A Twist in the tale as staff get "more"?
When Oliver Twist famously asked for “more” in Charles Dickens’ novel, a fair deal for workers meant “three meals of thin gruel a day, with an onion twice a week and half a roll on Sundays”. Fast forward 170 years and employers may be forgiven for thinking that today the scales are tipped far more firmly in favour of the employee.
The trend towards ever more ‘employee friendly’ legislation became apparent last year and looks like continuing as outlined below:
Employment Tribunals and Redundancy Pay
1st February marks the annual increase in the compensation limits for Employment Tribunal awards. For employees dismissed from this date, the maximum compensatory award for unfair dismissal will be £60,600. There has been a very significant increase over the years from the 1999 figure of £12,000. A ‘week’s pay’ for the purposes of calculating statutory redundancy pay (and the basic award in a successful unfair dismissal claim) is also set to rise from £290 to £310.
In October 2006, the introduction of regulations outlawing age discrimination resulted in changes to rules governing redundancy pay. Service before age 18 and after 65, which could previously be discounted, now has to be taken into consideration.
National Minimum Wage
Last Autumn, National Minimum Wage levels were increased. Employers must now pay at least £5.35 per hour to workers over 21. Rates for those aged 18 to 21 and under 18 increased to £4.45 and £3.30 respectively.
Plus, the Department of Trade and Industry (DTI) is now able to fine employers in excess of £200 for persistently failing to pay an employee the National Minimum Wage.
Maternity and Adoption Leave Payments
2007 brings a whole host of changes relating to babies due after 1st April. These are likely to prove costly to employers - not just in financial terms but also because they may cause practical difficulties in the management of a business or organisation.
From 1st April, all employees will have the right to take up to 52 weeks’ leave - which may make it more awkward for employers to provide cover during an employee’s absence. Employees will also be entitled to claim Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) for 39 weeks in total. Current rules give eligible staff entitlement to a maximum of 26 weeks’ pay at the weekly rate of £108.85 – this figure is also likely to rise in April.
However, there is an upside to the changes. Administration should become easier. Employers will be able to commence payment of SMP on any day of the week, rather than a Sunday as previously stipulated. In addition, both SMP and SAP can be calculated at a daily rate.
Annual Holiday Entitlement
The Government recently published proposals to increase workers’ annual holiday entitlement. Effectively all workers will have the right to paid bank holidays, as well as their current entitlement to 4 weeks’ paid leave. This is likely to add to employers’ costs and cause some businesses problems in ensuring that they provide an uninterrupted service to their clients.
Therefore, the DTI has proposed a phased approach - from 1st October 2007 entitlement will rise to a minimum of 24 days’ paid annual leave, increasing to 28 days in October 2008. The DTI estimates that up to 6 million workers will benefit from the increase.
While it is clear that we have moved some way from the Oliver Twist days of workhouses and the ethos of Victorian employers – the question now is has the balance shifted too far? Only time will tell.