6 April is the first of the Government’s two dates for implementation of changes to UK employment law (1 October being the other). I though a blog highlighting the main changes would be useful.
Firstly, the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 abolish the default retirement age of 65 and also the statutory retirement notice process which, when properly followed, meant dismissal on grounds of age was not unfair or discriminatory on the grounds of age. As a result, once the Regulations are fully in force, any termination of employment on the grounds of age will be unfair unless it can be objectively justified as a “proportionate response to a legitimate aim.”
There are complicated transitional provisions in force. Effectively, if the retirement process has not commenced before 6 April then the employer will not be able to take advantage of the old regime. If the retirement process has commenced before 6 April then it will likely fall within the transitional provisions, provided the employee turns 65 on or before 30 September 2011.
Employers will need to consider whether to have a set retirement age or not. If a set retirement age is decided upon they must be able to justify it and follow a fair procedure to minimise the risk of claims for unfair dismissal or age discrimination. Morton Fraser’s new Retirement Focus Group can help with any queries you may have on the new retirement rules.
Additional Paternity Leave
Another significant change is found in the Additional Paternity Leave Regulations 2010 which allow fathers of babies born on or after 3 April 2011 (or adoptive parents who are notified of being matched with a child for adoption on or after 3 April) additional paternity rights. Mothers can now opt to transfer up to 6 months of maternity leave to the father, who will also still receive the current two week paternity leave entitlement. The leave must be taken by the father no earlier than 20 weeks after the birth of the child, and it must end no later than 12 months from the birth. It must be taken in one continuous block. If the mother has returned to work prior to exhausting her statutory maternity pay entitlement then the father, subject to certain qualifying criteria, will be entitled to additional statutory paternity pay (at the same rate as statutory maternity pay) for the period during which the mother would have been paid statutory maternity pay, had she not returned to work.
Increase In Statutory Maternity & Paternity Pay
From 3 April Statutory Maternity, Paternity and Adoption pay and Maternity Allowance increases from £124.88 to £128.73 per week.
Statutory Sick Pay
The standard weekly rate of Statutory Sick Pay will also increase from £79.15 to £81.60 with the weekly earnings threshold rising from £97 to £102.
Right To Request Flexible Working – Not Being Extended
The right to request flexible working was to be extended to parents of children under 18 (currently 17) from 6 April 2011. However, as part of recent measures intended to cut red tape and improve growth, the Government has repealed this, and no changes will be made to the existing right to flexible working.
Taxation Of Termination Payments
The current taxation regime for termination payments changes on 6 April 2011. Currently, where termination payments (or parts of termination payments) made after a P45 is issued are taxable, they are taxed through PAYE using the code BR, which means they are subject to the basic rate of income tax irrespective of the individual’s earnings. Therefore if the employee is a higher rate or additional rate tax payer then the further tax liability is assessed and made by way of the self assessment regime. From 6 April the PAYE code used for termination payments will be the 0T code. This means, where the termination payment is taxable, the employer will deduct tax at the employee’s own tax rate.
Equality Act – Positive Discrimination
Further provisions of the Equality Act come into force on 6 April 2011. Employers are now allowed "to apply voluntary positive action in recruitment and promotion processes when faced with two or more candidates of equal merit, to address under-representation in the workforce".
There are also changes in immigration law with a migration cap being introduced which limits the number of certain non-EU immigrations allowed to enter the UK to work from 6 April.
Exemption From New Law For Small Businesses
As of today small businesses (defined as those with less than 10 employers) are exempt from compliance with any new domestic regulation for 3 years. This means that, for example, future changes in the area of shared parental leave and rights to flexible working, will not apply to small businesses. For the avoidance of doubt though the various changes highlighted above do all still apply to small businesses.