Relevance: All settings 

The hourly rates of the national living wage and national minimum wage will increase on 1st April 2020. Current and future rates are as follows:

  Relevance: All settings 

The expected annual increases to the various statutory rates for 2020/21 are as follows:

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Legislation: The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018

In its Good Work Plan published in December 2018, the Government committed to a range of policy and legislative changes with the aim of ensuring access to “fair and decent” work and improving clarity for employers and workers. Some of these measures take effect from April 2020.

This particular change, to holiday reference periods, only impacts on workers with irregular hours (e.g. casual and seasonal workers). Currently, when determining a “week’s pay” for such a worker (to calculate how much to pay the worker for a week’s holiday), an average of the previous 12 weeks is taken, excluding any weeks in which no remuneration was payable and going back further as necessary to bring the total to 12.

The amount of holiday pay for a worker with no set hours would therefore fluctuate across the year in accordance with working pattern, resulting in opposing incentives for some employers and individuals as to when to take holiday. By increasing the reference period to 52 weeks instead of 12 it is intended that workers will have greater flexibility on when to take holiday in future.

Some schools, MATs and local authorities still pay casual and atypical workers holiday pay on an accrual basis (either as an hourly holiday pay ‘premium’ on top of normal pay or by accrual of hours’ holiday based on hours worked) so will not currently use reference periods to calculate holiday at all. In light of the Court of Appeal judgment in The Harpur Trust v Brazel, it is likely that employers will increasingly move away from such practices which are deemed to be incompatible with the calculation for holiday pay under the Employment Rights Act 1996. See more on the Harpur Trust ruling in our briefing note on the subject.

Last updated: 9th December 2019

  Relevance: All settings 

Draft legislation: Finance Bill 2019 - amendment to Part 2 of the Income Tax (Earnings and Pensions) Act 2003

Schools and colleges in the public sector are already well-versed in the changes to intermediaries legislation (usually referred to as IR35) which came into force in April 2017. These changes generated an extra £550 million in Income Tax and NI contributions in the first 12 months. From 6th April 2020 these changes are being extended to medium and large organisations in other sectors and will have effect for contracts entered into, or payments made, on or after this date. There will also be some minor adjustments to the rules which will affect public sector employers.

Private Sector Changes

The rules are intended to ensure that an individual who works like an employee, but through their own limited company, pays broadly the same Income Tax and National Insurance contributions as other employees. The change to the rules shifts responsibility for operating IR35 from the individual’s personal service company to the organisation that the person is supplying their services to.

In the private sector there will be an exemption for small companies which can continue to apply the existing IR35 rules. The draft legislation lays out how this exemption is expected to operate but the definition of small company is in line with the existing statutory definition within the Companies Act 2006. Small companies will satisfy at least two of the following conditions:

• Annual turnover not more than £10.2m;
• Balance sheet total not more than £5.1m; and/or
• Number of employees not more than 50.

Undertakings which are unincorporated will be treated as ‘small’ if their turnover in the relevant financial year was not more than £10.2m. There are also rules around connected and associated companies.

Changes Affecting All Sectors

From the draft legislation it appears that:

• Organisations will be required to provide a Status Determination Statement which will confirm the IR35 decision and the reasons for it. The organisation will be liable for Income Tax, NICs and apprenticeship levy until it provides a valid Statement to the individual.
• If the individual believes the IR35 decision to be incorrect, he/she may make representations to the organisation which then has 45 days to review the case and confirm the decision reached, issuing a new Statement if the decision is changed.
• HMRC will have the power to transfer Income Tax and NIC liability to another entity in the supply chain if it considers that the other person should have paid those liabilities.

The Government has also committed to improving the HMRC’s Checking Employment Status for Tax (CEST) tool by April 2020.

As the legislation is firmed up and guidance published we will provide more information to relevant schools and settings.

Last updated: 9th December 2019

  Relevance: All settings 

Legislation: The Employment Rights (Miscellaneous Amendments) Regulations 2019 and the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018

Currently employees are entitled to a written statement covering details of their employment terms and rights once they have worked for the same employer for more than one month. The statement must be provided within 2 months of starting work. In practice many employers incorporate the written statement into a contract of employment which is provided before an employee commences work.

From April, certain changes will come into effect:

1. Access to a written statement will become a ‘day one’ right i.e. it must be provided by no later than the first day of work (it is still possible to provide certain information at a later stage though much of the core information must be in the ‘principal statement’);
2. Workers – and not just employees – will be entitled to a written statement;
3. Additional mandatory content will be required in a written statement from day one:

• How long a job is expected to last, or the end date of a fixed-term contract;
• How much notice an 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 and paternity leave;
• The duration and conditions of any probationary period
•  All remuneration (not just pay) – contributions in cash or kind e.g. vouchers and lunch;
• Which specific days and times workers are required to work.

What do I need to do to prepare?

Before April you will need to identify whether your existing written statements of particulars or employment contracts are compliant with the changes. If you use templates supplied by your local authority, diocese or HR provider you should expect updated versions of those templates to be made available to you. Our own templates will be updated in good time and we will be providing a checklist to assist those establishments that need to audit their own templates.

