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Changes to Worker Contracts

Changes to worker contracts from 6 April 2020:

Are your terms of employment for your employees spread over an offer letter and a separate contract or handbook? Do you use zero hours workers or workers on variable hours such as shift workers? Will you be offering training or requiring new staff to undertake training in the future? Do you provide staff benefits in addition to basic pay? Do you offer your workers any paid leave, other than the usual annual leave? Do you insist on a probationary period for new joiners?

If so, then you will need to make some changes to comply with the new rules which are coming into force next year in relation to the written statement of particulars which employers are currently required to give to their employees within two months of starting work (commonly known as “section 1 statements” as the rules are set out in section 1 Employment Rights Act 1996 (“the ERA”)).

These changes relate to any person starting work on or after 6 April 2020 and are summarised below.  Failure to comply with the rules relating to section 1 statements can expose you to a claim for compensation of two to four weeks’ pay per worker (but only where the worker also brings another claim).

What are the key changes relating to section 1 statements from 6 April 2020?

  • The obligation on employers to provide a written statement of particulars will be extended to workers, as well as employees.
  • There will no longer be a minimum one-month service requirement before a worker or employee is entitled to receive a written statement of particulars.
  • Additional information which must be included in the section 1 statement is as follows:
    • the days of the week the worker is required to work, whether the working hours or days may be variable and how they may vary,
    • any paid leave entitlement which is additional to annual leave and holiday pay, such as maternity leave or paternity leave,
    • details of all additional remuneration and benefits which aren’t specifically listed in section 1(4) of the ERA,
    • any probationary period, including any conditions and its duration, and
    • any training entitlement provided by the employer, including whether any training is mandatory and/or must be paid for by the worker.
  • The majority of written particulars must be provided in a single document on or before the date on which the employment starts (i.e. it becomes a “day one right”).
  • However, there are exceptions to this rule for certain terms which can be given no later than two months after the beginning of employment, and can be given in instalments. So for the following terms, employers will be able to choose to provide them either in a principal statement or in a supplementary statement:
    • pensions/pension schemes
    • collective agreements
    • any training entitlements (although terms relating to mandatory training, including any mandatory training which the worker must pay for must be given in the principal statement from day one), and
    • a note giving certain information about disciplinary and grievance procedures
  • For certain other information, the single document can refer the employee to another “reasonably accessible” place where those terms can be found, such as from HR or on the employer’s intranet. Under the new rules, these are terms relating to:
    • incapacity and sick pay
    • any paid leave entitlement which is additional to annual leave and holiday pay, such as maternity and paternity leave
    • pensions/pension schemes, and
    • certain information about disciplinary and grievance procedures
  • For terms relating to notice periods, the section 1 statement can refer to the law or to a collective agreement containing those terms. It will not be permissible to refer to any other accessible document such as a staff handbook for this information.

Other possible changes affecting contracts

  • Reform of confidentiality clauses – the government announced in its response to the consultation on the appropriate use of confidentiality clauses in cases of discrimination and harassment in the workplace, that it will legislate to require the limitations of a confidentiality clause in an employment contact to be included as part of the written statement. No time frame has been given for this change.
  • EU Directive on transparent and predictable working conditions – this Directive must be implemented by Member States by 1 August 2022 but given Brexit uncertainty it is not clear if this will ever apply in the UK.  It is aimed at workers without fixed or guaranteed hours and gives them the right to receive within 7 days of starting work, a statement confirming the number of guaranteed paid hours and the remuneration for any extra hours worked, as well as the reference hours and days within which they may be required to work. It will not apply to those working 3 hours or less a week in a reference period of 4 consecutive weeks.

What should employers do now?

  • All individuals starting work from 6 April 2020, other than genuine self-employed independent contractors, must be given a statement containing the particulars set out in section 1 ERA from day one of their contract. Therefore, you should put in place a process to determine who should receive a section 1 statement, and whether your organisation is responsible for doing so (agency workers, for example, would normally receive their section 1 statement from the employment business contracting with them directly).
  • Ascertain what is your “section 1 statement”: do you currently use a statement for your employees, or are all the required particulars set out in your terms of engagement or contract of employment/worker contract?
  • Check that the additional information required by the new rules is included in your section 1 statement.
  • Check that all the information required by the new rules to be in a single document is included in your section 1 statement, and that you provide all other information either in a reasonably accessible document (such as on the intranet or on request through HR), or in a supplementary statement (whichever is applicable) and, for the relevant supplementary statements, that they are provided within two months of starting work.