National minimum wage and other statutory rate increases
The rates for the national minimum wage increased on 1 April 2020. The national living wage rate, for workers aged 25 and over, increases from £8.21 to £8.72.
The rates for younger workers will also increase, with hourly rates rising to £8.20 for workers aged at least 21 but under 25; to £6.45 for workers aged at least 18 but under 21; and to £4.55 for workers aged under 18 who are no longer of compulsory school age. The rate for apprentices has risen to £4.15.
Other statutory rates have also increased:
- Statutory redundancy pay calculations – from 6 April weekly pay is capped at £538 and the maximum statutory redundancy pay which can be received is £16,140.
- The rate for statutory maternity, adoption, paternity and shared parental pay has increased to £151.20 effective from 5 April.
- The rate for Statutory Sick Pay (SSP) increased on 6 April 2020. The new rate is £95.85 per week. SSP remains payable for up to 28 weeks and is payable when staff are off sick for four or more days in a row.
- SSP and Coronavirus: Where a member of staff is unable to work because of self-isolating due to Coronavirus, they may receive SSP for every day they are in isolation. To be eligible, the member of staff needs to self isolate for at least four days. A member of staff who is self-isolating can get an isolation note online from NHS 111 if they are off work in self-isolation for 7 or more days.
Parental Bereavement Leave and Pay
On 6 April an addition to the Employment Rights Act 1996, called Parental Bereavement Leave came into force to support parents who have experienced the devastating loss of a child.
This entitles parents to up to two weeks’ leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy.
Parental bereavement leave
- The right is a Day 1 right, so no minimum period of employment is needed.
- The right is to take one or two weeks to leave (beginning on any day of the week) – either in one block of 2 weeks or two blocks of 1 week each. The leave may be taken at any time within 56 weeks of the child’s death.
- If more than one child dies, the bereaved parent is entitled to leave in respect of each child.
- Notice of a request to take this leave doesn’t have to be in writing – a phone call will be sufficient.
Parental bereavement pay
- To be entitled to statutory parental bereavement pay the bereaved employee needs to have been employed by the employer for a continuous period of at least 26 weeks as at the week immediately before the one in which the child dies and to have normal weekly earnings not less than the lower earnings limit.
- Statutory parental bereavement pay will be at the rate of £151.20 per week (or 90% of earnings if lower).
- The evidence of entitlement required is the name of the person claiming the statutory parental bereavement pay, the date of the child’s death and a declaration that the employee is a bereaved parent. This needs to be provided in writing.
Changes to written statements of employment particulars
There are three important changes to written statements, from April 6th 2020:
- All workers employed on or after 6th April 2020 will be entitled to a written statement of employment particulars.
- Employees and workers must be provided with their written statement on or before their first day of employment (and not within two months of starting work, as previously).
- There is additional information that written statements will need to contain. In addition to the current information which must be provided for all new joiners, from 6 April 2020 the statement should also include:
- how long a job is expected to last, or the end date of a fixed-term contract
- how much notice the employer and worker are required to give to terminate the agreement
- details of eligibility for sick leave and pay
- details of other types of paid leave e.g. maternity leave and paternity leave
- the duration and conditions of any probationary period
- all remuneration (not just pay) e.g. vouchers, lunch, health insurance
- the normal working hours, the days of the week the worker is required to work, and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determined
- any training entitlement provided by the employer, any part of that training entitlement which the employer requires the worker to complete, and any other training which the employer requires the worker to complete and for which the employer will not bear the cost.
Agency Workers’ Rights – Abolition of the Swedish derogation
The Agency Workers Regulations (AWR) 2010 were introduced in order to protect all agency workers by giving them equal rights to their employed counterparts, by stating that temporary workers employed for more than 12 weeks by the same employer have a right to enjoy the same pay and employment conditions as permanent staff.
However, a Swedish derogation contract allows the agency, rather than the client, to employ the worker on a permanent contract, with a lower salary, less employment benefits, and up to four weeks reduced pay in between assignments.
Due to concerns that the Swedish derogation is being used by some recruitment agencies to avoid implementing equal pay, from April 6, all agencies and their workers must work in accordance with the AWR 2010, with no get-out clause attached.
Therefore, from 6 April all agency workers, after 12 weeks, will be entitled to the same rate of pay as their permanent counterparts.
Agency Workers’ Rights – Provision of a key information document
All agency workers must be given a key information document before agreeing terms with an employment business. This regulation does not apply to agency workers already working for a business, but from April 2020, when they sign up with a new firm, they will be entitled to a key information document.
Further information about what should be included in a key information document is available here.
Changes to holiday pay calculations – reference period adjustment
The calculation of holiday pay can be complicated, particularly for those with variable hours and variable rates of remuneration. Until April the holiday pay reference period (i.e. to calculate average weekly pay) was 12 weeks.
However, from 6 April the holiday pay reference period will increase from 12 weeks to 52 weeks. This change is being introduced as part of the government’s Good Work Plan and is intended to prevent workers missing out on holiday pay if they take their annual leave in the 12 weeks after a quiet period.
Employers will need to pay workers who work variable hours their average weekly pay, calculated over the previous year, rather than the previous 12 weeks.
Lowering the information and consultation threshold (ICE Regulations)
The Information and Consultation of Employees Regulations 2004 (ICE Regs) allow employees the right, subject to certain conditions, to request that their employer communicates and consults with them about issues within the business.
Currently, at least 10% of employees (with a minimum of 15 employees) have to make a valid request to set up information and consultation arrangements in order for employers to set up or change those arrangements. From April 2020, that threshold will reduce to 2%. The requirement that at least 15 employees make the request will remain.
Taxation of termination payments
Previously, termination payments above £30,000 were subject only to income tax. From April 6 2020, however, employer class 1A NICs will become payable too. Termination payments will remain exempt from employee NICs.
IR35 Tax Rules – delay to extension
It has been announced that the extension of IR35 tax rules to private-sector employers will be delayed until 6 April 2021.