Government reforms (2):  April changes – are you ready?

There is perhaps something comforting in the fact that it is business-as-usual for employment law in terms of a number of changes coming into force in April, as is the case every year.

1 April 2020

Increase in National Living and Minimum Wage

The new rates are as follows:

• Age 25 plus: National Living Wage increase from £8.21 to £8.72 per hour;
• Age 21 to 24 (inclusive): increase from £7.70 to £8.20 per hour;
• Age 18 to 20 (inclusive): increase from £6.15 to £6.45 per hour;
• Age 16 or 17 (inclusive): increase from £4.35 to £4.55 per hour; and
• Apprentice rate:  increase from £3.90 to £4.15 per hour.

5 April 2020

Increases to the statutory rates for maternity (SMP), paternity (SPP), shared parental pay (SSPP), adoption (SAP) and sick pay (SSP)

Statutory rates for everything other than sick pay will increase from £148.68 to £151.20 per week or 90% of average earnings if lower.

Statutory sick pay (SSP) will increase from £94.25 to £95.85 per week.

Lower earnings limit

The amount of the weekly lower earnings limit that applies to National Insurance contributions (below which employees are not entitled to SMP, SPP, SAP, SSPP and SSP) is increasing from £118 to £120).

6 April 2020

Parental Bereavement Leave

See above.

Written statement of terms

We updated you in our January Blog that all workers, as well as employees, will be entitled to a written statement of terms. The Blog gives you some real detail about what you need to do as an employer.

From 6 April 2020, the written statement will need to be provided at the start of the employment or engagement (not within two months of starting work as was the case).

Statements must include a variety of new matters, including information about:

• which days of the week must be worked;
• whether or not such hours or days may be variable and, if so, how they vary or how that variation is to be determined;
• any terms and conditions relating to any paid leave other than holiday and sick leave;
• any other benefits not covered elsewhere in the statement (which includes both contractual and non-contractual benefits);
• details of any probationary period (this would in all likelihood include ‘trial shifts’), including conditions applicable to it and its duration;
• details of any training entitlement, and any part of that training entitlement which is compulsory; and
• details of any other compulsory training which the employer will not pay for.

Transitional arrangements mean that updated written statements do not have to be issued to existing employees as a matter of course.

Holiday pay

The period over which average holiday pay is calculated for employees without normal working hours, or who have variable remuneration, is being extended from 12 to 52 weeks.

The new legislation does not cover the calculation of holiday pay for workers with “normal working hours” whose pay does not vary. For these workers, case law so far has said that any calculation of what commission and overtime etc. to include in holiday pay should be based on average pay over a “representative“ period. In practice, even although the new legislation does not apply to these workers, it might result in Tribunals being more inclined to view 52 weeks as being “representative“.

Increases in Statutory Redundancy Pay, other statutory payments and Tribunal awards

The usual annual increase in statutory payments and Tribunal awards includes the:

• maximum limit for a statutory week’s pay (used to calculate statutory redundancy payments and the basic award for unfair dismissal) from £525 to £538.
• maximum compensatory award for unfair dismissal from £86,444 to £88,519. (Although the award is unlimited for certain automatically unfair dismissals, for example, health and safety or whistleblowing).
• maximum basic award for unfair dismissal and statutory redundancy payment from £15,750 to £16,140. That makes the maximum total basic and compensatory awards for unfair dismissal £104,659 (generally subject to a limit of 52 weeks’ actual pay).
• minimum basic award for certain automatically unfair dismissals from £6,408 to £6,562 (i.e. those due to due to health and safety, employee representative, trade union, or occupational pension trustee reasons).

The new rates take effect where the ‘appropriate date’ for the course of action, such as the date of termination in an unfair dismissal claim, falls on or after 6 April 2020.

Agency workers – Swedish derogation

The “Swedish derogation“ under the Agency Workers Regulations currently allows employment businesses to avoid pay parity between agency workers and direct employees if certain conditions are met. This derogation will be removed from 6 April 2020. Agencies must inform relevant agency workers by 30 April 2020 that it no longer applies.

In addition, from 6 April 2020 all employment businesses will have to provide agency work-seekers with a key facts statement, before agreeing the terms by which the work-seeker will undertake work. The document must be headed “Key Information Document“, be separate to any other documents provided to the work-seeker, and include specific information. Guidance on the key information document is available here.

Information and Consultation

The Information and Consultation of Employees Regulations 2004 (sometimes referred to as the ICE Regulations), are being amended to lower the threshold of employees required for a valid request to start negotiating an agreement on informing and consulting employees.  The threshold is being lowered from 10% of the workforce to 2% (subject to a minimum of 15 employees).