Frettens Update: Q&A – Legislation changes

  4th May 2011      
 Company News, Employment Law

This month we summarise the main changes to employment law taking effect in April. We also highlight some changes that were originally scheduled to come into force, but have been put on hold by the Government.

Q: What are the changes to maternity and paternity leave?

A: The Regulations bringing in new additional paternity leave actually came into force last year in April 2010, but practically came into effect this April, as it only applies to babies due on or after 3 April 2011. The changes can be summarised as follows.

  • The right to additional paternity leave and pay will be available to parents of babies due on or after 3 April 2011 and to adoptive parents who are notified that they have been matched with a child for adoption on or after that date.
  • The Regulations have been devised to provide greater flexibility in how parents use maternity and paternity provisions. In short, additional paternity leave and pay will enable eligible fathers to take up to 26 weeks additional paternity leave.
  • The leave may be paid if taken during the mother or partner’s statutory maternity pay period, maternity allowance period or statutory adoption pay period. Leave taken after this period has ended would be unpaid. This new provision is aimed at providing parents with more choice and flexibility in child care responsibilities and a more equitable sharing of leave entitlements.

Q: What is happening to the retirement provisions that came into force following the Age Discrimination legislation in 2006?

A: The default retirement age of 65 is being abolished on 1 October 2011 and transitional arrangements commenced on 1 April. The retirement procedure that employers could follow to lawfully retire employees that had reached the age of 65 is being removed as well. Full details were provided in our last newsletter’s Q&A which can be accessed from our website.

Q: I hear there has been a change in discrimination legislation, whereby employers can take ‘positive action’ in recruiting disadvantaged people?

A: Yes, provisions relating to positive action in recruitment were implemented on 6 April. These are a range of positive measures that organisations can use where there are employees with ‘protected characteristics’ who:

  • May be exposed to a disadvantage because of these protected characteristics;
  • Have a particular need because of their protected characteristic; or
  • Are disproportionately under-represented in a particular activity because of their protected characteristic.
    In these cases positive action can be used to overcome the disadvantage, need or under-representation. Positive action is entirely voluntary and there is no requirement for an employer to use either the general provisions or those relating to recruitment and promotion. The latter can be used where an employer reasonably thinks that people with a protected characteristic are under-represented in their workforce or suffer a disadvantage connected to that protected characteristic. In practice it will allow an employer faced with making a choice between two or more candidates who are of equal merit to take into consideration whether one is from a group that is disproportionately under-represented or otherwise disadvantaged within the workforce. It is important to note that this kind of positive action is only allowed where it is a proportionate way of addressing the under-representation or disadvantage. ‘Protected characteristics’ mean characteristics emanating from the various discrimination laws, namely: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex or sexual orientation .

Q: What are the annual increases in statutory payments?

A: The standard weekly rates increase for the following payments:

  • Statutory maternity, paternity and adoption pay has increased from £124.88 to £128.73;
  • Maternity allowance has increased from £124.88 to £128.73;
  • Statutory sick pay has increased to £79.15; and
  • The weekly earnings threshold for national insurance purposes has risen from £97 to £102.

Q: What are the changes to the tax treatment of termination payments made after the issue of the P45?

A: From 6 April 2011 employers have to use a 0T PAYE code for all termination payments made following the issue of a P45. This has an impact on the amount of income tax the employer must withhold on termination of employment. Before now, when a payment was made to a departing employee after their P45 had been issued, income tax was only required to be deducted at the basic rate of tax and the employee was responsible for any additional tax using a ‘BR’ tax code. Now tax at the full 20%, 40% or 50% rates must be deducted from post-termination payments using the 0T tax code. Any overpayment of tax will then have to be recovered by the employee. This change could mean that for some employees, it will be more beneficial to them, if any taxable termination payments, such as pay in lieu of notice, were paid prior to the issue of their P45.

Q: What are the legislative changes that have been put on hold?

A: The following changes that were due to take effect this month have been placed on hold:

  • Extension to flexible working — the planned extension of the right to request flexible working to parents of children under 18 (the right currently applies to parents of children aged 16 or under) from 6 April 2011 has been shelved, at least for now. However, the Government has indicated that it is still committed to going ahead with extending this right but that it has been put on hold as part of a package of measures designed to give businesses breathing space in the current economic climate.
  • The Bribery Act 2010 — implementation of this legislation, which was due to come into force on 6 April, shall now come into force on 1 July following the publication of guidance by the Ministry of Justice on 31 March. The Act will introduce new statutory offences of failing to prevent bribery by individuals acting on behalf of organisations, for which employees, directors and commercial organisations could all be liable. To avoid prosecution employers will have to show that they have put in place “adequate procedures” to prevent bribery and corruption in their organisations. The obligation and steps that employers will need to take shall be considered further in a future newsletter.
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