The 5 Biggest Employment Law Changes of 2019
Each year, HR must grapple with a whole host of changes to the way the function performs.
Changes to minimum wages, pension requirements and reporting can feel overwhelming. Every change requires careful planning and a real understanding of how they will impact the organisation.
No HR practitioner wants to drop the ball on an important legal change, as this opens the company up to further action. Preparing for these changes will allow you to manage them correctly and take them in stride.
Check out this blog to learn about the 5 biggest employment law changes of 2019 so far – and what you should be doing about them.
Prepare for Executive Pay Reporting
With two gender pay gap reports behind you at the end of this year, you should start looking forward to the next report you’ll be required to submit. This will be required from 2020, but the information you present should be gathered over the course of this year.
The executive pay report requirements will impact organisations with more than 250 employees and they’ll be required to compare employee pay to executive pay. In the report, employees should be broken down into quartiles, and each level should be compared to the CEO’s pay.
Organisations will be obligated to include all CEO remuneration, including bonuses, shares, dividends and any other compensation received. The nature of this type of calculation is vastly different from regular employee pay, so it’s important to prepare in advance for all of the information that you will require.
HR should work closely with the CEO for full transparency, while also handling the publication of their details sensitively. Consider the outcome of the report on your reputation too; will the CEO’s salary seem unfair in relation to other workers?
The system will be similar to gender pay gap reporting, in that you should publish your report online and include a signed statement. There’s a full FAQ published by the government that you can use to prepare for this new legal obligation.
Increased Payments, Leave and Rates
The National Minimum Wage has increased as of April, as has the National Living Wage. Continuing to ensure that you pay at least the minimum is key, considering any expenses or overtime that may cause this rate to be lower.
Consultations have already begun to set the National Living Wage rate for 2020 and it’s forecasted to be £8.67 around per hour, so keep up to date with these to prepare for the next changes.
Alongside changes to these pay rates, there’s also an increase in statutory family and sick pay rates. Again, these are changes that you can anticipate each April and plan for in advance. These impact maternity, adoption, sick, and shared paternal pay.
From April 2020, the government also plans to introduce parental bereavement leave and pay. This would give bereaved parents two weeks of paid leave in the 56 weeks following the death of their child.
Prepare for this by updating your bereavement policies and consider whether you could add further benefits to assist bereaved parents at this time.
Itemising Pay Statements for Workers
All employees have a right to an itemised pay statement, and now this also extends to workers too. Workers include any person that conducts work for your organisation, personally undertaking the services.
They are also free, without penalty, to accept or reject the offer of work that you make to them. This doesn’t include self-employed independent contractors that run their own business to supply these services.
Workers aren’t entitled to as many statutory rights as employees, but the right to an itemised pay statement has now been extended to them. Where they perform different duties for different rates of pay, these should be clearly outlined on the pay statement.
This should also include any deductions, gross pay, and net pay. This is a continuation of government work to create further transparency in the pay process, for all workers that may benefit from this clarity.
While arranging these pay statements, you may want to evaluate your current payslip setup. You could give further clarity to your existing employees, change the way that you manage these to reduce the risk of human error, or the way that these are distributed.
Enhanced Regime in the Finance Sector
In the finance sector, a new certification regime will come into play that impacts all FSMA authorised firms. This will include banks, insurers, mortgage providers, investment firms, and many more when it comes into effect on the 9th of December 2019.
This is a new regulatory framework that aims to place more accountability on a smaller number of senior staff members. The Senior Managers and Certification Regime (SMCR) will require firms to introduce key responsibilities and certification to specific managers within the organisation.
This compliance issue will require significant collaboration with HR in large firms, as they must ensure these duties are carried out and named individuals are tasked with responsibilities. It’s essential that Senior Managers are identified and approved by regulators ahead of this date for the firm’s continued compliance.
Handover procedures will also need to be implemented, so that departing members of staff are able to pass their responsibilities along without disruption. This may also impact your succession plans and restructuring strategies, as there should be a consistent number of named managers with these responsibilities.
Managers can also be reprimanded for breach of conduct under this scheme, though what constitutes a breach will be defined by the organisation. This may lead to the creation of a new policy to ensure that each employee is treated fairly in the event of misconduct.
Government Review of Modern Working Practices
The Taylor Review of Modern Working Practices set out several recommendations for governmental review. Over the coming months, we’ll begin to see these recommendations impacting the HR function as they’re signed into legislation.
This covers a broad range of suggestions, which will impact the average workplace and employee. This includes changes to Agency Workers Regulations, which will restrict the use of the Swedish Derogation.
Under this amendment, agency workers have the right to opt out of equal pay entitlements, meaning they can be paid less than permanent employees. However, this has been used unscrupulously by agencies and this derogation may be repealed as of next year.
This new legislation has also proposed to extend the holiday reference period from 12 to 52 weeks. This would mean that holiday entitlement would be calculated over a reference period of a year, rather than the current 12-week window.
By doing so, the government hopes to give fairer holidays to those that work irregular shift patterns, as the frame of reference encompasses their busy and quiet periods.
Finally, workers will be entitled to more details on their rights, like sick leave and other types of paid leave. This may impact your onboarding process for workers in the future, as you will be required to give this information on the first day of work with you.
By proactively managing these changes to employment law, you can defend your organisation from legal challenges. Keep up to date with shifts in the legal landscape and you can even begin to anticipate what’s coming next.
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