Five crucial HR resolutions for 2020
Changes in employment law are coming - is your organisation ready, asks Goodman Derrick's Katee Dias
There is a lot going on in 2020 in the world of employment law. Human resources professionals and those with HR responsibilities will need to resolve themselves to get on top of these changes. Below are five New Year resolutions that should help organisations with this task.
New Year Resolution 1: Update Employment Contract Template
From 6th April 2020, there are going to be some fairly major changes to the way we have been issuing employment contracts. Firstly, there will be additional details that need to be included (like training entitlements, details of benefits and paid leave). Also, existing contractual provisions may need further elaboration compared to what you do currently (such as hours of work, especially where the employee's hours vary).
Secondly, all employees (even those with less than one month of service) will need to be provided with an employment contract and, importantly, the contract will need to be given to the employee on day one of their employment at the latest (rather than having two months from the start of employment as we do now). This means that employers need to start getting ready for this change in good time.
New Year Resolution 2: Create Worker Contract Template
We are familiar with issuing contracts to employees but the same requirements will also apply to workers from 6th April 2020. The first step will be to identify if the organisation will be engaging any workers. A "worker" falls somewhere between an "employee" and a "self-employed" individual. A worker has more employment rights that the self-employed (for example, the right to paid holiday) but less rights than an employee (for example, a worker cannot claim unfair dismissal). In the tech sector, it is not uncommon to have employees, workers and freelancers so a careful analysis will be needed to check that the label you use accurately reflects their true employment status as seen by the law.
When you are drawing up a worker contract template, do bear in mind that although the prescribed information that must be included is identical to that which must be contained in an employment contract, there are some parts that do not always fit easily with the "worker" scenario. For example, you would not normally discipline a worker (as that could suggest that the individual is an employee, rather than a worker) but yet you will be required to specify who the worker should contact if they wish to appeal a disciplinary decision. Careful thought will need to be given as to how to address such issues.
New Year Resolution 3: Make Status Determinations
As mentioned above, in the tech sector, self-employed freelancers are often engaged. Some of those individuals might be engaged via their own personal service company. From 6th April 2020, there will be new tax rules applying where a personal service company, partnership or individual acts as an intermediary to provide the services of an individual to perform work for a client.
The end-user client (being the tech company where the freelancer actually carries out the work) will first need to check that they are not exempt from these new requirements, as only medium and large businesses will be subject to the new rules.
If the rules do apply, then you need to assess the employment status of the individual carrying out the work and issue what is known as a "status determination statement". Essentially this is a notice that sets out your conclusion (namely whether the individual is employed or self-employed for tax purposes) and reasoning. Careful analysis of employment and tax law principles will be needed and the government have launched an online tool called "check on employment status for tax" service which will provide a starting point.
Depending on the conclusions you reach, you might need to start deducting income tax and national insurance contributions from future payments you make to the intermediary.
New Year Resolution 4: Update Holiday Pay Calculations
The current rule when calculating holiday pay for those that have variable hours is to look back over the last 12 weeks of work to calculate the appropriate rate of pay. However, it is acknowledged that this does not always produce fair results. Therefore, from 6th April 2020, the reference period will be extended to 52 weeks (or, if less, the number of weeks they have worked). This could be an important change if you engage casual workers.
New Year Resolution 5: Keep Up To Date
Many other employment law reforms are on the horizon, from the requirement for a key facts information document to be given by employment businesses to each agency worker and changes to the tax rules concerning termination payments, to greater protection for those returning from family leave and a new legal right for workers to request a stable working pattern. Employers will need to keep on top of all of these developments so they can be ready to react and implement them.
Katee Dias is a senior associate in the employment team at Goodman Derrick LLP, the London law firm. www.gdlaw.co.uk