This long awaited piece of legislation is due to hit the statute books this Spring, with many of its provisions coming into force in October. It is this year’s most significant piece of legislation so far and will affect employers in both the private and public sectors. As well as harmonising and consolidating discrimination legislation, it will also strengthen it. For example, new types of disability discrimination will redress the balance in favour of the employee following the case of London Borough of Lewisham v Malcolm. Also, the definitions of direct discrimination and harassment will be widened to cover claims based on “association” and “perception” and there will be a new type of claim for gender pay discrimination based on hypothetical comparators. Widely publicised in the press is the extension of the concept of positive action to enable employers to choose from two equally qualified candidates, the person who is from a group which is under-represented in their workforce. It will also be possible for claimants to bring “multiple” direct discrimination claims. Finally, amongst other things, proposals to make the gender pay gap more transparent include a power to issue regulations which can require large employers (250+ employees) in the private sector to report their gender pay gap. Public bodies with more than 150 employees will be required to do this from 2011.
Financial Services Bill
Introduced in the House of Commons after the Queen’s Speech in November, the Financial Services Bill could become law before the forthcoming General Election. This Bill is a direct consequence of the banking crisis, providing for the statutory regulation of pay in the financial and banking sectors. It requires the Financial Services Authority (“FSA”) to regulate financial sector remuneration to promote effective risk management and compliance with international standards. It proposes enhanced pay disclosure and powers for the FSA to prohibit specific types of remuneration, make contract terms void if they are in breach and provides for the claw-back of payments made under void terms. These changes are intended to apply to certain contracts already in force, as well as future contracts.
For more information, view the Bill.
Additional Paternity Leave and Pay
Proposed to apply in respect of children due or born after 3 April 2011, fathers (or co-adopters of a child) will be able to take up to 26 weeks’ paternity leave once the mother has returned to work. The leave must not be taken earlier than 20 weeks after the birth of the child (or placement for adoption). Statutory Paternity Pay will be paid for the balance of the period which the mother would have remained on maternity leave and at the same rate as SMP. The Conservative Party have indicated their commitment to extend paternity leave and may even extend it further by allowing both parents to take time off simultaneously. Employers should update their policies if and when firm proposals for legislation are known (hopefully by summer 2010).
For more information, access the public consultation papers.
Default Retirement Age
Following on from the Government’s paper “Building a society for all ages” last year, the Government has asked for further evidence on how the default retirement age of 65 (“DRA”) works in practice and the impact on business on raising or removing the DRA, as well as how associated costs could be mitigated. The review of the DRA was scheduled to take place in 2011 but has been brought forward as a result of the comments made by the High Court in the Heyday decision last year. There seems to be a strong possibility that the DRA will be raised or removed altogether in the near future.
For more information, view the Government’s call for evidence.
New “fit” notes will replace the old “sick” note system from Spring 2010 (expected under the Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) Amendment Regulations 2010). The “fit” notes will help employers by giving more information on the employee’s medical condition. GPs will have the opportunity to state if the employee is fit for work (or for some work) and whether adjustments (such as a phased return to work) would be beneficial. It may still be advisable, however, to obtain specialist medical reports where there is a possibility that the employee suffers from a disability.
Time off to train
Employees working for employers with 250 or more employees will have a new right to request unpaid time off for work to undertake study or training. This new right will come into force on 6 April 2010 and will apply to employees with six months’ service (see the Apprenticeships, Skills, Children and Learning Act 2009).
Safeguarding Vulnerable Groups Act 2006
As from November 2010, anyone wishing to work in a “regulated activity” with children or vulnerable adults will need to register with the Independent Safeguarding Authority (“ISA”). An opportunity to register early will be available from July 2010.
There is a possibility that in relation to all whistleblowing claims brought on or after 6 April 2010, the relevant Employment Tribunal will be able to pass on to regulators information relating to that claim (providing the Claimant consents). The Government consulted on this last year and, although there has been no announcement as regards the outcome of that consultation, the Government has previously indicated 6 April 2010 as a possible date for the new regime to come into force.
For more information, view the Government’s consultation papers.
Bank Payroll Tax
In the 2009 Pre-Budget Report, the Chancellor announced a new one-off Bank Payroll Tax (“BPT”) payable by banks and other providers of financial services in respect of bonus awards to employees exceeding £25,000. The BPT will be charged at the rate of 50 per cent on any such bonuses awarded between 12.30 pm on 9 December 2009 (when the new charge was announced) and 5 April 2010 (the end of the current UK tax year). However, the Government is already considering extending this period until the Financial Services Bill 2010, which is expected to provide a new framework for the conduct of banks and similar institutions, comes into force.
The purpose of the BPT is to discourage banks from awarding bonuses which are deemed to be excessive and inappropriate during a recession which is largely perceived to have been caused by bankers. It is a tax on banks and other financial institutions and does not affect the tax position of employees.
The BPT will apply to banks, building societies and a number of other organisations within the financial services sector. It will be charged at the rate of 50 per cent on any payments and benefits exceeding £25,000 (other than excluded remuneration) to employees who are involved in certain types of financial activities (broadly, activities which require authorisation from the Financial Services Authority).
The BPT is intended to apply to remuneration with the character of a “bonus”, but not to regular payments of salary. This is reflected in the concept of “excluded remuneration” which is outside the scope of the BPT. Excluded remuneration comprises: (1) regular salary, wages or benefits (which do not vary by reference to performance or similar considerations), (2) payments and benefits made or provided in accordance with contractual obligations entered into prior to 12.30 on 9 December 2009, and (3) awards of shares under an approved share incentive plan or grants of share options under an SAYE option scheme.
The BPT will become due and payable on 31 August 2010 and will not be allowable as a deduction for corporation tax purposes. There are also record keeping and other reporting requirements. A failure to comply with the BPT regime will give rise to penalties.
And finally ….. for 2012
There will be an extra Bank Holiday on Tuesday 5 June 2012 to celebrate the Queen’s Diamond Jubilee. This will involve moving the late May Bank Holiday to Monday 4 June and adding an extra Bank Holiday on Tuesday 5 June to give a long weekend of celebration (except of course those studying for exams!!).