If you typically engage any workers (other than employees) to work for you, you will need to be prepared to begin issuing statements of particulars for any new engagements from the implementation date. You may already be providing a certain amount of relevant information in a letter or short contract on commencement but will need to ascertain whether this is sufficient to meet the revised legal requirements.

A ‘worker’ for these purposes is someone who works under a contract (oral or written) whereby he/she undertakes to perform personally any work or services, e.g. casual workers. It does not include circumstances where the school/organisation is a client or customer of the individual (e.g. someone providing professional services on a self-employed basis).

Last updated: 9th December 2019

  Relevance: All settings 

Legislation: The National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019

In the 2016 Budget it was announced that a change to the tax rules on termination payments would be introduced whereby employer NICs would become due on payments above £30,000 which are already subject to Income Tax. The measure was originally intended to come into force from 6th April 2018 but was later delayed until 2020.

From 6th April 2020 therefore, an employer will be required to pay NICs on any part of a termination payment that exceeds the £30,000 threshold. Government information states that it is anticipated that this will be collected in ‘real-time’ as part of the employer’s standard weekly or monthly payroll returns and remittances to HMRC. Employees will continue to benefit from an unlimited employee NICs exemption for termination payments.

It remains unusual for the ex gratia element of termination settlements in the education sector to exceed £30,000 so the impact in practice is not likely to be significant. If you are involved in negotiating settlements it will, however, be important to be aware of this change.

Last updated: 9th December 2019

  Relevance: All settings 

Legislation: The Parental Bereavement (Leave and Pay) Act 2018

The Parental Bereavement (Leave and Pay) Act 2018 implements a manifesto commitment to introduce a new entitlement to parental bereavement leave. It will require secondary legislation to bring the provisions into force though this is expected to take effect from April 2020.

Under the Act, employed parents who lose a child under 18 or suffer a stillbirth from 24 weeks of pregnancy will receive 2 weeks’ leave (which can be taken in two separate blocks of one week if desired). Subject to meeting eligibility criteria (minimum of 26 weeks’ service and earnings test) they will also be able to claim parental bereavement pay at the statutory rate, which will mirror the rate for statutory paternity / shared parental pay.

Much of the precise detail will be set out in the secondary legislation still to be published so we will provide further information and guidance closer to the time. Once the detail is known, it will be worthwhile updating any special leave or compassionate leave policies in place to reflect the new right. Schools and colleges may also wish to consider whether they wish to enhance the right, for example by offering full pay for some or all of the period of leave (some compassionate leave policies may already provide for this).

Last updated: 9th December 2019

  Relevance: All settings 

Legislation: TBC

In July 2019 the Government published its response to consultation on preventing the misuse of confidentiality clauses in the workplace. This was undertaken chiefly as a response to certain cases where employers had used such clauses to prevent victims of harassment or discrimination from speaking out. As a result, the Government has committed to:

• legislating so that no provision in a confidentiality clause can prevent disclosures to the police, regulated health and care professionals and legal professionals;
• legislating so that limitations in confidentiality clauses are clearly set out in employment contracts and settlement agreements;
• producing guidance for solicitors and legal professionals responsible for drafting settlement agreements;
• legislating to enhance the independent legal advice received by individuals signing confidentiality clauses;
• enforcement measures for confidentiality clauses that do not comply with legal requirements in written statements of employment particulars and settlement agreements.

Legislation is expected as soon as “Parliamentary time allows”. This is likely to be some time in 2020. Guidance is expected from the Equality and Human Rights Commission and ACAS and this may precede the legislation. We will revisit our own template contract and settlement wording once draft legislation is available to ensure compliance. We will also publish further advice closer to the implementation date once known.

Last updated: 9th December 2019

  Relevance: All settings 

Legislation: TBC

In July 2019, the Government published its response to consultation on extending redundancy protection for women and new parents.

Women on maternity leave (as well as those on adoption and shared parental leave) already have special protection in a redundancy situation, meaning that employers have an obligation to offer suitable alternative employment where it exists, in preference to others at risk of redundancy.

The Government has now committed to extending this protection as follows:

• Protection will apply from the point the employee informs the employer that she is pregnant (whether orally or in writing) and will extend until 6 months after the mother has returned to work;
• For those taking adoption leave, protection will also extend until 6 months after the return to work;
• A similar principle to adoption leave will apply for shared parental leave except that, in recognition of the differences between SPL and maternity leave, a different approach will be required (for example the period of protection will need to be proportionate to the amount of leave taken, bearing in mind that periods of SPL may be much shorter).

The Government has also committed to establishing a taskforce of employer and family representative groups to make recommendations on what improvements can be made to the information available to employers and families on pregnancy and maternity discrimination. It will also develop an action plan on what steps Government and other organisations can take to make it easier for pregnant women and new mothers to stay in work.

We anticipate these changes will probably come into law in the first half of 2020.

Last updated: 9th December 2019