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19 Feb 2020

What are some of the key legal changes for employers in April 2020?

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There are a number of employment law changes coming into force in April 2020. We focus on two key changes which employers should be aware of.

Employer National Insurance Contributions on termination payments

  • What is changing?
    Currently, termination payments are not subject to any employers’ NICs. From 6 April 2020, termination payments in excess of £30,000 will be subject to employers’ NICs.

  • What does this mean?
    This means the employer will be responsible for paying the NICs charge, at a rate of 13.8%, on the amount of the payment exceeding £30,000, and termination packages over this amount will therefore be more expensive.

  • What practical steps can companies take?
    If you are planning any exit conversations in the coming months, start them early and aim to make the related termination payments before the new changes come into force on 6 April 2020.

New requirements for section 1 statements

What are the current requirements?

  • Employers are currently required to give certain information to employees outlining particular terms of their employment (these are known as “section 1 statements” and are often included in employment contracts).

  • Section 1 statements can currently be given to employees within the first two months of employment.

What are the changes that are coming into force?

  • From 6 April 2020, section 1 statements will become a "day 1" right which means they must be provided on or before the first day of employment (with the exception of certain particulars (e.g. pensions) which can be given within 2 months of the start date).

  • This right has also been extended to workers as well as employees.

  • In addition, section 1 statements will be required to contain information about:

    • any probationary period including any conditions and its duration;

    • any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the employee;

    • the days of the week the worker is required to work (if the working hours or days may vary, it must set out details of how any variation will be determined);

    • any entitlement to paid leave (e.g family friendly leave, paid sabbaticals); and

    • details of any other benefits provided by the employer.

What happens to the current section 1 statements or employment contracts of existing employees?
Organisations do not have to change their statements or contracts for current employees. However, current employees can request an updated statement and if there is a change in any of the employees’ particulars (including the new requirements) this will trigger the need for a statement of changes.

How can companies prepare for these changes?
We would recommend that you review your template statements or contracts and update these to include the new requirements. Care should be taken when amending template contracts to ensure that items that are non-contractual (e.g. certain benefits) are not made contractual simply by virtue of being included in the statement or contract.

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Laura Anderson
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