employment law changes 2020

Employment law changes 2020: what SMEs need to know

New changes to employment law are scheduled for the coming years. This blog post is a quick-fire overview of the scheduled changes most relevant for owners and managers of SMEs.

Updated 6th June 2020

Scheduled employment law changes

Here are the upcoming employment law changes scheduled for 2020:

Living and minimum wage increases

In April 2020, the national living wage for people over the age of 25 increased by 6.2% from £8.21 to £8.72. The national minimum wage also increased by 6.5% for people aged 21-24 (from £7.70 to £8.20 an hour). Apprentices now receive £4.15 an hour, an increase of 25p per hour (a 6.4% increase).

Written statements

Again from April, employers will be under a legal obligation to provide a ‘written statement’ to new employees on their first day. This will likely reinforce obligations employers already have - but which many (especially those who own smaller businesses with few employees) do not take up - to issue new employees with a written contract within a maximum of eight weeks.

Parental bereavement leave

The Parental Bereavement (Leave and Pay) Act 2018 came into force on April 6th. Under this law, parents who lose a child under the age of 18 are entitled to 2 weeks’ leave as a day-one right from the start of employment; the leave will also be available for parents who suffer a stillbirth after 24 weeks' pregnancy. This leave can be taken in one or two-week blocks and is available for the first year after a child’s death. Employees are entitled to separate bereavement leave for each child lost.

Holiday pay reference period

For employers who hire employees on variable hours contracts, the holiday pay reference period is rose from 12 weeks to 52 weeks in April. For employees who have worked at a company for less than 52 weeks, the holiday pay reference period will be however many weeks they have worked. For those who have worked 52 weeks or more, however, the amount of holiday an employee is entitled to – both in terms of days/hours of holiday and amount paid – will need to be calculated according to the average number of hours they worked per day for the previous 52 weeks.

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Migrant salary threshold to drop

It has recently been announced that the salary threshold for skilled migrant workers coming to work in the UK will drop from £30,000 to £25,600, following Britain’s exit from the EU. Also, the government has announced they will be introducing a points-based immigration system for awarding visas. Some business owners are worried that this system will make recruitment much more difficult, as the pool of potential employees for roles will be greatly reduced.

IR35 regulation extending to private sector

Note: The IR35 update has been postponed until April 2021 due to the coronavirus pandemic and lockdown. Read more about the IR35 update here.

From April 6th 2021, some SMEs will need to decide the employee status of self-employed or contracted workers. This is in order to stop contractors who are effectively treated as employees not paying the same amount of tax as they would as registered employees with the company. This may also affect businesses, who would need to pay National Insurance contributions on any self-employed or contracted workers who count as employees.

Businesses that hire less than 50 employees will not be affected by the upcoming changes to IR35, unless they have an annual turnover of more than £10.2 million or a balance sheet total of more than £5.1 million.

Related article: IR35 update: the importance of determining employment status

Potential employment law changes

There are a number of other employment law changes currently in discussion that may come into effect in 2020. These include changes for:

Requests for flexible working

Employers may have to start accepting employees requests for flexible working by default - unless the employer has ‘good reason’ to reject the request. This proposal hasn’t been fully detailed yet, so what constitutes flexible working and good reasons for rejection of the request are not yet clear. However, employers should prepare themselves for accommodating more flexible working arrangements.

Read our guide to flexible working for employers to find out more about how to make flexible working work for your business.

Neonatal leave

The government may introduce a new law on neonatal leave and pay for working parents with premature or sick babies. Neonatal leave would allow new parents (mothers, fathers and partners) to receive one week of paid leave for each week that their baby is in hospital.

Related articles

How will changes to variable hours legislation affect employers?

How to create great HR policies as an SME

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Written by Kate Taylor

Kate is a Content Marketing Executive for myhrtoolkit. She is interested in SaaS platforms, automation tools for making HR easier, and strategies for keeping employees engaged.

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