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As the clocks change for summer, what`s hot in employment law?

04 April 2011 #Employment


As always, April heralds not only spring and the hope(!) of a hot summer, but also many changes in employment law.  The Government are ever reviewing and changing their proposals at the moment so keep a keen eye on Buddy and we`ll keep you up to date. 

The ‘Plan for Growth`

Recent changes, including those announced in the budget and in the Government`s ‘Plan for Growth` document, aim to remove red tape and make life easier for small business.  Some key points are:

  • Dual discrimination provisions set out in the Equality Act 2010 will NOT be brought into force
  • Flexible working rights will NOT be extended to parents with children under 18 - currently those with children of 16 or under can make flexible working requests.  Note that those with disabled children of 18 and under can make flexible working requests now and this will not change
  • Start-up and small businesses with fewer than 10 employees will NOT have to comply with new domestic regulation for THREE YEARS.  This applies to all domestic regulation due to start from 1 April 2011
  • Consultation will be launched to remove the obligation on employers to take reasonable steps to protect their employees from third party harassment,  The Government suggests that this is an "unworkable requirement"
  • The right to request time off for training, which applies to those in organisations with 250 or more employees, will NOT be extended to all employers from 6 April 2011 as planned.  This is now on hold whilst the potential impact on smaller employers is considered
  • The ‘two tier` code` (the Code of Practice on Workforce Matters in Local Authority Service Contracts to give it its full name) was withdrawn with immediate effect on 23 March.  The two tier code sought to ensure that private contractors recruit new employees on the same terms and conditions as those that applied to other parts of their workforce whom they inherited in accordance with the TUPE
  • Regulations following local authority outsourcing.  The rationale for this appears to be to aid local authority outsourcing - a key plank of the Government`s proposals to reform - and goes hand in hand with the Government`s decision to launch consultation on the removal of the ‘Fair Deal` policy which requires provision of broadly comparable pensions where staff are compulsorily transferred from the public sector to a new non-public sector employer.  This is all good news for those who outsource from the public sector. 

Default retirement age

As you will know by now, this will be removed with effect from 6 April 2011.  The key thing to note is that 4 April 2011 is the last day that notice can be served on an employee that they are to be retired as a result of the DRA.  Transitional provisions are in force in relation to those over 65 and currently working and looking to extend their intended retirement date. 

Employees can still be retired at employer-set ages without discrimination, but only if the retirement age can be objectively justified.  This will be a hard task!

Agency workers - ACT NOW!

The Agency Worker Regulations 2010 will come in force on 1 October 2011.  Considering these Regulations is a must if your business uses agency staff.  The Regulations will give agency workers the right to the same basic working and employment conditions as your permanent staff.  Agency workers will also be entitled to equal access to on-site facilities and information on permanent vacancies from day 1 of their engagement. 

These changes could have a big impact on your business so it is wise to consider the changes now so that you are ready in October.

What`s new with the Equality Act?

This hotly debated piece of legislation (which in all honestly did not do much more than consolidate discrimination law in one place) is still slowly being rolled out.  This month the changes are:

  • Positive action in recruitment and promotion.  From 6 April 2011 employers will be able to apply positive action to address under-representation in the workplace when faced with two or more candidates of equal merit.  Wait for the case law turning on what constitutes ‘equal merit`...
  • Public sector equality duty - which requires public sector bodies to have regard to the need to eliminate unlawful discrimination, harassment and victimisation to advance equality and foster good relations between different groups will come into force on 5 April 2011
  • New EHRC Code of Practice on Equal Pay will come into force on 6 April 2011
  • Draft "Guidance of matters to be taken into account in determining questions relating to the definition of disability" has been put before Parliament.  If this is not disapproved it will come into effect on 1 May 2011

Tax, tax, tax...

A few more ingenious ways of taxing employees and businesses are:
From 6 April 2011 tax on termination payments issued after the employee`s P45 will need to be processed on a new "0T" zero-allowance tax code meaning that employees will be taxed at their normal rate.  Previously these payments were made at a the basic rate meaning the employee would enjoy the cash flow advantage of this before having to declare any additional tax due at the end of the tax year.  Now the provisions will operate the opposite way, very much in favour of HMRC.

From 6 April 2011 the HMRC extra-statutory concession which says that an employee`s legal fees on termination can be paid by their employer free of tax if they are either ordered to be paid by a court or Tribunal or covered under a severance agreement will be removed.  This will be replaced by provisions limiting the tax concession to cases where the a court or Tribunal has made a formal costs order or to formal compromise agreements complying with section 203 of the Employment Rights Act.  This means that COT3s under ACAS will no longer enjoy the exemption, nor will tax under Compromise Agreements which relate to limited matters not covered by the Employment Rights Act, such as discrete claims covered by the Equality Act 2010 for example.  HMRC has apparently said that it will look into these issues and that, in the meantime, compromise agreements under the Equality Act can use the old extra-statutory concession pending amendments to the legislation.  The fact that the legislation is known to contain flaws before it even comes in begs the question of why not fix it first - but this might be just too logical!

Additional paternity leave and pay

The legislation for this is already in force and affects parents of babies born on or after 3 April 2011 and adoptive parents notified of a match on or after that date, so we will start to see the effects of this soon.  Eligible employees can now take up to 26 weeks` paternity leave with some additional paternity pay if the mother or primary adopter returns to work early. 

This may be the first in a series of plans to encourage shared parenting from an early stage.  According to Nick Clegg, consultation will be launched on the design of a new flexible system of shared parental leave to be introduced in 2015. 

Immigration cap

A permanent migration cap to restrict the number of non-EU migrants entering the UK will be introduced on 6 April 2011 .  The annual limit has been set at 20,700 people coming to the UK under Tier 2 (General) of the points-based system.  The limit will not apply to those earning more than £150,000 per year and is a lower limit than that recommended by the Migration Advisory Committee, but will be subject to annual review.  It is anticipated that the limit will be reduced, not increased. The rules of settlement and requirements of Tier 2 are also being tightened.

Bribery Act 2011 - delayed until July

This Act, designed to introduce a new strict liability corporate offence of failing to prevent bribery by those acting on behalf of their organisations, has been delayed until 1 July.  It was put back by a few months whilst its guidance was reviewed.  The guidance was finally published on 30 March.  Of this Justice Secretary, Kenneth Clarke, said:

"I have listened carefully to business representatives to ensure the Bribery Act is implemented fully and in a workable, commonsense way - this is particularly important for small firms that have limited resources. I hope this guidance shows that combating the risks of bribery is largely about common sense, not burdensome procedures".

Time will tell if this is in fact how the legislation operates.

Rate rises

The weekly rates of statutory maternity, paternity and adoption pay and maternity allowance rise to £128.73, all from 3 April 2011.  Statutory sick pay rises to £81.60 a week from 6 April 2011.  There is a rumour that the 28 week SSP period will be reduced, although nothing official has been said.

Whilst on this subject it is useful to remember that the limit of a week`s pay (used to calculate statutory redundancy payments amongst other things) rose to £400 with effect from 1 February 2011 and the maximum compensatory award for unfair dismissal rose to £68,400.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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