Is your employment contract ready for the April changes?

Several changes in employment law come into force this April. In addition to the changes to employment contracts, there is a new right to parental bereavement leave and pay, as well as amendments to the way holiday pay is calculated for those working irregular hours. Read on to explore these alterations, as well as those to agency worker rights and IR35.

Contracts must be issued on day one of employment (or before)
From April 2020, employers must provide any new member of staff with a written ‘Statement of Particulars’ from the first day of employment. These statements are effectively the written contract of employment. 

This changes the current position which allows employers up to 13 weeks after the employee’s start date to issue a contract. While this change should be perfectly achievable for most situations, the changes also require contracts to be issued to ‘workers’ and not just ‘employees’. In other words, any casually employed staff must receive their contracts on, or ideally before, the first day of employment. 

Probationary periods must be included in contracts
The ‘Statement of Particulars’ now needs to include a statement explaining whether a probationary or trial period exists, how long this will last and any conditions which relate to it. The importance of this clause cannot be overstated. If it is worded incorrectly, then any dismissal during the probationary period may lead to a claim of breach of contract, even though a staff member may not be able to claim unfair dismissal.

Working hours must be clear
At the moment, some staff work variable hours, sometimes as part of a rota, and other times very flexibly. Contracts are often written flexibly to reflect this. For example, ‘Hours of work are 35 per week, to be worked Monday to Saturday, as agreed with your manager.’ From April, the Statement of Particulars will require a greater degree of clarity and certainty to be written within the statement (or contract). Employers will need to state the days of the week the worker is required to work and whether working hours or days may be variable, with details of how they may vary. Again, thought and care needs to be given to how this is worded.

Training which is required must be in the contract
There has never been a requirement for employers to include a clause about training requirements unless the contract was for an apprenticeship or traineeship of some sort. However, from April, employers will need to stipulate in the contract if training is required to be completed. Staff who fail to achieve these qualifications within the time allowed may well find themselves at risk of breaching their contract.

Parental bereavement leave
The Parental Bereavement (Leave and Pay) Act 2018 provides for at least two weeks’ leave for employees 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 will be entitled to paid leave at the statutory rate and other employees will be entitled to unpaid leave.

Changes to holiday calculations
From April, holiday pay for employees working irregular hours must be calculated using a 52-week reference period. The current period is 12 weeks. This means that if someone currently takes holiday after a ‘quiet’ 12 weeks, their pay will be lower than if they take their holiday after a ‘busy’ 12 weeks.

Changes to agency workers’ rights
There are three changes to agency workers’ rights which will apply from 6 April 2020. The most important change is that all agency workers will be entitled to the same rate of pay as their permanent counterparts after 12 weeks.

All agency workers will also be entitled to be given a key information document that clearly sets out their employment relationships and terms and conditions with their agency. Finally, agency workers who are considered to be employees will be protected if they assert their rights associated with The Agency Worker Regulations (AWR).

IR35 applies to all medium and large employers, not just the public sector
From 6 April 2020, medium and large organisations will become responsible for assessing an individual’s employment status and determining whether an individual should be treated as a worker, employee or contractor for tax purposes. 

Employers will have to issue a Status Determination Statement to their contractors, which makes their IR35 status clear and explains why. As long as employers support their decision with sufficient evidence and file the appropriate tax documents, they should avoid any penalties.

HMRC has updated its online assessment and produced additional ‘supporting guidance’. Employers are strongly advised to keep a copy of their reasoning (or determination) and if they conclude that an individual is a worker, pay them through PAYE!