Phase 3 are committed to supporting our clients with changes to legislation which affects HR and Payroll systems. Our summary here is designed to highlight changes to legislation which would directly affect your people technology.
New right to a written statement of terms
From 6 April 2020, all new employees and workers will have the right to a statement of written particulars from their first day of employment. Previously the employee would have to be issued if they had been employed continuously for more than one month.
Given the new obligation is to provide particulars on ‘day one’, HR teams should start preparation of the revised statement of particulars during the recruitment stage and ensure that these include every element of the new requirement. Employers will need to consider who might qualify as a worker, issuing contracts of employment only to employees and using a separate template when issuing particulars for workers.
Holiday pay reference period adjustment
The calculation of holiday pay can be complicated, particularly for those with variable hours and variable rates of remuneration. Currently, the holiday pay reference period (the period in which the employer looks back to determine earnings) is 12 weeks.
From 6 April 2020, the holiday pay reference period will increase from 12 weeks to 52 weeks. Employers will be required to look back at the previous 52 weeks where a worker has worked and received pay, removing any weeks not worked or where no pay was received, to calculate the average weekly pay. This could mean reviewing pay records for up to 104 weeks to find the 52 earnings periods which contained pay.
Where a worker has been employed by their employer for at least 52 weeks, the reference period is increased from 12 weeks to 52 weeks. Where a worker has been employed by their employer for less than 52 weeks, the reference period is the number of weeks for which the worker has been employed.
This change is intended to help to even out the variation in pay for workers, particularly those in seasonal or atypical roles.
Parental Bereavement Leave
The Parental Bereavement (Leave and Pay) Act 2018 comes into force in April 2020. The result of the legislation is that bereaved parents will have the right to two weeks of leave following the loss of child under the age of 18, or a stillbirth after 24 weeks of pregnancy.
Details of the new entitlement and those who will qualify will be set out in separate regulations. Bereaved parents will be entitled to take their leave in one two-week block or in two separate blocks of one week. The leave must be taken before the end of a period of at least 56 days beginning with the date of the child’s death.
Bereaved parents employed with a minimum of 26 weeks’ continuous service will also be entitled to receive statutory parental bereavement pay. Those with less than 26 weeks’ continuous service will be entitled to take two weeks of unpaid leave.
Agency Workers – the Swedish Derogation
In the ‘Good work plan’ published in December 2018, the government made a commitment to abolish a legal loophole known as the ‘Swedish derogation’ in the rules governing the use of agency workers. This allowed agencies to opt out of equalising the pay of agency staff with the permanent workforce when they had been with the same employer for more than 12 weeks, provided they paid the agency workers between assignments.
The opt-out will cease on 6 April 2020 when the Agency Workers (Amendment) Regulations 2019 come into force.
Tax on Termination Payments
Up to 5 April 2020, deductions from termination payments in excess of £30,000 is limited to income tax only. The new NIC legislation which takes effect from 6 April 2020 ensures that any termination payment in excess of £30,000 which is defined as taxable, will also attract a Class 1A NIC liability at the usual 13.8 per cent on the balance above the £30,000.
This means that only the employer suffers the NIC charge not the employee meaning systems will need to be able to cope with NIC being deducted from Employers only.
If you need support with payroll year-end or any further help from a HR technology consultant, please get in touch.
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