Professional March 2020

REWARD

Danny Done, managing director at Portfolio Payroll, outlines the changes expected this year Top ten developments

A s we head into 2020, it will be important for employers to look ahead to the host of employment law changes that are set to have a big impact on business operations throughout the year. ● CEO pay ratio reporting – As of 1 January 2020, certain businesses will need to include information relating to their chief executive officer’s (CEO’s) pay ratio within directors’ remuneration reports. UK ‘quoted’ companies that have in a year, on average, more than 250 employees are expected to compare their CEO’s most recent remuneration against that of their full time-employees. As this report forms part of directors’ duties under the Corporate Governance Code, failing to comply with this requirement will be considered an offence. ● Change to contracts – The law around employee contracts will change from 6 April 2020, meaning contracts will become a day-one right for both employees and workers. Contracts will also need to contain additional information the first time, including entitlement to all forms of remuneration, eligibility for sick leave and pay as well as details on all other types of paid leave that an individual may be eligible for. Employers will need to have mechanisms in place to ensure they are able to comply with this new requirement, as they will no longer be afforded a grace period for providing staff with their respective contracts. ● Extension of holiday pay reference period – The holiday pay reference period, which is used to calculate the average pay for zero-hours staff, and others who work irregular hours, will be extended

from 12 to 52 weeks as of 6 April 2020, which will change the way many payroll departments calculate holiday pay. This adjustment means it will be especially important for employers to keep track of individuals’ working time throughout the entire year, including overtime, to ensure they are correctly remunerated whilst on annual leave. ● Lowering consultation threshold – The percentage of employee support needed to set up information and consultation arrangements will be reduced from 6 April 2020. From this date onwards only 2% of the overall workforce need to be behind this measure, as opposed to the previous 10%. This is designed to give employees a greater voice in the actions of an organisation and increase overall engagement. ● Agency workers’ ‘key facts’ page – From 6 April 2020, we expect that agency work-seekers will have a right to receive a key information document to help them make informed choices about the work they accept. This document is designed to increase clarity and therefore must include specific details on the type of contract the worker is employed under and their minimum rate of pay. ● End of Swedish derogation contracts – Meanwhile, employment agencies will no longer be able to make use of Swedish derogation contracts from 6 April 2020 as these contracts, which allow employers to avoid providing agency workers with equal pay after twelve weeks of an assignment, will become unlawful. Agencies that utilise these contracts will have to provide a written statement to their agency workers explaining that they are now entitled to

equal pay treatment after twelve weeks. This statement has to be provided by 30 April 2020, otherwise agency workers will be entitled to seek compensation at an employment tribunal. ● Increase to minimum wage – As national minimum wage (NMW) rates are reviewed each year, it is reasonable to expect an increase to the existing rates in April 2020. After all, the government have previously pledged to ensure those aged 25 and over will be entitled to a minimum of £10.50 per hour by 2024. Whilst minimum wage employers will likely be familiar with the processes needed to increase pay rates each year, employers should still review personnel files to ensure staff continue to be receive the correct rate depending on their age. ● Change to statutory rates – The minimum rates for statutory entitlements such as maternity pay, paternity pay and sick pay are typically increased each year in April. Extra consideration may be required for any individuals who are already on an extended period of maternity or sick leave when these new rates are introduced in order to ensure they are remunerated correctly. ● Parental bereavement leave – The right to parental bereavement leave is also expected to become effective in April 2020. Qualifying parents will be entitled to two weeks of paid bereavement leave following the death of a child under the age of eighteen in order to help with the grieving process. It is reasonable to expect that the statutory pay for this period will be in line with statutory sick pay and statutory maternity pay, so this is another payment that employers will need to budget for. n

| Professional in Payroll, Pensions and Reward | March 2020 | Issue 58 46

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