New regulations are coming in 2020 regarding employee rights, payments and more. How will your payroll and HR teams handle the changes?
IR35 Changes to Private Sector
New changes are coming to medium and large companies in the private sector related to employing off-payroll workers (including contractors or personal service companies). Public sector companies have been providing reporting on off-payroll workers since early 2017, and now HMRC is extending the rules to the private sector to equalise taxes for employees vs. contractors doing the same work but paying different taxes.
Parental Bereavement Leave
A new bill was approved in September 2018 that will entitle workers to receive 2 weeks paid leave (if they have 26 weeks of service) or 2 weeks unpaid as of the first day of work due to the loss of a child under 18 or a lost pregnancy after the 24th gestational week. Employers currently allow employees unpaid leave to handle bereavement, but this new policy will entitle employees to payment during their leave.
Taxation on Termination Payments
HMRC will begin taxing termination payments over £30,000 as of 6 April 2020. The new regulation was originally scheduled for April 2018, but was delayed for 2 years. Now employers will be required to tax termination payments for employees if the amount exceeds £30,000.
Agency Workers Regulations
The “Good Work Plan” the government published at the end of 2018 commits to removing a loophole in which agencies can opt out of paying agency staff equally to permanent workers. This change will help agencies be more accountable for paying their employees a fair and equal wage.
Average Week’s Pay
Changes to calculations for an “average week’s pay” will begin 6 April 2020. This new calculation will move from using 12 weeks of pay to calculate the average to 52 weeks of pay. This will help seasonal workers who are often negatively impacted by the current calculation method, and will make employers pay their seasonal employees more fairly when it comes to calculating an “average week’s pay” when determining bonus or holiday payments.
Staying ahead of new employment law changes that impact payroll is vital to maintain compliance, reduce manual errors, and ensure your employees are paid accurately each month.
