The government has revealed huge changes to Employment Law, that will come into force from 6th April 2020. These key changes will have a big impact on businesses and employers, so it’s important to ensure you are ready and prepared.
Here’s what you can expect:
Holiday Pay Reference Period
Almost all workers are entitled to 5.6 weeks paid holiday each year. This includes agency workers, workers with irregular hours and workers on zero-hours contracts. Where a worker has fixed hours and is paid a salary, they continue to receive their salary whilst on leave. However, where workers undertake regular overtime, or have variable hours, their holiday pay should be calculated using a reference period.
Currently employers should look back 12 weeks and calculate the average weekly pay received for that time. For weeks where no work was performed, and thus no pay earned, the week is discounted. The employer then looks back a further week until 12 weeks in which the worker was paid are counted. Detailed guidance on the current rules is available on GOV.UK
From 6 April 2020, the reference period is being extended. Instead of looking back 12 weeks, employers need to calculate the average over a 52 week period. As unpaid weeks are still excluded, this can require employers to count back over a year into the past. To avoid having to go back indefinitely, a limit of 104 weeks’ worth of data is being introduced; two full years. If after that, there is still not 52 weeks’ worth of data, the employer uses an average of what they have. E.g. if in the past 2 years, the worker has worked in 46 weeks, that is the number of weeks’ worth of data used. Similarly, if the worker has worked 60 weeks in the last 2 years, only the most recent 52 weeks would be included in the reference period.
The changes also clarify what employers do with new workers; if they haven’t worked 52 weeks, they should use what pay data is available right back to their start date. For example, if a worker has been working with their employer for 14 weeks then takes leave, the employer should use the 14 weeks’ worth of data that is available.
Further information on holiday pay and entitlement is available on GOV.UK or on the Acas website.
The Government has also legislated to extend the right to a written statement to all workers. This will give workers the same clarity as employees on the terms and conditions of their new employment. The Government has also legislated to make the written statement a ‘day 1’ right for all individuals who are entitled to a written statement.
This means firstly that they will be entitled to receive the ‘principal statement’ of the written statement no later than the first day of their new job, where at present the employer has a period of two months in which to provide the statement. Secondly, there will be no qualifying period of employment. At present employees are entitled to a written statement only if their employment has continued employment for at least one month.
In addition, the Government is expanding the information that employers are required to provide as mandatory content in a written statement from day one (including any additional information provided e.g. through staff handbooks on sick leave and pay or other types of paid leave). The additional information to be included in the principal statement includes both new information and information which employers are already required to provide but can provide separately: in a staff handbook for example.
Both sets of changes will come into force from 6 April 2020. Updated guidance will be available on GOV.UK from 6 April 2020.