Paternity leave
Flexible working
Training requests
Change to taxation of employer-supported childcare
Equality Act
European works councils
Retirement age
Agency workers
Annual compensation limit increases
Employers should be aware of the following legislative changes due to come into force in 2011.
Fathers of babies due or children adopted on or after April 3 2011 will be entitled to up to six months' additional paternity leave, to be taken before the child's first birthday, and the transfer from the mother of up to three months' pay at the statutory flat rate. In addition to updating paternity leave policies, employers should bear in mind that a number of legal issues previously arising only in relation to additional maternity leave will now be relevant to additional paternity leave, such as:
- continuation of childcare vouchers;
- bonus awards;
- priority over vacancies if the role is made redundant; and
- notification of job vacancies while on leave.
Further, recent EU case law suggests that fathers taking such leave will be entitled to the same contractual benefits as an employer gives its employees on additional maternity leave, including any enhanced pay and potentially returners' bonuses.
The right to request flexible work will be extended to parents with children aged 17 from April 2011 - the present age limit is 16. Employers should update their flexible work policies. A consultation on how to extend this right to all employees and create a new system of flexible parental leave is expected in early 2011, with plans to be finalised by the end of the year.
The right to make a request in relation to training (eg, for time off to study), which has applied to employers with at least 250 employees since April 2010, will be extended to cover all employers from April 2011 if the government confirms the previous government's plans; however, the decision is under review. Requests can be refused only for prescribed business reasons. This change could place a significant burden on small employers; if it is implemented, employers will need to update employee handbooks to set out the procedure employees should follow.
Change to taxation of employer-supported childcare
Higher-rate taxpayers that join an employer-supported childcare scheme on or after April 6 2011 will receive income tax relief at only the basic rate.
From April 2011 employers will be able to recruit or promote a person because he or she is from an under-represented or disadvantaged minority group, provided that the person is as qualified for the job as the other candidates. Such positive action will be optional; in practice, many employers may baulk at the idea, given that proving equal qualification is likely to be difficult in many cases. The government has not yet announced whether it will bring the prohibition on dual direct discrimination into force in April 2011, as the previous government had planned.
Minor changes to the regulations dealing with European works councils will come into force on June 5 2011. The changes strengthen information and consultation requirements and union involvement, and provide for a renegotiation of the works council agreement where the company structure alters (eg, in the event of a merger). Only employers with 1,000 or more employees in the European Economic Area and at least 150 in two separate member states are potentially affected. The new rules will not apply to many pre-existing agreements, but employers with a European works council agreement should consider whether steps are needed to ensure that it continues to be governed by the pre-2011 regime.
The government has confirmed that the default retirement age of 65 will be abolished from October 1 2011 (with phasing out beginning in April 2011). Employers that wish to retire employees turning 65 before October 1 2011 will have to issues a notice of intended retirement before April 6 2011 and will be required to comply with the statutory request procedure. Thereafter employers will only be able to retire employees if they can justify the use of the specific retirement age as a proportionate means of achieving a legitimate aim, which is likely to be difficult. The government has decided to introduce an exemption to allow employers not to provide group risk insured benefits (eg life insurance, health insurance, private medical cover) once the employer has reached the age of 65 (to increase in line with the state pension age). Draft regulations have not yet been published. Employers that decide not to have a retirement age will need to ensure that they have robust performance management structures in place.
The Agency Workers Regulations 2010 will come into force on October 1 2011. Agency workers with 12 weeks' continuous service with the hirer will be entitled to pay, working time and holiday terms at least equal to those that would have applied had the worker been employed to do the same job directly by the end user. Businesses may wish to review their use of agency workers, given that costs are likely to increase. Employers will need to consider their terms of engagement with the agencies and ensure that they have appropriate procedures in place to inform the agencies of the relevant employment terms.
Annual compensation limit increases
From February 1 2011, the maximum compensatory award for unfair dismissal increased to £68,400 (previously £65,300) and the maximum for a week's pay increased from £380 to £400. The maximum unfair dismissal award (basic plus compensatory) is now £80,400.
For further information on this topic please contact Andrew Brown at Herbert Smith LLP by telephone (+44 20 7374 8000), fax (+44 20 7374 0888) or email ([email protected]).