- Latest update: 13th March
COVID-19 support for Employers announced in the March Budget:
- Statutory Sick Pay (SSP) now applies from day 1, not day 4, for those eligible workers who are self-isolating due to COVID-19.
SMEs with fewer than 250 employees will be able to reclaim up to 2 weeks’ SSP for any employee who has claimed SSP as a result of COVID-19. Employers should maintain records of staff absences and payments of SSP.
The government plans to work with employers to set up a repayment mechanism in the coming months
SSP is currently £94.25 per week for 26 weeks.
- Employees will not need to provide a GP fit note (sick note) as proof of their sickness.
COVID-19 additional support for Businesses in March Budget here.
CIPD has a very helpful and updated information hub with guidance HRs and Employers on good practices and how best to respond to COVID-19 here.
- Big changes coming for Employers – Good Work Plan
- Big changes coming for contractors/consultants & large employers
– IR35 reform/off payroll rules
- UK:EU Transition Period update – European Settlement Scheme
- Immigration update – New ‘points based’ system coming in 2021
Employment Law updates – Good Work Plan
There are a number of significant changes in Employment law coming into force from 1st April 2020 as the government begins clamping down on employment practices, following its Good Work Plan published* last year. The Good Work Plan has been called ‘the biggest package of workplace reforms for over 20 years’.
Here is what you need to know:
From 6th April 2020:
- Employers will need to issue all new workers and employees with a written Statement of Employment Particulars from day one.
Employers will have to include certain additional information in the Statement of Particulars, such as: length of time job is expected to last, the notice period, eligibility for sick leave and pay, other rights to leave, and probationary period, all pay and benefits and specific days and times of work.
Review existing contracts of employment in the run up to 6th April to include the required changes.
Employers will need to change the way they calculate holiday pay for certain workers, taking into account average wages in the previous 12 months, and including bonuses, regular overtime and commission payments. Previously holiday pay was calculated as an average of the previous 12 weeks wages.
Agency workers will have the right to be paid the same as permanent staff, once the agency worker has been engaged by the same employer in the same role for 12 weeks.
By no later than 30th April 2020, temporary work agencies must provide agency workers whose contracts contain an opt-out of this right (called the Swedish Derogation) with a written statement advising that from 6th April, they have a right to pay parity.
- Temporary work agencies must provide agency-work seekers with a Key Information Document (similar to a Statement of Particulars). This must include information on the type of contract, the minimum expected rate of pay, how they will be paid and by whom.
- The much-publicised changes to the off-payroll rules, commonly – and wrongly – called ‘IR35’ come into force. HMRC’s aim is to claw back tax from contractors , who work in a manner similar to an employee, but under the guise of a limited company; these folk pay lower tax.
These apply to larger businesses only (T/O above £10.2m a year, more than 50 employees), who will now be responsible for determining the tax status of freelancers and contractors.
These changes will affect your business even if its below the size threshold, if you are in a supply chain to a larger organisation and you use consultants or contractors operating through their personal services companies (PSCs), such as limited companies, partnerships, or LLPs.
- From 1st April 2020, new hourly wage rates apply:
The National Living Wage for ages 25 and over – up 6.2% to £8.72
The National Minimum wage for 21-24 yr olds – up 6.5% to £8.20
For 18-20 yr olds – up 4.9% to £6.40
For under 18s – up 4.6% to £4.55
For Apprentices – 6.4 % to £4.15
(workers under 19 or in first year of apprenticeship)
More detail is available on the national minimum wage rates here.
The difference between National Living Wage and National Minimum Wage, explained.
Parental Bereavement Leave Regulations come into force, allowing Parents the right to 2 week paid time off work if they have a child under the age of 18 that dies.
Employment Law Updates – IR 35 reform / off payroll working
HMRC is tightening the net around Off Payroll rules and IR35.
IR35 is a complicated piece of legislation designed to crack down on a tax loophole used by self-employed contractors working at a firm on a permanent basis but operating through their own company, (called a personal service company, PSC ) for example a limited company, a partnership or LLP.
By working via a PSC rather than being on the payroll, such folk were effectively working as full-time employees but paying lower rates of tax as a self-employed contractor; hence the term Off-payroll working.
Originally it was up to individuals to assess whether they fell under IR35.
Since April 2017, firms in the public sector have had to decide the status of their self-employed contractors. From 6th April 2020, this responsibility spreads to large companies in the private sector.
Many large companies, perhaps finding the burden of this complex legislation now falling on their shoulders a step too far, have not wanted to risk getting it wrong, and have drastically reduced their contractor base.
From April, many more self employed contractors will come under the IR35 umbrella, and will have to pay same level of tax that permanent members of staff pay, which will significantly reduce their pay. The tightening and complexity of these new rules, coupled with minimal information from HMRC, have caused a great deal of confusion and resentment with employers and contractors alike.
The government, bowing to pressure, did launch a review in January 2020 into the implementation of the changes. But as this review only looks into how they new rules are applied, not whether they should be, it’s anticipated that these reforms are going ahead in April 2020.
UK:EU Transition Period Update- European Settlement Scheme
On 31st January 2020 the UK left the European Union, which triggered the start of an 11 month ‘Transition’ or ‘Implementation’ Period, during which the UK and the EU aim to agree a “deal” regarding the future relationship and critically, the basis on which we will trade.
During this Transition Period, not much will change in terms of accessing European workers: EU nationals can continue to come to the UK and retain full movement rights. Frictionless trade continues, and the UK is still bound by EU laws, and its payments to the EU budget.
The Transition Period is due to end on 31st December 2020 though, and with it the free movement of goods, services and people.
The immediate priority this year for UK employers in terms of workforce continuity & planning is to ensure all EU, EEA and Swiss nationals on your teams apply online for settled status in the UK, under the European Settlement Scheme.
The European Settlement Scheme is available to any EU, EEA and Swiss nationals who enter the UK before the end of 2020.
Applications are taking on average 15-20 minutes to complete online. They need to be submitted by the end of 2020 in the event of a ‘no deal’ and by the end of June 2021 if the UK and EU agree a deal by the end of this year.
Where an applicant to the European Settlement Scheme has been resident in the UK for 5 years, they will qualify for settled status, and the right to stay permanently. Refusals are only in the case of criminal history.
Where an applicant to the scheme has been resident in the UK for less than 5 years, they are likely to get pre-settled status, meaning they can stay in the UK to gain full settled status after the 5 year mark.
Immigration Update – new ‘points based’ system for 2021
The government has recently announced the biggest overhaul of UK Immigration for decades. Announcements are being made daily on these plans, on UK youth mobility schemes and special categories. We will be with you on these with advice on what Employers need to do this year in preparation soon.