Hannah Copeland, HR Associate, Priority Appointments explains how to ensure that your Employee Contracts comply with new legislation which came into force in April when you take on new people.

Spring 2020 was probably the most challenging period that any employer has ever had to deal with. 

As an employer, you have had to understand and implement short-term and fast-evolving changes associated with the Coronavirus Job Retention Scheme during a period of huge uncertainty. And as if that wasn’t enough, you’ve also had to deal with the new employment legislation that came into effect in April - dubbed by many as ‘the biggest overhaul of employment law in 20 years’.

As lockdown eases in the southeast, companies are having to make major changes to their workforce to suit the future of their business, and to cater for the personal needs of staff members who have been - or are - affected by the pandemic. 

The Impact of The Good Work Plan

The latest changes have affected many areas of employment law, but what do they specifically mean for your workforce?

During Theresa May’s premiership, there were a number of proposals and consultations on key issues in employment law, particularly in regard to improving the regulation of the ‘Gig Economy’.

The result of these consultations was the 2018 Taylor Review of Modern Working Practices, which fed into the recommendations in the government’s Good Work Report. These recommendations have now been put into legislation.

A survey in November 2019 by Citation, found that at that stage, 59 percent of British employers did not know about the Good Work Plan, just months before the raft of changes came into effect. 

The survey also found that 42 percent of those who knew about it only partly understood how it would affect them, and 11 percent had heard of it but did not understand how it would change their legal obligations.

How Do the Changes Affect You?

Since then, employers have had to deal with the additional challenges caused by the pandemic in addition to getting up to speed on new legislation. It is no surprise therefore that some businesses are finding it hard to manage workforce changes - particularly if they don’t have dedicated HR expertise in-house. 

Many elements of the Good Work Plan came into force last year, but April 2020 saw further major amendments. 

Here is a summary of some of the key changes and how they can affect your company, particularly if you are planning on restructuring your workforce. 

1) Issue of Contracts

What’s changed? A contract, also known as Statement of Terms and Conditions, now has to be given to a new employee on or before the first day of employment. In the past, you had 60 days from someone starting to issue them with their contract. 

What are the risks if you don’t comply? If you don’t have a legally compliant contract in place, Terms and Conditions of employment are ambiguous from day one. This can create a culture of mis-trust and uncertainty which could potentially lead to arguments over terms and, if not watertight, could affect the magnitude of any future compensation payments if employees have to be made redundant. 

2) Holiday Pay Reference

What’s changed? The period referenced for holiday pay changed from 12 weeks to 52 weeks. This means employers must look back 52 weeks and calculate average pay during that period, then use that figure to pay employees while they are on holiday. This is particularly relevant for the manufacturing sector where staff often do varying shifts and earn overtime. 

What are the risks if you don’t comply? If you don’t calculate holiday pay correctly then you could leave yourself open to compensation claims for underpayments. If underpayments continue over a period of time, you would be exposed to claims for substantial sums and may have to settle the matter at an employment tribunal. 

3) Information and Consultation

What's Changed? Employees have increased rights to request a formal agreement governing their right to be consulted about workplace changes. Two per cent of the workforce (or at least 15 employees) in any company with over 50 employees have the right to request a formal agreement to be consulted and informed about workplace matters which affect them. 

What are the risks if you don’t comply? Companies can be fined heavily for failure to consult with employees in the right way, even when their motive and rationale for making changes is sound. But aside from monetary fines, failure to consult with your staff will negatively impact communication channels and will ultimately lead to a discontented - and less productive - workforce.

4) Content of Contracts

What’s changed? All Employment Contracts must now include the following new clauses/information:

• Terms relating to the days and times (not just hours) that someone has to work and whether days and hours are likely to vary or stay the same. 
• Details of eligibility for sick leave and Statutory Sick Pay
• Details of any other types of paid leave: contracts must now state what remuneration is paid for maternity, paternity, compassionate leave etc. 
• Duration and conditions of a probationary period
• Training entitlements, requirements, and exactly what training will be paid for 
• Details of ALL employee benefits, not just benefits relating to pay such as bonuses/commission etc.

What are the risks if you don’t comply? As with all employment law, the devil is in the detail and these seemingly minor changes can in fact have a major impact on the content of contracts. As an employer, if you were to fail to comply with any of these clauses, your company could become exposed to litigation - particularly for a potential breach of contract claim, discrimination claims and breaches under the Working Time Regulations. 

Whilst these changes may feel like an additional administrative burden for your company at a difficult time, applied effectively, they provide openness and transparency for everyone. They will ensure that you have complete consistency in your terms to protect your company from the risk of potential claims in the future.

Ensuring You Are Compliant When Restructuring Your Workforce

As you plan to bring in people with new skills, or take on new staff to cover for those who are not yet able to return to work, it is well worth making sure that you employ your permanent or temporary staff through a professional recruitment consultancy like Priority Appointments. 

As a professional member of the Recruitment and Employment Confederation (REC), you can rest assured that we abide by the body’s Code of Conduct, including all relevant legislation, statutory and non-statutory requirements and official guidance, and keep up with any future amendments. 

We’re Here to Help

If you have specific queries about what you should be including in a new employment contract, please get in touch with your Priority Appointments account manager, or email the team and tell us about your query.