Many businesses have welcomed the news that the Government will introduce a new scheme to…
Dubbed the biggest overhaul of employment law in 20 years, the implementation of the new Good Work Plan is now just weeks away.
Businesses will be expected to familiarise themselves with the wide-reaching changes and take steps to prepare for the new rules, which are due to come into force from on 6 April 2020.
Amongst these changes are several new regulations which may affect how employees are paid. To help businesses get to grips with the key changes, here is a brief rundown of how the new Good Work Plan will affect employers’ practices.
Written contracts of employment
The plan introduces several changes to the rights to receive a written Statement of Main Terms (SMT).
This document will need to include an employee’s key terms of employment including pay and annual leave entitlement and employers currently have two months to provide it to a new employee.
Importantly this document will now need to be provided to those on zero-hour contracts as well as other workers.
The mandatory reference period for calculating holiday pay will increase and employers will have to use a reference period of 52 weeks, (instead of the current 12 weeks) when calculating holiday pay for staff whose pay varies, including the zero-hours workforce. This calculation method will result in a payment which balances out any peaks and troughs of working hours throughout the year.
The Government has confirmed that the tests used to determine who is an employee, worker or self-employed will be adjusted. The results of this are likely to be that many self-employed individuals will be re-classed as workers.
‘Swedish derogation model’ contracts for agency workers will be banned. These contracts proceed based on a legal loophole to avoid the requirement to pay agency workers the same basic pay as direct recruits at the hirer organisation after 12 weeks of an assignment.
Those who are currently engaged on these contracts will be entitled to a statement to explain the effect of the ban on their pay. As a separate measure, all agency workers will be entitled to a key facts sheet explaining the details of their payment.
Further details of the Good Work Plan are expected in the coming weeks, but employers must consider the impact of these changes on their business and how employees are paid.