Employment changes in 2020 – what do we know for certain?
We now know that Brexit will be “done.” However, there remains a great deal of uncertainty over the exact impact of Brexit on workers’ rights in 2020 and beyond. In the meantime, this is what we are currently expecting in 2020.
The Government’s intentions from the December Queen’s Speech
The Queen’s Speech included an Employment Bill which is intended to “protect and enhance workers’ rights” as the UK leaves the EU. Much of what is included in the Bill has already been set out in the Good Work Plan and the Conservative manifesto. The proposals include creating a new single enforcement body for workers’ rights, giving workers the right to request a more predictable contract, extending redundancy protections to prevent pregnancy and maternity discrimination, increasing leave for neo-natal care and introducing one week’s leave for unpaid carers. The Government will also consult on making flexible working a default right, unless employers have good reason not to allow it.
What changes were planned before the election was called?
The majority of changes will take place in April 2020. The key reforms comprise:
- Written statement of terms: all workers, as well as employees, will be entitled to a written statement of terms. It must be provided on or before the first day of the engagement, rather than within two months - as currently required in relation to employees. There is also an increase in the level of information that must be included in the statement, with more information required in relation to working patterns and training requirements. These provisions will apply to joiners from 6 April 2020.
- Holiday pay calculation period: since the introduction of paid holiday in 1998, there has been a string of cases challenging how it is calculated. For those working irregular working patterns, with fluctuating hours and payments, it has often been difficult to assess fairly. The consistent message from the European Court of Justice has been that the pay for holiday should reflect the pay that the individual would have received if at work. Otherwise the individual may be deterred from taking holiday. One area of dispute has been whether the current reference period (ie looking back 12 weeks), fairly reflects the average pay of a worker. The courts have found that it does not and the legislation will be changed from April 2020 to allow for a 52 week period to be taken into account instead. This is likely to give a more accurate reflection of average pay as fluctuations in work and pay throughout the year should effectively be “smoothed out”.
- Taxation of termination payments: currently, many termination payments in excess of the value of the notice period qualify for a tax exemption up to £30,000 and payments that exceed this amount are subject to income tax, but no NICs are payable. From April 2020, Class 1A NIC liability will apply to the amount of the payment exceeding £30,000.
- Agency workers: from April 2020, temporary work agencies must provide agency work-seekers with a Key Information document, including information on the type of contract offered to them, the minimum expected rate of pay, how they will be paid and by whom.
- Off payroll working: the Government is planning to introduce legislation from April 2020 that will impact on payments made to personal service companies (PSCs) by large and medium sized businesses. In relevant cases, payments to PSCs will be treated as payments of employment income on which the client (or third party intermediary) must account for tax. This effectively shifts responsibility for the IR35 tax compliance from the PSC to the client or intermediary. Whilst there has been talk of reviewing the legislation, the implementation date may not necessarily be put back, so employers should continue to prepare.
- Parental bereavement leave: it is still anticipated that this new right will come into effect in April 2020, but the timing has not yet been confirmed. When it does come in, it will enable parents who have lost a child to take two weeks’ leave.
- Swedish derogation: The “Swedish derogation” under the Agency Workers Regulations currently allows employment businesses to avoid pay parity between agency workers and direct employees if certain conditions are met. It will be removed from 6 April 2020. Agencies must inform relevant agency workers by 30th April 2020 that it no longer applies.
Cases to watch out for
As well as these key legislative changes coming in, there are some interesting cases on appeal to watch out for:
- Employee data: We are awaiting the Supreme Court decision in the case of Various Claimants v Morrisons in which Morrisons have appealed against a Court of Appeal finding that it is vicariously liable for a data leak by an employee. The breach resulted in about 5,000 staff members having their personal data stolen and shared with the public.
- Discrimination and shared parental pay: The Supreme Court will make a final ruling in 2020 on whether it is discriminatory to pay male employees on shared parental leave less than female employees on maternity leave (Ali v Capita; Hextall v Chief Constable of Leicester).
- Worker status: The long running Uber case on worker status reaches the Supreme Court in July (Uber v Aslam). Uber has lost in every court so far. In the latest decision, the Court of Appeal found that Uber drivers were “workers” and therefore entitled to the protection and benefits which that status affords. The Supreme Court has a habit of looking at things from a different perspective to the lower courts, so the outcome is far from certain.
- Vicarious liability: The Supreme Court heard Barclays Bank v Various Claimants in November 2019 and judgment is awaited. It is deciding the issue of whether the bank is vicariously liable for the sexual assault of 153 claimants whilst attending a medical examination required by the bank, to establish whether they were physically qualified for employment and life assurance cover. The outcome clearly has potential to be extremely costly.
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