Five key challenges facing SMEs in 2020

2020 promises to be a hectic year for employers. With that in mind, Kate Palmer of Peninsula highlights five key challenges that businesses across the UK are going to face this year.

SME Challenges 20201. Brexit

The UK has now left the EU with a deal. Understandably many companies are concerned over what this is going to mean going forward. It is still to be confirmed what a future immigration system will look like and, with free movement of persons to end, some businesses may find increased difficulty in sourcing labour. While we wait for further confirmation, employers should encourage EU nationals currently working for them to apply for settled status before the deadline of 30 June 2021. However, it's important to remember that employers can't force them to apply. 

As things stand, the current withdrawal agreement has set up a 'transitional period' to give the UK and the EU more time to work out a lasting deal on their future relationship, which will last until 31 December 2020. If a separate trading deal cannot be reached in this time, a no-deal Brexit will be back on a table. It is therefore also important that businesses keep this in mind going forward.

2. Changes to statement of main terms (SMTs) 

From 6 April, as part of the Good Work Plan, the provision of SMTs will become a day one right for employees and workers. Previously, businesses had two months in which to provide this document, which outlines the main terms and conditions of an individual's employment. This is likely to place increased administrative burden on companies, and they should prepare for this as we edge closer to April.

It should also be remembered that SMTs will also need to include additional information, including content around all forms of paid leave, all employee benefits and the length and conditions of probationary periods.

3. Extension of holiday pay reference period

On 6 April, the holiday pay reference period, which is used to calculate the average holiday pay of those who work irregular hours, will be extended from 12 to 52 weeks. This is to ensure that holiday remuneration is fair and more consistent, taking into account that employees may earn more money in different 12-week periods. 

Businesses will now need to keep track of their employees working time throughout the year, inclusive of any overtime they work, to ensure they are paid correctly while on annual leave. 

4. National minimum wage increase

With the national minimum wage going up as an annual event, it will come as no surprise that there is also to be another increase in 2020. From 1 April, the national living wage, or rate for adult workers aged 25 and over, will increase from £8.21 to £8.72. All other rates are also set to get higher, in what has been labelled the 'biggest ever cash boost' for UK workers. 

This will undoubtedly place a higher burden on smaller businesses to meet the costs, and they should avoid leaving preparations to the last minute. Failing to implement these new rates on time will place organisations in breach of national minimum wage law and could also lead to significant reputational damage.

5. Introduction of parental bereavement leave

Also known as 'Jack's law', this new provision will give employees a day one right to take time off following the death of a child under the age of 18 or a stillbirth after 24 weeks of pregnancy. Employees who have worked for the business for at least 26 weeks will also be entitled to statutory parental bereavement leave pay, which is set at the same rate as other family-related leave. 

Businesses will need to make sure they are familiar with this new legal entitlement and that they facilitate it to employees if they are in this position. It has recently been confirmed that employees will be able to take parental bereavement leave from 

About the author

Kate Palmer is Associate Director of Advisory at global employment law consultancy at Peninsula.

See also

Five upcoming employment law changes your company needs to be aware of in 2020

Executive pay ratio reporting: what do you need to know?

Find out more

Apply to the EU Settlement Scheme (

Good Work Plan (

Holiday entitlement (

National Minimum Wage and National Living Wage rates (

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Publication date: 4 February 2020