2019 was another turbulent year with a lot of activity in politics, but not much time for passing legislation. Karen Holden has a digest of the main changes this year.
It’s that time of year – time to look back on the year we’ve just been through and reflect on some of the most important changes in terms of legislation around employment and self employment. Karen Holden from A City Law Firm highlights the main developments in chronological order below.
The Government announced in January 2019 new legislation which requires companies with more than 250 employees to report on executive pay gaps. The first reports will be published from January 2020. However, this will report on the prior financial year. Unlike gender pay gap reports, it will require explanations in respect of the methodology used to calculate pay ratios, and reasons for any changes in ratios.
The Government introduced a new scheme in April 2019, called Making Tax Digital, which seeks to make it easier for businesses to get their tax right and to keep on top of their affairs. It is now a requirement that, for VAT-registered businesses who have a taxable turnover above the VAT registration threshold (£85,000) records are kept and preserved in digital form and VAT returns should be filed using compatible software.
State pension rates increased in April 2019. Those who receive basic state pension (i.e. those who reached retirement age before April 2016) got an extra £3.25 per week, whereas those who reached retirement age after April 2016 were entitled to a new single-tier state pension. This new state pension meant that weekly payments were boosted by an extra £4.25 per week.
In response to findings that NDAs were used inappropriately to threaten employees against whistleblowing and/or reporting criminal offences to the police, the Solicitors Regulation Authority issued further guidance in May 2019. The guidance reinforced that NDAs cannot be used to prevent, impede or deter a person from reporting misconduct or making any similar disclosures. It was also purported that a copy of the NDA could only be held by a party’s solicitor and not themselves; a party would therefore not be able to easily and efficiently review the agreement as the costs of instructing their solicitor to deal with any questions would serve as a deterrent.
The Civil Aviation Authority (CAA) implemented new regulations on 30th November 2019 in a bid to improve public and airspace safety, especially in the wake of events involving near-misses between drones and aircrafts. These regulations make it more rigorous to be a drone flyer; for example, it will be mandatory that you register your drone and flyers must take and pass an online competency test The rationale is to allocate legal responsibility so that if anything were to go wrong, legal responsibility would lie with an individual person. Therefore, if you own your own business, you will not be able to register your company as the legal owner of your drones; if you have a number of drones within your company, the person with legal responsibility for those drones may well be the Chief Safety Officer or Chief Financial Officer, for example.
HMRC introduced IR35 as a means to tackle those who might take advantage of tax efficiency in a contractor/client relationship. April 2020 will see the introduction of new laws and will look behind the contracts and invoices and see if the worker is genuinely a contractor or de facto an employee. So, partners taking monies from the business; or someone who only works for your business and no one else, where you govern the hours and pay are unlikely to be held as self-employed. Now whatever the contract or payment arrangements the law will seek to look behind it.
As a business, you must ensure that it is clear who will be determining the status of a worker (hours, location, clients or activities). If it is your responsibility, you are responsible for deducting tax and National Insurance from your worker’s fees and paying it to HMRC. It would be a good idea also to take a look at your current workforce and identify those who supply services elsewhere and also put processes in place to determine if IR35 rules apply.
Under current laws, employers have two months to provide a Statement of Terms and Conditions to employees. However, from April 2020, all employees and workers will be entitled to this from the first day of their employment. In order to prepare, businesses should make sure that they have already drafted a statement at a much earlier stage prior to the worker being employed so that they are ready to hand this to a worker on day one of their employment.