to a range of policy and legislative changes that work to improve workers access to fair work.

Agency workers – on the 06 April 2020, the Agency Workers (Amendment) Regulations 2019 will come into full force. This will abolish a legal loophole known as the ‘Swedish derogation’ rule that allows agencies to opt-out of equalising the pay of agency staff with permanent employees.

Seasonal workers – the reference period for calculating an average’s weeks pay will be extended from 12 weeks to 52 weeks from 06 April 2020. This should improve holiday pay for seasonal workers.

Written particulars – rights to receive a written document setting out basic terms of employment and conditions will be extended to workers, as well as employees. This is intended to improve the clarity for many workers regarding their contractual agreement. Presently, employers have two months to provide written particulars; it is moving to become a day-one right.

Tax on termination payments

On 06 April 2020, a measure comes into force that aligns the rules for tax and employer National Insurance contributions (NICs). According to CIPD, any part of a termination payment above £30,000 will be subject to employer NICs. The £30,000 threshold guarantees that no statutory redundancy pay on its own will be affected.

Talk to an employment law expert

As an employer, understanding employment law is crucial to your business’ success and retaining employees. We can give you impartial legal advice on any of the following issues:

  • Contracts of employment
  • Employee handbooks and policies
  • Defending employment tribunal claims pursued by employees, i.e. unfair dismissal and discrimination
  • Advice on redundancy procedures
  • Disciplinary and grievance issues
  • Dismissing or disciplining an employee
  • Drafting and dealing with settlement agreements
  • Variation of contract terms
  • Discrimination
  • Business transfers (TUPE)
  • Breach of restrictions by an employee

Our expert employment law advice applies to employees as well as employers. If you are an employee and you want to know what you are entitled to, contact the specialist employment solicitors for employees at Foys Solicitors. We will help you understand your rights as an employer and how they are going to change in 2020.

To find out more, get in touch by filling out our Online Form, or contact your local office for a free initial consultation.

Alternatively, you can email us at enquiries@foys.co.uk.

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