The government is making some changes to employment law in April, some of which might affect directors.
Employers will now have to issue written terms and conditions on day one of employment, plus the way holiday pay is calculated will change.
Our legal team go through these changes and what they might mean for you in the article below.
From April 6 2020, the government will be extending the entitlement to minimum written terms, often known as a “statement of particulars” to include workers (directors who do not operate through a personal service company are regarded as workers for employment rights purposes) and not just employees. There will also be important changes to the minimum written terms and to the timing of when these should be provided.
• Contracts must be issued to both employees and workers.
• Contracts must be issued on or before the first day of employment/engagement
• Additional details will need to be included, including:
- how long a job is expected to last, or the end date of a fixed-term contract
- how much notice the employer and worker are required to give to terminate the agreement
- details of eligibility for sick leave and pay
- details of other types of paid leave e.g. holiday pay, maternity leave and paternity leave
- the duration and conditions of any probationary period
- all remuneration (not just pay) e.g. vouchers, lunch, health insurance
- the normal working hours, the days of the week the worker is required to work, and whether or not such hours or days may be variable, and if they may be how they vary or how that variation is to be determined
- any training entitlement provided by the employer, any part of that training entitlement which the employer requires the worker to complete, and any other training which the employer requires the worker to complete and which the employer will not bear the cost.
• All workers will become entitled to receive the contract, regardless of their length of service
What about current workers?
These changes are not retrospective, so only apply to new engagements on or after 6 April 2020. However, all current workers will also be entitled to request a section one statement (including the new, additional information) and such requests must be complied with within one month.
Why the changes?
The changes result from the government’s Good Work Plan that was published in December 2018. The recommendations are aimed at increasing transparency between workers and employers as well as improving the enforcement of employment rights.
What if employers fail to comply?
A failure to provide a section 1 statement, or one that meets the requirements, may give rise to an employment tribunal claim from affected workers or employees. The tribunal will determine the relevant terms of engagement. However, if you are a Directors UK member and a company proves unwilling to issue you with a written contract before you start work please don’t hesitate to contact the legal department at Directors UK and we will contact the company involved and resolve the matter.
Changes to holiday pay calculations
Legislation requires a worker’s holiday pay to be calculated as a week’s pay for each week of leave and, if a worker does not have normal working hours, a week’s pay is taken to be the worker’s average weekly pay in the 12 weeks before the calculation date. This reference period is due to be increased to 52 weeks with effect from 6 April 2020.
So why is the reference period changing?
The primary reason for the change is inconsistent payment of holiday pay. The Government’s Good Work Plan states that the changes will allow greater flexibility for workers in choosing when to take holiday, particularly for those in seasonal or atypical roles that limit some workers from benefiting from their full holiday pay entitlement.