Employment update – what’s new in 2020?

United Kingdom

There are a number of employment law developments on the horizon in 2020. We have selected some of the headline changes below.

Future Employment Bill

In the Queen’s Speech only a few days before Christmas the government outlined plans for its new Employment Bill. At this stage we have very limited information on what the Bill will contain (see below) and no indication of timescales.

The speech highlighted the following changes:

  • The creation of a new single enforcement body intended to offer greater protection for workers;

  • The introduction of a right to request a more predictable and stable contract after 26 weeks’ service;

  • The extension of redundancy protection from the point at which an employee notifies their employer of pregnancy until six months after the end of maternity leave;

  • The extension of leave for neonatal care;

  • Making flexible working the default working arrangement unless an employer has a good reason not to (this proposal will be subject to consultation); and

  • The introduction of a week’s leave for unpaid carers.

None of the proposals are new having been mentioned in various consultation documents during 2019. It will be interesting to see how the government will frame the right to make flexible working a default arrangement, and how much scope an employer will be given to argue that a role was not suitable for flexible working.

31 January 2020 Brexit

The UK left the EU on 31 January 2020 with a deal meaning that a transition period will exist until 31 December 2020. During this period the UK will continue to apply EU law. For employers this means that free movement continues and essentially during the transition period the status quo is retained.

What is less clear is what the future will hold for employment law and workers’ rights, in the period after December 2020. The previous Withdrawal Bill contained provisions enshrining workers’ rights. This was removed in the final version of the Bill, leaving open the possibility that at some point in the future the position may change.

In addition, within the final Withdrawal Bill once the transition period is over there is power for Ministers to issue secondary legislation to specify the circumstances in which lower courts could depart from the rulings of the Court of Justice of the European Union. The obvious contender for change in the longer term within the area of employment law is holiday pay. The recent extensions in the definition of holiday pay to include variable payments flows from EU rights.

The transition period also affects the rights of EU workers currently resident in the UK. Many EU nationals will already have applied for settled status, or depending on how long they have been here, pre-settled status. EU nationals who come here to work before 31 December 2020 will have until 30 June 2021 to apply.

After the transition period ends, EEA/Swiss nationals arriving in the UK will be subject to the new points based immigration system that is set to be implemented in January 2021.

6 April 2020 – Changes to off-payroll working in the private sector (IR35)

Introduced in 2000, the IR35 rules were intended to ensure that individuals working through an “intermediary” (usually, but not necessarily, a personal service company), who due to the way they were working and the nature of their work would have been regarded as employees for income tax purposes if engaged directly by the end user (the “client”), pay broadly the same income tax and NICs as if they were employed.  In the private sector, it is currently for the intermediary to determine whether the rules apply and, if so, to account for income tax and NICs accordingly. This means that the tax risk lies with the intermediary, and therefore effectively the individual, rather than with the client.

In April 2017, the government amended the legislation for individuals providing services to a public sector client through an intermediary. The new rules (referred to as the off-payroll working rules) meant that the public sector client, rather than the intermediary, became responsible for deciding whether the individual should be deemed to be an employee for income tax purposes (assisted by an online tool known as CEST) and, if so, for accounting to HMRC for tax and NICs. From 6 April 2020, the public sector reforms are to be extended to the private sector. “Small” businesses (assessed based on turnover, balance sheet and employee headcount) won’t be affected by the reforms and will remain subject to the current rules. For more detail on the reforms and how businesses can prepare, please refer to our earlier update here.

Although the government last month launched a review into the implementation of the reforms in the private sector, there appears to be no plans to delay to the existing timetable. Most organisations are well underway with their preparations for the reforms and businesses which may be affected and that have not yet considered or finalised their approach going forward now need to do so as a matter of urgency. 

6 April 2020 – Good Work Plan

  • Written statement of particulars: On or after 6 April 2020, a written statement of particulars must be issued to workers (as well as employees) and must be issued on or before the start of employment. This is an advancement on the current law, which only requires a written statement to be issued to employees within two months of the start of their employment. The new rules also stipulate that additional requirements must be included in the written statement and certain points must be covered in the principal statement. Employers should be reviewing their standard terms and conditions and updating their processes.

  • Reference period for calculating holiday pay: The rules for calculating a week’s pay for holiday pay purposes are changing. The reference period for variable pay will be increased from 12 weeks to 52 weeks for workers with irregular hours. The purpose of this change is to benefit those who work in seasonal employment or have atypical roles.

  • Agency workers: The Agency Workers (Amendment) Regulations 2019 abolish the  “Swedish derogation” for agency workers, which broadly speaking allows employers to avoid the pay parity provisions of the Agency Workers Regulations 20210 where an agency worker is given a permanent contract of employment and is paid between assignments. Further, temporary work agencies will be required to provide, by 30 April 2020, a written statement to an agency worker employed on a contract permitted by the Swedish derogation on 6 April 2020 informing the agency worker of the impact of the new regulations.

  • Information and Consultation: The Employment Rights (Miscellaneous Amendments) Regulations 2019 will lower the percentage required for a valid employee request for an employer to negotiate an agreement on informing and consulting employees from 10% to 2% of the total number of employees employed by the employer.

Employer NICs on termination payments above £30,000

The rules for income tax and employer NICs will be aligned so that employer NICs will be payable on termination payments above £30,000 (currently only income tax is payable on sums in excess of £30,000). For more information on this change click here to read our recent law-now.

Parental Bereavement Leave

On 23 January the government announced that The Parental Bereavement (Leave and Pay) Act 2018 will come into force on 6 April 2020. Broadly, it provides that employed parents who have lost a child under the age of 18 (or if there is a stillbirth from 24 weeks of pregnancy) will be entitled to two weeks’ leave (irrespective of length of service) to allow them time to grieve away from the workplace. They will also be entitled to receive statutory bereavement pay if they have 26 weeks’ service or more. This will be paid at the statutory rate of £148.68 per week (for 2019 to 2020), or 90% of average weekly earnings where this is lower. Parents will be able to take the leave in a block or as 2 separate weeks in the year following the death of their child. The government estimate that this will help around 10,000 parents a year. Employers should be updating their maternity and family friendly policies to refer to this leave and pay.

Ethnicity Pay Gap Reporting

In 2020 we expect that the government will publish their proposals for ethnicity pay gap report, but we have very little information on what the final proposals will involve. We understand that the government have been carrying out pilots with some employers to determine the best way to report ethnicity pay gap figures. A key decision will be whether employers will be required to report against many classifications of ethnicity or to provide a single pay gap figure using a white/other ethnicities metric.

Misuse of Confidentiality Clauses

We can expect to see more moves to limit the use of confidentiality clauses when settling employment disputes and it seems likely that the government will press on with proposals, following the implementation of Brexit. Click here for our most recent update on this topic.

Harassment at work

In 2019 the government launched a consultation aimed at strengthening the law in relation workplace harassment. The proposals included a preventative duty and reintroducing liability for third party harassment. Further information on the details of the consultation in 2019 can be found in our equality and diversity  law-now from last year. In January 2020 the EHRC published technical guidance on workplace harassment, which the government has said will form the basis of the draft version of the statutory code of practice. Click here to read more about the Guidance.