Employment legislation

The Good Work Plan

The Government has dubbed the Good Work Plan “the biggest overhaul in employment law in 20 years”, although it may not feel like that at the moment. However, don’t let these new changes catch you out…

1. Workers get the right to a written statement

   From 6 th April 2020, all employees and workers should receive a written statement on or before their first day of employment. Workers don’t always have a written contract with their employer and they don’t have to accept the work their employer offers, they have fewer rights than employees.

   Employees on the other hand always have a written contract of employment and have to accept the work their employer gives them. As an employee, they get flexible working rights, protection from dismissal, and the right to raise grievances.

2. Right to request stable contracts

   After 26 weeks of employment, workers and employees can request a clearer, more certain contract. For example, they can ask you for a guaranteed number of working hours or fixed working days. You’ll have to approve or reject their request within three months. If you reject it, you’ll need to have a genuine business reason to back up your decision.

3. Break-in continuous service will increase

   From 6th April 2020, the continuous service gap increased to four weeks. 

4. Agency workers to get Key Facts Page

   New agency workers must be provided with a  'Key Facts Page' to tell them more about a job before they accept a role. The Key Facts Page can’t be longer than two A4 pages and must explain:

   • The type of contract;
   • The minimum rate of pay;
   • The person who pays the wage;
   • That workers get the same pay as permanent staff after 12 weeks’ service.

More protection for agency workers

From April 2020, the Agency Workers Regulations were amended so that agency workers with 12 weeks’ continuous service are paid the same amount as permanent staff.

Holiday Pay for those with irregular hours

The Working Time Regulations 1998 have also been amended to increase the reference period for determining an average week’s pay (to calculate holiday pay). Where a worker has been employed by their employer for at least 52 complete weeks, the reference period is increased from 12 weeks to 52 weeks.

Where a worker has been employed by their employer for less than 52 weeks, the reference period is the number of weeks for which the worker has been employed. This development makes it fairer and much easier to calculate holiday pay and protects workers who work irregular hours.

Increase to statutory rates

The  National Living Wage (for those aged 23 and over) and the National Minimum Wage rates change every year on 1 April.  From 1 April 2021 the period that an employer must retain records sufficient to prove it is paying a worker the correct rate is now six years. The current rates are:

• NLW will increase from £8.91 to £9.50 per hour (for those aged 23 and over);
• NMW 21 to 22-year-old rate will increase from £8.36 to £9.18 per hour;
• NMW 18 to 20-year-old rate will increase from £6.56 to £6.83 per hour;
• NMW 16 to 17-year-old rate will increase from £4.62 to £4.81 per hour;
• NMW apprentice rate for those aged under 19 or in their first year of an apprenticeship will increase from £4.30 to £4.81 per hour.

Statutory sick pay - from 6 April 2022

• Statutory Sick Pay (SSP) increases from £96.35 to £99.35 per week;
• Lower earnings limit increases from £120 to £123 per week

Statutory family-friendly payments - from 3 April 2022

• Statutory maternity, paternity, adoption, shared parental and parental bereavement pay increases from £151.97 to £156.66 per week.

Tribunal compensation

The annual Employment Tribunal aware limit changes effective from 6 April 2022. For cases involving dismissals, the figures apply where the effective date of termination falls on or after 6 April 2022. 

The maximum compensatory award for unfair dismissal will rise from £89,493 to £93,878. The cap on the compensatory award is the lower of the compensatory award limit (£93,878 from 6 April) or a year's' pay (based on the Claimant's gross salary prior to dismissal including employer pension contribution but excluding benefits in kind and discretionary bonus). 

There are a limited number of exceptions where the cap does not apply. These are dismissals for whistleblowing or for raising certain health and safety issues.

In addition, there is no limit to the award that can be made where a dismissal is related to unlawful discrimination. The limit on a week's pay (used for calculating statutory redundancy payments and the basic award for unfair dismissal) will increase from £544 to £571 meaning the maximum basic award and maximum statutory redundancy payment increases to £17,130 (30 weeks' pay subject to the limit on week' pay).

Guidelines for injury to feelings awards

An award for injury to feelings is made to compensate for injury to feelings caused by discrimination. The award is separate from an award to compensate for financial loss and can be made even where no financial loss has been suffered.  To assist Employment Tribunals, the Court of Appeal previously set out guidance for quantifying awards for injury to feelings, known as the Vento bands. 

The new Vento bands are as follows for any cases presented on or after 6 April 2022:

• Lower band (less serious): £990 - £9,900
• Middle band: £9,900 - £29,600
• Upper band (more serious cases): £29,600 - £49,300

Awards over £49,300 will be made only in exceptional cases.

Gender pay gap reporting

All employers with 250 or more employees are required by law to comply with gender pay gap reporting under the specific duties of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Employers must report their gender pay gap data on the snapshot date each year which is 31 March for most public authoirty employers and 5 April for private, voluntary and all other public auuthority employers. Further guidance on gender pay gap reporting can be found on the gov.uk website. 

The gender pay gap is the difference between the average (mean or median) earnings of men and women across the workforce.  

IR35

Changes to IR35 in the private sector - came into force from 6th April 2021.  The rules shift responsibility for determining the status of a contractor for tax purposes onto the client.

Post-employment notice pay

Changes to the calculation of Post-Employment Notice Pay (PENP) took effect from 6 April 2021 which resulted in a more consistent calculation. 

PENP is the amount of a 'relevant termination award' paid to a departing employee that represents a payment in lieu of all or part of their notice entitlement. It is calculated using the statutory formula, based on the employee's basic pay and the number of days (or months) in the indivdiuala's period of unserved notice (the post-employment notice period).  

This amount is subject to deductions for income tax and National Insurance contributions, therefore PENP can no longer be paid free of tax.   

Parental bereavement leave

The 6 April 2020, saw the introduction of the new sttautory entitlement and payment of parenteal bereavement leave, aimed at supporting parents who lose a child under the age of 18 years.

The Parental Bereavement (Leave and Pay) Act 2018 specifies that a 'bereaved parent' will be able to take statutory bereavement leave and applies to employees who suffer a stillbirth after 24 weeks of pregnancy, or lose a child aged below 18.   A 'bereaved parent' is defined based on the employee's caring responsibilities for the child to avoid excluding those who are not the child's legal parents.  Further information on statutory parental bereavement pay and leave can be found on the gov.uk website. 

New immigration system

The government has published its plans for the new points-based immigration system which will apply from 1st January 2021 to both EU and non-EU migrant workers.

Under the new system, all would-be Tier Two (General) migrants must speak English and will need an offer from an approved sponsor, for a role at the required skill level (i.e. a role requiring qualifications equivalent to A levels) and at the required salary.

The minimum salary threshold will be set at £25,600 (with no regional variation across the UK). However, in certain circumstances, the minimum salary threshold will be reduced to £20,480. There will be no need to advertise a role and there will be no cap on Tier Two work visas.

Confidentiality and NDAs

Acas has published new guidance on non-disclosure agreements (NDAs). These commonly form part of settlement agreements with departing employees. This is the latest in a series of developments and, although the guidance does not have the same force as a statutory code of practice, it may be used as evidence in legal proceedings.

The Acas guidance discourages the routine use of NDAs. It also states that a worker should be given a reasonable time to carefully consider the agreement and makes it clear that NDAs should not be used to stop someone from:

• Reporting discrimination or sexual harassment at work or to the police.
• Disclosing a future act of discrimination or harassment.
• Whistleblowing

Details of the government’s proposed legislation on confidentiality clauses are awaited.