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Employment law changes 2020: the top priorities for HR managers

Part two: Changes in 2020

In this second part of our look ahead at employment law changes, we focus on changes in the pipeline for 2020 that businesses need to be considering and planning for this year.

Changes to IR35

IR35 is tax legislation that was introduced in 2000 and is aimed at combating tax avoidance by individual contractors not genuinely in business on their own account (i.e. whose working practices are akin to those of employees) supplying their services through their own limited company.

IR35 had limited impact and, in 2017, the Government introduced changes to curb the use of “off payroll workers” (e.g. limited company contractors) in the public sector.  The changes had a significant impact on the use of limited company contractors in the public sector, many of whom were in reality employees.

Currently, in the private sector, the burden lies on the individual contractor who operates through the limited company to decide whether IR35 legislation applies and to account for the correct tax due. However, from 6 April 2020, every medium and large private sector business in the UK will become responsible for setting the IR35 tax status of the contract workers they engage.

Businesses should review the arrangements they have with their contractors and consider whether they wish to make any changes to the way they engage contractors.

Employer National Insurance Contributions on termination payments

From 6 April 2020, Class 1A employer National Insurance Contributions (‘NIC’) will be payable on termination payments over £30,000.

Termination payments will remain exempt from employees’ NIC, even if over £30,000.

Parental bereavement leave and pay

The new Parental Bereavement Leave and Pay Act will give all employed parents a right to 2 weeks’ leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy. Employed parents will also be able to claim pay for this period, subject to meeting eligibility criteria.

Although the new right is not expected to come into force until April 2020, employers should start preparing for it during 2019 and could decide to introduce their own bereavement leave policy.

Ethnicity Pay Gap reporting

Following the introduction of Gender Pay Gap reporting, in Autumn last year the Government began consultation on the introduction of mandatory Ethnicity Pay Gap reporting for large employers. Consultation closed on 11 January 2019 and we await the results.  However, prudent businesses should begin planning for the introduction of Ethnicity Pay Gap reporting by analysing statistics this year, before mandatory reporting obligations are introduced, to ascertain whether there are any obvious areas for improvement.

Good Work Plan

In December 2018, the Government committed to a wide ranging policy ensuring that workers and employers can access fair and decent work.  Some of the key changes include:

  • new legislation to upgrade workers’ rights, including a Day 1 statement of rights for all workers setting out leave entitlements and pay;
  • plans to bring forward proposals for a new single labour market enforcement body to ensure workers’ rights are properly enforced; and
  • an end to Swedish derogation, which enables some firms to pay agency workers less than permanent staff.

Further details of how these changes will be implemented in practice will come out later this year.

If you want to find out more about how to prepare for these changes or what they might mean for you, please contact a member of  our Employment Team.

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