Changes in Employment Law – April 2011

April 2011 brings a number of important changes in employment law. These are:

Abolition of default retirement age

From 6 April, the default retirement age of 65 will be abolished. Although there are transitional provisions (which mean that there may still be some lawful retirements under the default retirement legislation into April 2012) unless employers have given notice to employees to retire prior to 6th April 2011, any further retirement dismissals will be judged on whether the retirement is objectively justified as a proportionate means of achieving a legitimate aim. This will be a fact-sensitive issue and justification will be determined in the light of a detailed analysis of the working practices and business considerations involved.

Equality Act 2010

The controversial provisions relating to positive action in recruitment and promotion (section 159) come into force on 6th April. These provisions allow employers in certain circumstances to treat someone subject to a disadvantage because of a protected characteristic more favourably than another equally qualified person in connection with recruitment or promotion. Other provisions are delayed or will not now come into force. The public sector equality duties (section 149) are now due to come into force in July 2011 as revised regulations are under review. It was announced in the 23rd March budget that the provisions for dual/combined discrimination claims (section 14) will not come into force and will be dropped. The government is also going to consult on removal of the requirement for employers to take reasonable steps to prevent persistent harassment of their staff by third parties (section 40). The Plan for Growth document describes this as an “unworkable” requirement as employers have no control over the third party behaviour.

Additional paternity leave and pay

The right to additional paternity leave (and additional paternity 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. Additional paternity leave can be up to 26 weeks, although the right depends on the mother going back to work sometime in the period beginning 20 weeks after the child’s date of birth and before 12 months after the date of birth. Additional statutory paternity pay is paid at the same rate as ordinary statutory paternity pay and is a standard rate set by the government (£128.73 from April) or at 90% of the employee’s average weekly earnings if lower.

Taxation of termination payments

From 6 April, employers must use an 0T PAYE code for post-P45 payments. This means that employers will no longer be able to deduct tax from termination payments made after the issue of the P45 at basic rate only and so there will no longer be a cash flow advantage for higher tax payers. Payments should therefore be made prior to the issue of the P45 in most cases as the personal allowance can be used and it is likely to be administratively simpler.

Easing the burdens of employment regulation

Easing the burdens of employment regulation is a key theme of the recent budget and the government has scrapped two planned rights, due to come into force in April, namely (i) the extension of the right to request time to train to businesses with fewer than 250 employees and (ii) the extension of the right to request flexible working to parents of 17 year olds. (The existing right only applies to parents of children up to and including age 16.)

Recognising the particular burden that new regulation places on small business the government will also exempt businesses with fewer than 10 employees and genuine start up business from new domestic regulations for three years from 1 April 2011. In addition the government will launch a public thematic review to reduce the burden of existing legislation and the presumption will be that all regulations identified as burdensome will be removed unless good reasons are given for them to stay. The government will also publish a timetable for its ongoing review of employment law over the course of the Parliament which allows business to provide input to the changes that are being made. The stated aim is to reduce the estimated £1 billion burden of complying with current employment laws.

Statutory payment rates

From April 2011, weekly rates will increase for:

•Statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £124.88 to £128.73. The weekly earnings threshold will rise from £97 to £102.
•Statutory sick pay will increase from £79.15 to £81.60. The weekly earnings threshold will rise from £97 to £102.
•Maternity allowance will increase from £124.88 to £128.73, with the earnings threshold remaining at £30.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to www.law-now.com.