Several changes in the law relating to contracts of employment will take place on 6 April 2020. They stem from the Government's Good Work Plan and are intended to provide more clarity on the employment relationship for both parties. The changes will affect all employers. This article summarises them and explains what you need to do in order to comply.
Employers have had to provide written contracts of employment (sometimes known as written particulars of employment), setting out the basic terms of employment, for over 55 years. Up until now they have only had to be given to employees, and employers have had a couple of months from when the employee starts work in which to supply them with a statement. All that changes from April 2020, when most of the information required will need to be given on or before the first day of work. In addition, statements will have to be provided to all workers, not just employees. Extra information will also have to be included.
What is a worker?
"Worker" includes employees, as well as those who work under a contract under which they undertake to work personally for another party to the contract. The other party must not be a client or customer of any profession or business undertaking carried on by that individual. Workers have fewer employment rights than employees but more rights than self-employed individuals.
The contract will now have to be given to the worker either on their first day of work or before they start work. The change in the law applies to all employees and workers who start work on or after 6 April 2020; there is no requirement to re-issue contracts to existing staff.
At the moment, a contract only has to be supplied if the employment is due to last for more than one month. That requirement will be abolished from 6 April so that even short-term employees or workers will have to be given a statement.
Employers already have to give employees a long list of information relating to their terms and conditions of employment. From 6 April, extra information will have to be included covering:
- The days of the week the worker is required to work and whether working hours or days may be varied, with details of how they may vary
- Any entitlement to paid leave (other than paid holiday, which already has to be provided), including maternity and paternity and adoption leave
- Any other remuneration or benefits provided by the employer
- Any probationary period, including any conditions and how long it will last
- Any training provided by the employer, including whether the worker is required to complete it and whether the employer will pay for it
Although most of the information has to be given in a single document on or before day one of employment, some particulars can be given in a separate statement no later than two months after employment begins. They are details of:
- Pensions and pension schemes
- Collective agreements
- Any training entitlement (although details of compulsory training, and any training the worker has to pay for, must be included in the initial statement)
- Disciplinary and grievance procedures
In addition, the single document can refer the worker to another source (such as a staff handbook or the intranet) for certain information including:
- Incapacity and sick pay
- Entitlement to paid leave (other than paid holiday)
- Pensions and pension schemes
- Training entitlement
The consequences of getting it wrong
If you fail to comply fully with the rules regarding written statements, an employee or worker will be able to bring a claim for two to four weeks' pay. However, this is not a stand-alone right and can only be brought in conjunction with another claim (eg for unfair dismissal or unpaid wages). Such claims are rare but are not unknown.
What do employers need to do now?
Employers should review their template contracts of employment and check that they comply with the new law. If you have not looked at them for some time, this is a good opportunity to ensure they are up to date.
Secondly, you need to amend your HR system so that a reminder is generated to issue a contract before a new joiner starts work (or at the latest on their first day of employment).
Lastly, if you take on any workers, you must ensure that they also receive a written statement. If you engage workers, you may find it helpful to have a separate document for them, as many of the terms and conditions set out in a contract of employment will not apply. Using a contract of employment template for a worker could suggest that the individual is an employee and has additional rights so should be avoided.
It will not always be clear whether or not an individual is a worker, or who has the obligation to provide the information required. For example, if you use genuine self-employed contractors, they will not need to be given a statement. If you use agency workers, you will need to check with the agency that they will supply the statement. If you have any queries, please speak to your usual employment contact.