Scotland: Staying 2020 – A clear view of upcoming changes in employment law
The New Year has now arrived and brings with it some important employment law changes. Make sure your business doesn’t lose sight of the following key changes this year:
1) New reference period rules for calculating holiday pay
The reference period used to calculate holiday pay for workers and employees with variable pay is changing on 6 April 2020. Currently, the calculation period includes pay that a worker receives during the 12 weeks worked prior to taking a holiday.
The reference period will be changing to 52 weeks, or the number of weeks of employment if a worker has been employed for less than 52 weeks.
As such, employers must consider when and how to address this change. For the purposes of holiday, many businesses begin their year on 1 January. If that is the case, you need to decide whether to change the way you calculate holiday pay on 6 April, or at the start of your holiday year.
The Christmas period often involves overtime for some sectors, which could have repercussions on holiday pay if you switch to the new system in January. It could also mean that people who work the same hours receive different holiday pay, simply because of the dates they take leave, so this must be taken into account. Also if your financial year ends after 6 April, the value of accrued but untaken holiday will increase, meaning you may wish to limit how much holiday can be carried forward. These changes are important to get right to avoid potential holiday pay claims.
2) Changes to the tax treatment of off-payroll labour
From 6 April 2020, changes to tax legislation regulating off-payroll working (commonly known as IR35) also come into effect. These new rules will require larger private sector businesses to deduct income tax and National Insurance contributions via payroll from fees for services paid to a personal service company (PSC) where the individual performing the services would, but for the PSC, ordinarily be regarded as an employee of the client company for tax purposes.
If your business utilises the services of any individual operating through a PSC this is an important change to be aware of to avoid HMRC penalties.
3) Written particulars of Employment will be a “day one right” for workers and employees
Section 1 of the Employment Rights Act 1996 (ERA) requires that all employees are at a minimum provided with a written Statement of Particulars of Employment containing certain basic details within 1 month of starting employment. From 6 April 2020 this is being altered in three key ways:
• This will now become a “day one right” for those employed after 6 April 2020;
• The change will cover workers as well as employees; and
• The statement must to cover additional information, such as: probationary periods, any variation in working hours, and “any other benefit provided by the employer”.
While many employers provide contracts which go above the requirements of section 1 of the ERA, businesses with more basic contracts should take time to consider whether what they have is fit for purpose.
4) Bereavement Leave
The government has confirmed that parental bereavement leave will be introduced in April 2020.
This new entitlement means that parents, or primary carers (which includes adoptive parents, foster parents and guardians), will be entitled to at least two weeks’ leave following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy.
Employees with 26 weeks’ continuous service will receive paid leave at the statutory rate and other staff will be entitled to unpaid leave. Further details of this scheme are currently awaited.
5) Potential extension of legal protections from discrimination for philosophical beliefs in veganism and climate change
Many will have been watching with interest the number of important cases this year concerning what could constitute a “philosophical belief” and therefore be eligible for protection from discrimination under the Equality Act 2010. The two most notable recent cases held that both a belief in climate change; and separately, ethical veganism could be protected philosophical beliefs. More cases similar to these are in the pipeline, so watch this space and we will update you on developments.
6) Removal of the Swedish Derogation
Finally, the "Swedish derogation" in the Agency Workers Regulations 2010 will be removed by the Agency Workers (Amendment) Regulations 2019 on 6 April. This allows differences in pay between agency workers and direct employees of an employment business if certain conditions are met.
From 6 April 2020 employment businesses must provide agency work-seekers with a key information document, including information on the type of contract, the minimum expected rate of pay, how they will be paid and who will pay them. Also by no later than 30 April 2020, such employment businesses must provide agency workers whose existing contracts contain a Swedish derogation provision with a written document advising that this no longer applies.
Written by: Meghan Jenkins
For more information about any of the above or for specific advice, please call 0141 303 1100 and ask to speak to a member of our specialist employment team.
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