Blog: What will be new for Employers 2020?

Chris Moses LLM Chartered FCIPD is Managing Director of Personnel Advice & Solutions Ltd.

He is a Chartered Fellow of the Chartered Institute of Personnel and Development, and has a Master’s Degree in Employment Law.

If you have any questions regarding the below issues please feel free to contact him on (01529) 305056 or email p.d.solutions@zen.co.uk

1. Employment Contracts. Workers and Employees will be entitled to receive Employment Contracts from the start of their Employment.  Currently the legal requirement is for written particulars to be issued not later than two months after the start date. From April 2020 new recruits will need to be given their terms and conditions on their start date. This requires Employers to issue specific written particulars, which include:

• Names of both parties

• Start Date

• Pay & payment method

• Hours of work

• Holiday entitlement

• Sick Pay entitlement

• Pensions

• Notice Requirements

• Job title and related activities

• Location of work (including outside the UK)

• Any Collective Agreements

The details do not have to be in a Contract, a Letter of Appointment could include all of these details.

2. Calculating Holiday Pay. Following a surge of case law over the past five years, most Employers are now aware that holiday pay for people whose pay regularly fluctuates, cannot be based on the bare minimum contracted hours.  If workers receive overtime, bonuses and commission, these need to be included in the holiday pay calculation.  Current legislation requires Employers to calculate the average pay over the 12 weeks leading up to the period of paid leave.  This can create a problem.

Many Employers prevent staff taking leave during busy times of the year, and then allow them to take time off when things quieten down.  This means that the 12 week calculation period may well cover the busy times, when workers were possibly doing a lot of overtime which pushed their earnings up.

Consequently their holiday pay will be higher than during quiet periods.

This can result in a rush of holiday bookings by staff to take time off after busy periods.  To resolve this, the reference period is being moved from 12 weeks to 12 months.  As a result, seasonal fluctuations will be ironed out.

3. IR35 for the private sector. Contractors working in the private sector will need to complete the HMRC IR35 online test to establish their self-employed status and exempt their customer from having to deduct PAYE and NI from their payments.

Details will be announced in the Autumn Budget; however the tests which will be applied are based on the following long established criteria.

Control:  Does the Contractor work under the direct managerial control and supervision of their customer?  If so they are acting as an Employee.

Financial Investment:  Does the Contractor provider their own tools and equipment, or rely on their customer to provide them.  If they provide their own tools, they are acting as a self-employed contractor.

Interchangeability:  Can the Contractor send someone else to do their work?  If not, and the customer expects the same individual to carry out, they are treating them as an Employee.

Mutuality of Obligation: Does the Contractor expect to get regular hours of work and does their customer expect them to work on an ongoing basis? If so, the Contractor fulfils the definition of an Employee.

4. Zero Hours Contracts. Many people who are engaged on a zero hours contract, in actuality work regular weekly hours.  In practice they can expect to work a minimum number of hours per week, plus additional hours when needed.

In effect, these people are not zero hour’s workers, but guaranteed minimum hours workers.  From 2020 such individuals will be able to request a change of contract from zero hours to guaranteed minimum hours.  The Employer can object, but objections would need to be based on specific statutory reasons.

Published research can be viewed at   https://ssrn.com/author=2701127