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UHY Hacker Young | Chartered Accountants
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Payroll & employment: what you need to know by April 2020

18 February 2020

Employers should be aware of a number of changes to employment law and payroll matters that will come into force during 2020.

Statement of Main Terms

Currently, employers are required to provide employees with a Statement of Main Terms of Employment [SMT] within eight weeks of the start of their employment.

With effect from 6 April 2020 there are three main changes:

  1. Employers are required to provide an SMT immediately on the commencement of employment.
  2. The requirement to provide an SMT is extended to include workers who are not employees. (See below)
  3. The information to be covered in an SMT has been expanded and now includes:
    • How long a job is expected to last
    • Specific days and times that staff are expected to work
    • The duration and conditions of any probationary period
    • The length of the notice period
    • Details of eligibility for sick leave and pay
    • Details of other types of paid leave e.g. maternity leave and paternity leave
    • All remuneration (not just pay) e.g. vouchers, lunch, health insurance, etc.
    • Any training entitlement provided by the employer.

Who is a worker?

Although it is relatively easy to identify an employee, recognising a ‘worker’ can be more problematic. In a nutshell, a worker is someone who works for you but has no rights to notice of dismissal, statutory redundancy pay, time off for emergencies, or flexible working, and is not entitled to bring a case for unfair dismissal. Usually, such a person is a casual worker or subcontractor. For further clarification click here.

Parental bereavement pay and leave

With effect from a date to be advised at some point in 2020, working parents will be entitled to two weeks’ paid leave in the unfortunate circumstances of the death of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy.

Termination payments

From 6 April 2020, new NI legislation requires that any termination payment in excess of £30,000 chargeable to income tax will also be liable to Class 1A NICs at 13.8% on the balance above the £30,000. Up to that date, termination payments in excess of £30,000 are liable to income tax only.

The charge is to Class 1A NICs rather than Class 1 NICs, so it is only the employer, not the employee, that pays. Nevertheless, this will obviously make qualifying termination payments much more costly for employers. Another downside is that Class 1A NICs are normally levied on benefits-in-kind, reported on forms P11D, and paid by 19 July following the tax year end. However, those relating to termination payments will be collected through Real Time Information/PAYE and so will need to be paid and reported to HMRC at the time they occur.

Beware of Employee Burnout

In May 2019, the World Health Organisation (WHO) recognised burnout as an “occupational phenomenon.” It is not yet classified as a medical condition but is included among ‘Factors influencing health status or contact with health services’ – which includes reasons for which people contact health services but that are not classed as illnesses or health conditions.

It is defined by the WHO as follows: “Burn-out is a syndrome conceptualised as resulting from chronic workplace stress that has not been successfully managed”.

Employers will henceforth need to be able to recognise burnout and deal with it. It is important to differentiate burnout from stress, although the two are connected.

Typical symptoms include:

  • An unexplained drop in performance
  • A change in mood
  • Poor motivation and concentration
  • Frustration
  • Irritability or lack of patience with co-workers or customers
  • Lack of job satisfaction
  • Use of food, drugs or alcohol to feel better
  • Change in sleep patterns
  • Unexplained headaches, stomach or bowel problems, or other physical complaints.

Employers may need to review their HR policies and ensure that managers are trained to recognise the signs. If an employee’s ability to carry out day-to-day activities are affected by burnout, they may be protected by the Equality Act 2010 and be deemed disabled within the definition of that Act. Obviously, the consequences could be serious and costly.

As I have often said, the business of employing people gets ever more complicated and onerous. Perhaps now would be a good time to consider outsourcing your payroll or HR functions. At UHY we already carry out payroll for hundreds of businesses across a wide range of sizes and industries and we are also well-placed to recommend HR and employment law specialists as required. If you need advice please contact me or use our contact form.