U.K Labor Law Changes – April 2020

Erez Greenberg January 30, 2020

A number of big labor law changes are set to take place in the United Kingdom in April 2020. We outline some of the key changes taking place below.

Parental Bereavement Provision

The Parental Bereavement Provision will allow for parents and primary carers who have lost a child to take at least two weeks paid paternal leave. Leave will be given for the death of a child under the age of 18 and to parents who have had a stillbirth after 24 weeks of pregnancy. Paid leave will be granted to any employee who has at least 26 weeks of continuous employments. This includes parents, adopters, foster parents, or any guardian who is responsible for the child’s care. Payment will be given at the statutory rate.

Holiday Pay Reference Period

Holiday reference period will be increasing from the current 12 weeks to 52 weeks and will be used to calculate and determine employee’s holiday pay for seasonal workers or those with abnormal working hours.. This means that any employee with at least 52 weeks of continuous employment will now be given a 52-week reference period. Any employee who has worked less than 52 weeks will receive a reference period equal to the number of weeks they have been employed.

Amendments to Agency Workers/Swedish Derogation Contracts

Swedish Derogation is an employment system that allows for agencies and clients to hire temps directly, at the rate the temp agency and client agree upon. This legal loophole has allowed employers to avoid equal pay to agency workers, causing discrimination. Beginning April 6th, 2020, Swedish Derogation will be abolished creating pay parity between agency workers and permanent employees. This amendment will enforce equal pay and working conditions to agency workers after they have completed 12 weeks of continuous employment.

By April 30th, 2020, all temp agencies must provide agency workers who are under a Swedish derogation contract a written statement that the derogation is invalid and that they will now qualify for equal pay.

Right to Written Statement

Currently, employers are not required to provide employees with a written statement of particulars before the second month of employment. However, beginning April 6th, 2020, all employers will be required to provide employees with a written statement either before, or on their first day of work. Alongside this change, it will be required to add additional particulars to the content of the statement to provide better clarity for all parties involved.

Additional information will be:

  • Working hours
  • Paid leave
  • Additional benefits
  • Probationary period specifics
  • Training

Employers should know individuals who began employment prior to April 2020 are not required an updated contract unless the employee specifically requests a section 1 statement. If the employer is asked, they must meet the new standards. Also, any changes made to section 1 statement must be made within a month’s time, and notifications must be provided to employees and workers regardless of their start date.

Tax on Termination Payments

Tax on termination pay was delayed from April 2018 but will now come in affect April 6th, 2020. This change will make employers liable to pay National Insurance Contributions (NICs) towards their employee’s termination payments that exceed the £30,000 threshold. It is currently understood that these payments will be collected during the employees normal weekly or monthly payroll.

It will also become mandatory that payments in lieu of notice (PILONs) be taxable and subject to Class 1 NICs. This means that the employer will be required to determine the total basic pay the employee would have earned if they had continued through their notice period, even if they left prior to completion. This amount will not be subject to the £30,000 Income Tax exemption; however, all other termination payments will be part of the £30,000 termination payments exemption.

IR35 Changes

Changes to IR35 will also be happening in April, so be sure to read our full post here.