What are the changes for UK employment law in 2020?
In this article, Sean Dempsey and Richard Lister of UK law firm, Lewis Silkin, take a look at what’s coming up in UK employment law in 2020
Lewis Silkin is the UK member firm of Ius Laboris, an HR and employment law firm alliance.
Looking ahead to 2020, various Good Work Plan reforms are coming into effect in April and the Government is planning to introduce a new Employment Bill, which will pave the way for a number of further employment law reforms. It is clear that the Government’s main priority is ‘getting Brexit done’, but we can expect several employment law reforms to be progressed during the course of this year, many of which are to be included in the proposed new Employment Bill.
Brexit impact on employment law
The prime minister has brought the Withdrawal Agreement Bill back to Parliament, and expects MPs to ratify it prior to the UK leaving the EU on 31 January 2020. The Government has, at least for the time being, ruled out extending the transition period beyond 31 December 2020. The Conservative manifesto contained no detail about long-term plans for employment law, though did include a pledge to ensure high standards of worker’s rights. For more information about the implications of the current divorce deal, and the scope for long-term divergence from the EU on employment rights, see our Brexit portal.
New IR35 rules
Changes to the operation of IR35 regime are due to take effect from 6 April 2020. Private-sector businesses engaging contractors who supply their services personally via an intermediary (e.g. a personal service company) will become responsible for determining whether IR35 is applicable. If the business considers IR35 applies, the person paying the intermediary will be responsible for operating PAYE and national insurance on the fees it pays.
Companies affected should urgently prepare for these important changes by, for example: auditing their labour supply chain to identify contractors using intermediaries; deciding on a methodology for assessing their status; and reviewing their onboarding process and documentation for contractors going forward. Before the general election, the Chancellor Sajid Javid said there would be a review of the proposed IR35 changes to ensure they were ‘right to take forward’. It seems more likely than not the reforms will proceed in April, so it remains sensible to continue preparations.
One of several reforms being implemented from the Government’s Good Work Plan is a revamp of the rules requiring employers to supply staff with a written statement of key particulars of their employment. From 6 April 2020, statements will have to be provided to those with ‘worker’ status in addition to employees, by day one of employment. More information will need to be set out in the statement, including details of the full benefit and remuneration package. Many employers are likely to be recruiting for April starters, so now is the time to start reviewing and amending their standard documentation.
The law on agency workers is also changing in April. When the UK first implemented the EU Agency Workers Directive, it enacted the so-called ‘Swedish Derogation’, which provides that certain agency workers are not covered by the principle of equal treatment. This is being abolished with effect from 6 April 2020. Businesses will need to decide what to do about any agency workers on Swedish Derogation contracts and, where appropriate, migrate them onto standard agency contracts or take them on as direct hires.
The reference period for calculating holiday pay is increasing from 12 weeks to 52 weeks on 6 April 2020. This change may create practical problems in relation to people who work intermittently for just some weeks of the year. Employers should review their current approach to calculation and identify any changes required, and perhaps conduct a dry run to assess any cost impact.
Information and consultation
The final April 2020 Good Work change is a reduction in the threshold for demanding information and consultation arrangements under the Information and Consultation of Employees Regulations 2004 from 10% to just 2% of employees.
After significant changes to the tax treatment of termination payments were introduced in April 2018, a related requirement for employers to pay employer NICs on any part of an ex gratia termination payment exceeding GBP 30,000 was put on hold. This change will now come in on 6 April 2020, making termination payments more expensive.
CEO pay ratio reporting
The first reports will be due this year under the new legislative regime requiring directors of UK-listed companies with 250 or more employees to report annually on the difference in pay between their CEO and average workers.
Parental Bereavement (Pay and Leave) Act 2018
A new right to parental bereavement leave, giving parents two weeks’ paid leave if they lose a child under 18, is expected to come into force sometime this year. Regulations setting out details of how the right will operate are still awaited.
The Government has promised to implement a planned reform to provide priority access to redeployment opportunities for pregnant women and new parents in a redundancy situation. The new Employment Bill will include provisions to implement these new rights.
Regulation of NDAs
The Government is expected to bring forward legislation introducing new restrictions on confidentiality clauses in employment contracts and settlement agreements. This follows the publication of a consultation response on the issue last July. There is no draft legislation yet and the implementation date is unknown.
Family and carers’ rights
The Government will be taking forward plans to allow parents to take extended leave for neonatal care (following a consultation published last July). The Employment Bill will also provide for a new right for carers to take a week’s leave each year. The Conservative manifesto said they would look at ways to make it easier for fathers to take paternity leave, but no further details have been released.
Making flexible working the default
The Government intends to encourage flexible working arrangements and consult about making them the default unless employers have a good reason otherwise. Details are not yet clear, but the plans could go further than the proposals currently under consultation that would require employers to say if flexible working is available in job adverts and publish their flexible working policies.
Employment status and protections
Despite the unresolved issue of employment status (see above), the Conservative manifesto did promise that workers would gain the right to request a more predictable working contract. This is something which had already been promised in the Good Work Plan, and forms part of the requirements of the EU Transparent and Predictable Working Conditions Directive.
The right to a more predictable working contract will form part of the new Employment Bill. The manifesto also mentioned other ‘reasonable protections’, which may refer to rights to reasonable notice of work schedules and compensation for shift cancellation, which are already under consultation.
The new Employment Bill will provide for legislation requiring employers to pass on all tips. The Government also plans to introduce a new Statutory Code of Practice to ensure that tips are distributed fairly and transparently.
New state enforcement body
The Conservative manifesto also pledged to create a new state enforcement body to tackle non-compliance in the labour market, following a consultation published last year.
The plan outlined in the consultation was to bring together the existing patchwork of enforcement under the remit of a single body, and then expand its remit to cover holiday pay for vulnerable workers and umbrella companies operating in the agency workers sector. The Government is likely to focus on targeting the most exploitative employers.
Upcoming cases in 2020.
Important employment cases to be decided this year include the following:
- Data protection
The case of Morrison Supermarkets plc v Various claimants was heard by the SC last November and the judgment is expected soon. Morrisons is appealing against the CA’s ruling that it was liable for the wrongful disclosure of payroll data on around 10,000 staff by an aggrieved employee.
2. Minimum wage
In February, the SC is due to hear Royal Mencap Society v Tomlinson-Blake, a case of huge significance for the care sector. The CA decided that care workers carrying out ‘sleep-in’ shifts were not entitled to the national minimum wage for the whole shift, but only when they are required to be awake and working.
3. Employment status
In Uber BV v Aslam and others, a case of major interest for the gig economy, the CA upheld by a majority the finding that drivers engaged by Uber are workers rather than self-employed, whenever they are signed into the relevant app and ready to work. The SC is scheduled to hear Uber’s appeal in July.
4. Equal pay
Asda Stores Ltd v Brierley (see here) is likely to be decided by the SC this year. A hearing date for Asda’s appeal is awaited.