Are you prepared for the Good Work Plan?

Posted

By now, you have probably heard about the Good Work Plan which is the manifestation of the recommendations in the Taylor Review of Modern Working Practices. Below you will find the changes that come into effect from 6th April 2020.

Written Statement of Terms and Conditions

  • All workers, not just employees, will have the right to a written statement of terms (as currently referred to in Section 1 of the Employment Rights Act ’96) (in practical term, this is a statement of terms and conditions of employment, a contract of employment or a contract for services if freelance). This means that casual agreements, frequently used by our clients for workers, must now also contain the information required within Section 1 of the Employment Rights Act ’96
  • The statement of terms will have to be provided on or before the first day of work (reduced from 56 days after commencing work)
  • Existing staff, who have statement of terms and conditions of employment or contracts prepared before 6 April 2020, will be entitled to request a new version, which you are required to provide within one month
  • In addition to the existing requirements of Section 1, the statement of terms should specify:
    • how long the job will last
    • the notice period
    • other rights to paid leave such as maternity and paternity leave*
    • terms of any probation period
    • details of pay and benefits*
    • specific days and times of work (and if days or hours are variable, details of how those hours may vary)*.

*For those using Roots HR’s contracts of employment or casual agreements at present, additional information will now be required in these areas to ensure compliance.

Holiday pay
For those of you with members of your workforce whose working hours vary from week to week:

  • The reference period for calculating average pay for annual leave increases from 12 weeks to 52 weeks. If the employee has less than a year’s service then the reference period is their period of employment in complete weeks.

Parental Bereavement Leave

  • Employers must give at least two weeks’ leave to an employee following the loss of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy
  • Employees with 26 weeks’ continuous service are entitled to two weeks of paid leave at the statutory rate and other employees will be entitled to unpaid leave
  • The right covers birth parents, the partner of the child’s parent and adoptive parents.

IR35
For most of you using self employed workers or contractors, IR35 changes from 6th April 2020 will not apply – and here’s the reason why:

  • IR35 is legislation that allows HMRC to collect additional income tax and national insurance payments where a contractor is an employee in all but name. IR35 applies if a contractor is operating through an intermediary, such as a limited company, and but for that intermediary they would otherwise be an employee of their client. The intention of IR35 is that if these individuals work like employees (for example if they work hours or have a work pattern that indicates employment), they should be taxed and subjected to NIC like normal employees. When IR35 legislation applies, a contract may be described as ‘within IR35’
  • If the contractor’s contract is in the public sector, it’s up to the engager (the contractor’s client) to determine whether IR35 applies
  • If it does, the client must place the contractor onto their payroll and deduct income tax and National Insurance before paying the contractor
  • If the contractor’s contract is in the private sector, IR35 currently requires the intermediary to make an extra payment to compensate for the additional tax and NI that HMRC would have received on an equivalent employee’s wages
  • The rules change from 6th April 2020 for contractors working with medium to large sized clients in the private sector (which for the avoidance of doubt means all businesses including charities, social enterprises, co-operatives and other not for profits) but only those over a certain size. Medium and large sized clients will have to determine whether the contractor falls inside or outside IR35
  • There is an exemption for ‘small businesses’ as defined by the Companies Act 2006 which means meeting two or more of the following criteria:
    • Annual turnover is no more than £10.2 million
    • Balance sheet total is no more than £5.1 million
    • No more than 50 employees.
  • For charities, the definition of turnover excludes donation and grant income
  • Where the end-client meets two or more of these criteria, responsibility for determining the IR35 status of a contract remains with the contractor and the changes will not apply.

Notwithstanding this, we are encountering clients who, despite falling within the definition of a small business and therefore qualifying for the exemption, have decided to treat all contractors who work like employees as employees and are putting them on the payroll.

Agency Workers
For those of you using agency workers:

  • Agencies will have to give agency workers a statement confirming their right to equal pay with permanent colleagues ie they will no longer be able to opt out of equal pay arrangements in return for guaranteed pay between contracts (known as the “Swedish Derogation”)
  • Agency workers will be protected from dismissal or detriment if they assert their rights under the new laws.

Our initial advice here is that those employers using agency workers may wish to revisit their own working models.

Information and Consultation Regulations 2004

  • The threshold for requesting information and consultation under the above Regs will reduce from 10% to 2% of employees in the workforce but will remain subject to a minimum of 15 interested employees.

There are further changes to come but they have no firm timetable at this stage.

If you have any questions on the above, please do contact us at hello@rootshr.org.uk or by calling 01562 840060.