As someone who owns or runs large properties or estates, you likely employ a number of household or estate staff. As of April 2020, three key reforms are coming into force, and you or your HR team need to be aware of these legally binding measures.
1. Calculating Holiday Pay.
Some key household staff may receive variable pay in the form of overtime pay, increased pay for unsociable hours, bonuses or even commission.
The current method for calculating holiday pay for workers with variable pay is to calculate the average pay taken over the 12 week period prior to taking the holiday.
From 6 April 2020, this period will be changed to 52 weeks, or the number of weeks of employment if the staff member has been with you for less than 52 weeks.
What you Need to Do:
Check the way you calculate holiday pay – Most employers begin their holiday pay year on 1 January. If that is the case, you need to decide whether you need to change the way you calculate holiday pay on the upcoming 6 April , or at the start of your holiday year.
Christmas time will often bring high levels of overtime for your household staff, which could affect their holiday pay. Additionally, if your financial year ends after 6 April, the value of accrued but untaken holiday will increase, so you may wish to limit how much holiday can be carried forward.
Adjust your HR systems – change the 12 week period to 52 weeks.
Review your variable pay policy -This previous 12 week reference period was one of the few pieces of case law that was unclear, but this is no longer the case. You will need to consider whether this could trigger claims for backdated holiday pay.
2) Changes to tax legislation for off-payroll labour
Some households choose to employ members of staff through a company (e.g. Household Ltd) and may pay certain service providers via that person’s own personal service company (PSC) rather than as employees. This is where the household company (Household Ltd) pays the individual performing the service (gardener, housekeeper, chauffeur) via their company (Mrs Housekeeper Ltd) rather than directly employing the housekeeper.
The new rules mean that income tax and NI contributions should be deducted if it can be determined that the worker is in reality an employee, or if they are genuinely self-employed.
What you Need to Do:
Audit your off-payroll labour – You will need to look at each PSC and make individual decisions, this will be a factual investigation looking at what each individual does in practice.
Consider the knock-on effects – You may need legal advice to draft contracts, advise on pension liability and other factors.
3) Written particulars become a “day one right” for employees
Currently, when you take on a new member of staff in your household, you have a grace period of 2 months within which to supply your employee with their written contract and particulars of employment. As of 6 April 2020, this will become a “day one right” for all new employees. This documentation will also need to include topics such as probationary periods, any variation in working hours and other benefits provided by you as the employer.
What you need to do:
Review your contracts – Check all your procedures for taking on new staff members to ensure contracts are up to scratch. If your staff members are on flexible working patterns such as shifts, ensure that your terms and conditions include the correct wording.
For further advice on domestic staffing HR and other matters, please contact Franklin for a no-obligation consultation.
(With thanks to our legal consulant Nicola Goodridge at www.goodhr.co.uk)