Employment law update: Good Work Plan

Contract of employment

The Employment Rights Act 1996 will be amended so that:

1. All workers (not just employees) will have the right to a written statement of terms of employment.
2. The scope of these statements is to be extended (also for employees). Further information is required within the statements of terms, including:
   1. The days of the week the worker is required to work, whether the working hours may be variable, and how such variations will be determined
   2. Any paid leave the worker is entitled to
   3. Details of all remuneration and benefits
   4. Any probationary period
   5. Any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the worker.
3. The written terms will need to be given to the worker on, or before, they start work (previously 2 months after the start of employment).

Our recommendations

Review your contracts of employment, update your templates, and create new templates for workers (your standard employment contract template may not be suitable for your arrangements with workers). 

Holiday pay

The Working Time Regulations 1998 will also be amended to increase the reference period for calculating holiday pay for those working irregular hours. The average will be worked out taking into account 52 weeks of pay, as opposed to the current 12 weeks.

This means that affected employees will benefit from the peaks and troughs of their employment over the whole year. It could also act to discourage the strategic taking of holiday after a particularly busy period.

Other changes

• All termination payments above a £30,000 threshold will be subject to class 1A National Insurance contributions (employer liability only).
• The Agency Workers (Amendment) Regulations 2019 will amend the 2010 rules and revoke the "Swedish derogation", which excludes agency workers from the right to the same pay as directly recruited workers if they have a contract of employment with an agency.
• A week's pay, for basic award and statutory redundancy purposes, increases from £525 to £538 for all dismissals.
• The maximum compensatory award for unfair dismissal claims increases from £86,444 to £88,519 (or a year’s salary - whichever is the lesser sum).

National minimum wage

This will rise, as follows, on 1 April 2020.

IR35

In a further move to crack down on perceived tax avoidance, the Government was due to enforce the new ‘off-payroll’ rules under IR35 as of this April (see more here). In response to pressures arising from the Covid-19 pandemic, these rules are now set to come into force a year later – 6 April 2021.

To discuss your employment queries with a legal expert, please get in touch with a member of the Employment team.