January Blog - 06/01/2020

What's in store from upcoming law?

Here's what we know so far about the legal changes expected to affect businesses in 2020.

Brexit

Parliament approved the Withdrawal Agreement Bill in December and, at the time of writing, the UK is set to formally leave the EU on 31 January. The UK will then enter a transition period until 31 December 2020, during which the UK and EU will try to negotiate a trade agreement. This means that though the UK will cease to be an EU member on 31 January, the trading relationship will remain the same during transition and the UK will continue to follow the EU's rules, such as accepting new EU parliament directives and rulings from the European Court of Justice – so don't expect references to EU laws or judgments to disappear from our documents or guidance materials just yet.

Employment law

There are a number of new laws that are due or expected to come into force in April. They affect employers in Great Britain, but not (currently) Northern Ireland.

Written statement of terms of employment

Sometimes referred to as a 'section 1 statement', this is a document containing certain information that, currently, you must give to your employees within 2 months of employing them (an employment agreement or statement usually does the job). From 6 April, this changes. We've picked out 3 key points:

  • You must give it no later than the employment start date.
  • The requirement extends to new workers, as well as employees. Consequently, this will put more importance on ensuring that any self-employed members of your workforce are genuinely self-employed and not in fact classed as workers.
  • You'll need to include extra information in the statement, such as if they have a probationary period, any benefits they'll be entitled to, the days of the week they'll be required to work, and any way in which these days and/or working hours will vary.

You don't need to update existing statements or contracts for those already working for you before 6 April 2020. However, they'll be able to request a section 1 statement at any time up to 3 months after they stop working for you – if they do, the statement you give them must meet the new requirements.

New National Minimum Wage and National Living Wage rates

As well as other statutory pay rates, such as those for sick pay and family leave (maternity, adoption, paternity etc), the National Minimum Wage and National Living Wage rates will increase.

Right to parental bereavement leave

This is expected to be in force in April and gives bereaved parents the right to 2 weeks of leave following the loss of a child under the age of 18, or a stillbirth (i.e. a loss after 24 weeks of pregnancy). If they have 26 weeks' continuous service, they will also be entitled to statutory parental bereavement pay.

Change to the reference period for calculating holiday pay

This affects workers with no normal working hours, and those whose pay varies with the amount of work done or according to the time that they work. The reference period is currently the average weekly pay they have received over a 12-week period before they take holiday leave. This is calculated by looking back to see when they've worked and received pay and disregarding any weeks not worked or where no pay was received. The reference period will change from 12 weeks to 52 weeks.

Amendments to agency workers rules

After 12 weeks' continuous service, an agency worker has the right to the same pay and basic working conditions as other workers in the same role. Currently, this will not apply if an agency worker is paid a minimum amount by the agency between each assignment. This exemption will no longer apply from 6 April.

Lowered thresholds for the requirement to inform and consult employees

Employees working in businesses with 50 or more employees have the right, subject to certain conditions, to request their employer to inform and consult with them before making changes that affect them.

Currently the law requires employers to set up an information and consultation arrangement if 10% of the workforce request it. This will be lowered to 2%.

Changes to IR35 rules for the private sector

Instead of a self-employed individual accounting for their Income Tax and NI contributions to HMRC, responsibility will pass to the business that employees them. Thankfully, this is unlikely to affect SMEs as the new legislation won't apply to businesses with any 2 of the following:

  • Annual turnover of less than £10.2m
  • A balance sheet of less than £5.1m
  • Fewer than 50 employees.

For those employers it does affect, it means they'll have to determine the employment status of self-employed individuals working for them, assess whether they're truly self-employed or in fact employed, and then inform HMRC. For example, if a self-employed individual has worked for you for several years, they're likely to be regarded as a worker or employee for tax purposes. They'd gain employment rights and you'd be required to pay their Income Tax and NI contributions to HMRC.

How we can help

We are in the process of amending our documents, such as our Employment statement and Employment agreement, in advance of these changes taking effect.

 

January Blog - 13/01/2020

Dismissal: employers liable if managers deceive honest decision-makers

What happens if a manager acts improperly by inventing a reason for an employee's dismissal and then hides the true position from the decision-making manager?

In a recent case that made it all the way to the Supreme Court, the true position was that an employee had made whistleblowing disclosures, which would be automatically viewed as unfair dismissal by any Employment Tribunal. Having made the disclosures, her line manager bullied her and falsely claimed that her performance was unsatisfactory (and so inventing a new, potentially fair reason for dismissal).

The company appointed another manager to investigate whether her performance justified dismissal. She was signed off sick for work-related stress, anxiety and depression and was unable to present her case or attend meetings before the decision was made to dismiss her. The dismissing manager had no reason to doubt the evidence of poor performance and reached a genuine decision to dismiss her for that reason.

Before this case was heard by the Supreme Court, the Court of Appeal ruled that a tribunal only had to consider the mental processes of the authorised person who made the dismissal decision. On this basis, a tribunal wouldn't be able to view this particular case as one of unfair dismissal.

The implication was that employers wouldn't be liable if a cynical manager decided to interfere with evidence in a disciplinary process, and engineer a dismissal by misleading a decision-making manager.

However, the Supreme Court overturned the Court of Appeal's decision and confirmed that in cases of unfair dismissal, an employer will be liable in these circumstances.

What this means for you

You should ensure that decisions about dismissing employees are made truthfully and wherever possible rely on more than one source evidence before making a decision.

How we can help

We have a suite of Disciplinary letters for each step in the process. Disciplinary and dismissal procedures are available in our Employee handbook and as optional extras within our Employment agreements.