Here’s what employers need to know
Important new changes to employment regulations are due to come into force on 6 April 2020. The plans were first revealed in December 2018, when the Government announced proposals for its new Good Work Plan.
The raft of proposed new legislation promises to both increase transparency and strengthen the rights of workers in ‘unsecure’ employment.
But how will the changes affect businesses and, in particular, how you deal with payroll?
Full details of the proposal are available to view on the Government’s website here.
To help you get to grips with the key changes, here is a brief rundown of how the new Good Work Plan will most affect employers’ practices.
Written contracts of employment
The plan introduces several changes to the rights to receive a written Statement of Main Terms (SMT) with effect from 6 April 2020.
This document includes an employee’s key terms of employment including pay and annual leave entitlement and employers currently have two months to provide it to a new employee. The grace period will be removed meaning the SMT is to be removed so employers will have to give the SMT to the employee no later than the commencement date of employment.
In addition, more details will have to be included in the SMT, as follows:
- Duration of and conditions attached to any probationary period
- All paid leave entitlements
- All benefits the employee receives
- An employee’s training entitlement
- The days of the week the employee is required to work on and whether normal working hours are variable or not. If they are variable, information must be included on how they vary or what determines the variation
Significantly, employers will have to provide an SMT to their ‘workers’, as well as their employees. Currently, only employees are entitled to receive this document, but workers including zero hours workers and casual workers will also be brought within scope.
The mandatory reference period for calculating holiday pay will increase.
From 6 April 2020, employers will have to use a reference period of 52 weeks, (instead of the current 12 weeks) when calculating holiday pay for staff whose pay varies, including the zero hours workforce. This calculation method will result in a payment which balances out any peaks and troughs of working hours throughout the year.
‘Swedish derogation model’ contracts for agency workers will be banned from 6 April 2020. These contracts proceed on the basis of a legal loophole to avoid the requirement to pay agency workers the same basic pay as direct recruits at the hirer organisation after 12 weeks of an assignment.
Those who are currently engaged on these contracts will be entitled to a statement to explain the effect of the ban on their pay. As a separate measure, all agency workers will be entitled to a key facts sheet explaining the details of their payment etc.
The Government has confirmed that the tests used to determine who is an employee, worker or self-employed will be adjusted. The results of this are likely to be that many self-employed individuals will be re-classed as workers.
Right to request stable contracts
Another key change is the introduction of the right to request a more stable contract, which will be available to all workers that have accrued 26 weeks’ service. Workers will be able to request, for example, guaranteed hours or a more stable working pattern and employers will be under a duty to consider it. No implementation date has yet been set for this change.
It is important to be aware that Brexit and a potential General Election may, of course, delay these proposals. At this stage, our advice is to work on the basis of a “be prepared” plan, on the assumption that these proposals come into force in April 2020.
Is your payroll function ready for the changes?
At Macalvins, our specialist payroll team are here to ensure you remain compliant. By outsourcing your payroll to us, we can help make the necessary adjustments as and when they are required, allowing you to do what you do best – running a successful business.
For help and advice on the proposed Good Work Plan and how you can ensure your business is fully prepared, please get in touch.
Get in Touch
We offer no obligation meetings so you can pop in and see if Macalvins is right for you free of charge. You can rest assured that with Macalvins we shall be moving forward together. We look forward to hearing from you