UK employment law seems to be in a constant state of flux and this year is no exception. Summarised below are the main legislative changes that employers need to know about this April. There are some urgent action points to consider before 6 April regarding serving any last minute retirement notices and the timing of termination payments.

Flexible Working and right to request time off to train

Confusingly, the right to request to work flexibly to care for children will not now be extended to parents with children under 18 from 6 April 2011 as had previously been proposed. The Government recently announced in The Plan for Growth, published alongside the budget on 23 March 2011, that it will no longer be implementing this change. The right therefore continues to apply only to parents of children under 17 (or 18 for a disabled child). BIS will soon be consulting on the extension of flexible working rights to all employees, as well as the design of a new flexible system of shared parental leave which the Government intends to be introduced from 2015.   Furthermore, as announced in November 2010, the Government will not be extending the right to request time off to train to companies with fewer than 250 employees, as had originally been planned. The right still applies in the case of larger companies.

Watch out for the Government’s forthcoming consultation paper on the new flexible system of shared parental leave and extension of flexible working rights. As regards your flexible working and training policies, change back any amendments made in anticipation of the aborted change to the right to flexible working and the right to request time off to train.

Paternity Leave

Parents and adoptive parents of babies born (or notified of a match for adoption) on or after 3 April 2011 will be able to take advantage of the new right to Additional Paternity Leave introduced by the Additional Paternity Leave Regulations 2010 (for further information see our client alert Paternity Leave). The new right will entitle eligible employees (usually fathers) to take up to 26 weeks’ paternity leave. The leave can be taken any time from 20 weeks from the date of birth / placement for adoption up until one year after that date. The Government announced in September last year that Additional Paternity Leave was an “interim measure” and, as mentioned above, it now intends to consult on more ambitious plans to formulate a system of flexible shared parental leave, to be introduced in 2015.

Review and update your family, paternity, maternity and adoption policies. If you operate an enhanced maternity pay policy, consider whether you should extend this to cover paternity leave. Watch out for our forthcoming client alert dealing with this issue

Increasing Rates

As from 11 April 2011, statutory maternity, paternity and adoption pay are set to increase from £124.88 to £128.73 per week, with the weekly earnings threshold increasing from £97 to £102.

Default Retirement Age

5 April 2011 will be the last date on which employers will be able to issue a notice of retirement under the current retirement rules. On 6 April 2011, the transitional provisions under the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 will come into force. These Regulations will implement the Government’s plans to abolish the default retirement age of 65 as from 1 October 2011 and the associated retirement procedure, including the right to request working beyond retirement. For more information see our client alert Phasing out the UK default retirement age.

Make an urgent review of your personnel files to consider whether to serve last minute retirement notices before 6 April on any employee who has reached 65 (or normal retirement age if lower) or who will do so before 1 October 2011

Equality Act 2010

Most of the provisions of the Equality Act 2010 came into force on 1 October 2010. However, there were a number of provisions which were left undecided. The following provisions will now come into force in early April:

  • positive action in recruitment and promotion (section 159) (6 April);
  • public sector equality duties (section 149) (5 April);
  • the new Statutory Codes on Equal Pay and Employment issued by the Equality and Human Rights Commission (6 April).

The Government has recently announced that the combined discrimination provisions (section 140) will not now be brought into force at all. It will also be consulting on whether to revoke the provisions relating to harassment by third parties (section 40).

In December 2010 the Government announced that it would work with private sector employers to introduce voluntary (rather than mandatory) measures to provide gender pay gap information (section 78).

Finally, ECHR guidance on matters to be taken into account in determining questions relating to the definition of disability is expected to come into force on 1 May 2011.

Familiarise yourself with the new Statutory Codes. Consider if the positive action provisions can be useful to you in your organisations’ recruitment and promotion plans. Consider implementing the recommendations in the EHRC’s Code on Equal Pay as regards the voluntary measures your organisation might put in place to measure and share information on men’s and women’s pay.

Bribery Act 2010

This Act was intended to come into force on 6 April 2011 but has now been delayed until three months after the Government’s guidance on the Act has been published. The Act introduces a new corporate offence of failing to prevent bribery by individuals acting on behalf of an organisation. Employers will need to ensure that there are “adequate procedures” in place so they can prevent bribery and corruption. The Guidance will help employers understand what amounts to “adequate procedures” under the terms of the Act. The Guidance was published on 30March 2011 and the Act is now expected to come into force on 1 July 2011.

Read up on the implications of the Bribery Act by referring to our client alert on the Act and our latest client alert on the Guidance.

Tax on Termination Payments

On 6 April 2011, the Income Tax (Pay As You Earn) (Amendment) Regulations 2011 come into force. The Regulations concern the deduction of tax from the payment made to a departing employee after the issue of their P45. Currently, tax on such post-termination payments is deducted at basic rate only using the “BR” tax code. From 6 April, employees will be required to deduct tax at the full applicable rate, whether basic, higher or additional, using the new “OT” tax code. A last minute exception to these proposed changes has been announced in relation to employee shares, options and other securities under Part 7 of the Income Tax (Earnings and Pensions) Act 2003.

Any employers considering the timing of any imminent dismissals should consider whether it may be better to enter into any compromise agreement or other termination agreement before the end of this tax year. This will not change the actual amount of tax due but will have cash flow advantages for employees on higher rates of tax. As regards payments to be made after 6 April, employers should consider whether it may be better to make the entire payment before the issue of the P45. HR and payroll operators should be made aware of the change so they can apply the OT code if necessary and so that the payment is not automatically delayed until after the issue of the P45. Watch out for our client alert on this change which will be published shortly.

Small employers and start ups

The Government announced in The Plan for Growth, published along with the Budget on 23 March 2011, that small employers (ones with less than 10 employees) and start ups will be exempt from all new domestic employment law changes coming into force over the next 3 years, effective from 1 April 2011. No particular detail was given on this but we wonder whether this will apply to changes which would be advantageous to such employers?

Watch out for more announcements on this change.

Statutory maternity pay – reduction in small employer’s relief     

Small employers can recover all of their statutory maternity pay from HM Revenue & Customs. They are also entitled to an additional compensatory amount which is equivalent to 4.5% of the statutory payment made and which relates to the NICs they have paid. As from 6 April 2011 the additional compensatory amount for small employers will reduce from 4.5% to 3%. A small employer, for these purposes, is one whose total Class 1 NICs is at or below a set annual threshold in the qualifying tax year. This is currently set at £45,000.