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  • Employment Law Round-up: April 2020
News 1
15
Apr
Employment Law Round-up: April 2020
News

Key changes with effect from 6 April 2020

Changes to written statement of employment particulars: For joiners on or after 6 April 2020, a written statement of certain key terms of employment must be given on or before their first day of employment. The minimum written terms have now been extended to include the details of any probationary period, the hours and days that the employee is required to work, any entitlement to paid leave, any other benefits not mentioned in the written statement and details of certain training provided by the employer.

Action point for employers: Ensure offer letters and contracts are amended to include all of the new mandatory details and HR processes are set up to deal with this.

Paid bereavement leave introduced: Employees will qualify for two weeks’ parental bereavement leave if they have a child who dies aged under 18 or they suffer a stillbirth after 24 weeks of pregnancy. Workers and self-employed contractors do not qualify. The leave must be paid if the qualifying employee has at least 26 weeks’ service. The leave is then paid at the same rate as statutory maternity and paternity pay, £151.20 per week or 90% of average weekly pay if less.

Action point for employers: Add a parental bereavement policy to staff handbooks and train managers on how to deal with requests made under this new policy.

Employment Law team

New rules for calculating holiday pay for shift or casual workers: The reference period for calculating holiday pay is now 52 weeks, not 12 – but only where the employee’s pay varies depending on their shifts, or for casual employees who have no normal working hours.

Action point for employers: Check that holiday pay is being calculated and paid correctly and that your payroll staff are aware of this new requirement.

Changes for agency workers: Agency workers who had previously agreed to be exempted from the right to equal pay with permanent comparators (under what was known as the “Swedish Derogation”), no longer have this right. After 12 weeks of service, all agency workers are entitled to the same rate of pay as permanent comparators. All employment businesses engaging with agency workers must give the agency worker a “Key Information Document” before agreeing terms of work with them.

Action point for employers: Assess the financial cost of paying any such agency workers in line with permanent staff and consider re-negotiating contracts with the business supplying the agency worker to defray the cost.

Employer NICs now chargeable on termination payments above £30,000: Previously, the element of termination payments above £30,000 was only subject to income tax. While that excess will remain free from employee NICs, employer class 1A NICs will be chargeable on the excess from 6 April 2020.

Action point for employers: Ensure the additional cost of this is considered when putting together settlement offers to staff in excess of £30,000.

Increases in rates and limits:

  • The maximum “week’s pay” for calculating redundancy pay and basic awards is now £538, up from £525.
  • The unfair dismissal compensatory award cap for dismissals on or after 6 April 2020 is now £88,519 (or a year’s salary, if lower) – an increase from £86,444.
  • The National Minimum Wage rate increases to £8.72 hourly for workers aged 25 and above, £8.20 for workers aged between 21-24 and £6.45 for workers aged between 18-20.
  • Statutory Sick Pay increases to £95.85 per week and statutory maternity/maternity/adoption and shared parental pay increases to £151.20 per week.

Morrison’s supermarket held not liable for employee’s data breach

In the long-running case of WM Morrison Supermarkets plc v. Various Claimants, the Supreme Court has confirmed that employers are not vicariously liable for data breaches where the unauthorised actions of an employee done outside the course of their employment have no obvious close connection to their authorised employment activities.

Key considerations for employers: While this is a good and sensible judgment, it is fact-specific and employers can still face vicarious liability where employees make human errors or commit acts of misconduct that are closely connected to their authorised employment activities. Employers should ensure that employees are only able to access the data they need to do their jobs, have robust incident response plans in place to deal with employee data misuse and keep a clear paper trail to show the acts that an employee is not authorised to perform.

Restrictive covenants in shareholder agreement upheld

12 month long restrictive covenants in a shareholders’ agreement were held to be enforceable by the Court of Appeal in Guest Services Worldwide Ltd v Shelmerdine. The restrictions only began to “bite” when the individual stopped being a shareholder – which could have been many years after his consultancy arrangement ended.

Key considerations for employers: Remember that restrictive covenants can (and often should) be added to shareholders’ agreements and this judgment is a reminder that they can potentially be relied upon for many years after the individual has left their employment if they continue to hold shares.

IR35 reform pushed back to 2021

The extension of the IR35 tax rules to private sector employers has been deferred for a year as a result of the COVID-19 outbreak. They will now take effect on 6 April 2021.

The COVID-19 furlough scheme

Can you rotate employees on and off? What happens to their holiday? Read more in our COVID-19 Legal Guidance hub.

Key considerations for employers: Remember that this is merely a deferral, not a cancellation of the changes. Employers who receive services through individuals’ personal service companies should still prepare for the potential significant liability for tax that could be incurred as a result of the changes. The extra 12 months to prepare may also mean HMRC is less willing to be “light touch” on penalties, given the additional time employers will have to prepare.

To discuss specific issues arising at your business, please contact Carl Vincent, Paul McAleavey or David Morgan who will be happy to help.

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.

Authors

Paul McAleavey

Partner
Employment Law
upper shape

Our Experts

Carl Vincent

Head of Department
Employment Law

Paul McAleavey

Partner
Employment Law

David Morgan

Senior Associate Solicitor
Employment law

Will Chrusciel

Assistant Solicitor
Employment Law

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