Employment Law Changes 2020

Everything you need to know about Employment Law Changes 

In December 2018, the Government introduced the Good Work Plan, which included several employment laws changes. These changes aim to strengthen employment rights and to improve working lives for everyone. As a result, there are two changes being implemented in 2020 which have been outlined below.  

1. Changes to the tax treatment of off-payroll labour 

This relates to changes to tax legislation regulating off-payroll working (IR35) and comes into practice on 6th April 2020.  

It requires private sector businesses to deduct income tax and National Insurance contributions via payroll from fees for services paid to a personal service company (PSC) where the individual performing the services would ordinarily be regarded as an employee if it weren’t for the PSC.  

It is the responsibility of medium and large businesses to determine the IR35 status of a contract. For small businesses (defined by the Companies Act 2006), there is no change and the PSC is still responsible for determining the IR35 status of a contract. 

1. New reference period rules for calculating holiday pay 

Also, on 6th April, the reference period used to calculate holiday pay for workers with variable pay is changing. Now, this is the pay that a worker received during the 12 weeks worked prior to taking a holiday. However, come April the reference period will be changed to 52 weeks, or the total number of weeks worked if less than 52 weeks.  

You will need to consider when you are going to enforce this within your own company, many companies start their holiday calendar on 1st January, but you can put it off until 6th April but it is important to think about the financial and practical issues that could arise such as holiday carryover.