We have previously outlined statutory employment law changes that came into effect on the 6 April 2020 and further information on some of these changes have since been published by the government. The following is a summary of these updates.
- Tax and IR35
These reforms which were originally set to come into force on the 6 April 2020, shift the responsibility to organisations to determine whether a contractor carrying out work for them should be treated as an employee for tax purposes. As a result of the Coronavirus pandemic, the Government have postponed the changes for a year, until 6 April 2021.
- Reference period for calculating holiday pay – workers without fixed hours
On the 6 April 2020, the Working Time Regulations 1998 were amended to increase the reference period for determining an average week’s pay when calculating holiday pay, from 12 to 52 weeks. The Government have since updated its guidance on calculating holiday pay for workers without fixed hours or pay to reflect new 52-week reference period.
- As a result of this change, Employers must now use 52 weeks' worth of pay data to calculate holiday pay for workers without fixed hours or pay, instead of 12.
- Where a worker does not have 52 weeks' worth of pay data, the employer should use however many complete weeks of data they have.
- If a worker takes holiday before they have been in the job for a full week, then there will be no data to use for the reference period. In this situation, employers should pay the worker an amount which fairly represents their pay for the length of time they are on leave. In working out what is fair, an employer should take into account the worker's pay, the pay they have already received and what is paid to other workers doing a comparable role for the employer.
- For weeks that a worker receives no pay, it remains the case that these weeks are excluded from the reference period. In this situation, employers should count earlier weeks in which pay was received instead. Up to 104 weeks of data can be used by employers as reference periods, in order to calculate 52 weeks of data. This is to prevent employers having to look back more than 2 years to reach 52 weeks’ of pay data.
- An employer should not count back more than 104 weeks to reach 52 weeks of pay data. In this case, the reference period will be shortened to however many weeks of data are available in this 104-week period.
- Parental Bereavement Leave
In February we outlined the detail of the new Parental Bereavement Leave legislation that came into effect on 6 April 2020, which can be found here. This provides a period of one or two weeks leave to parents following the death of a child under the age of 18 or a stillbirth.
The Government have since published an employer’s guide on this new statutory right. This guidance provides an overview of the legislation, confirms the eligibility criteria to Statutory Bereavement Leave and Pay as well as the notice that an employee must give. Other points include:
- If an employee does not qualify, employers can refuse statutory parental bereavement pay by sending a specified form to the employee within 28 days of their pay request.
- The guidance further outlines the records that employers must keep for HMRC purposes. These include start dates of any leave taken, the payments made, evidence of entitlement from the employee for Statutory Parental Bereavement Pay and details of any weeks that statutory Parental Bereavement Pay was not paid, despite the employee claiming these weeks. These records must be kept for 3 years.
- The financial help with statutory pay is also detailed, allowing employers to reclaim any payments or apply for an advance if any payments they cannot afford.