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Employment Update 6 April 2011

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United Kingdom

Read the 'Employment Law Update' newsletter, 16 April 2011, on ffw.com

Welcome to our fortnightly round-up of what's happening in employment law.

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Bribery Act 2010 - guidance published

The Government has finally published the long awaited guidance on the procedures that businesses need to implement to comply with the Bribery Act 2010, which will now come into force on 1 July 2011. Click here to read more from our Anti-Corruption Group. 

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Budget - employment issues

Following the publication of the Budget on 23 March 2011, alongside the "Plan for Growth", the Government announced some measures which have a particular impact on employers:

  • The Government has introduced a moratorium exempting businesses with fewer than 10 employees and start up businesses from new domestic regulation for three years from 1 April 2011.
  • The regulations which were due to extend the right to request flexible working to parents of children under 18 have been revoked. These were due to come into force on 6 April 2011.
  • The dual discrimination provisions of the Equality Act 2010 will not be brought into force.
  • The Government will consult "to remove the unworkable requirement" that employers take reasonable steps to prevent third party harassment. 

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April - a reminder of the key changes

Here are the key changes, and dates, to remember for April 2011:

  • Additional paternity leave and pay - The right to additional paternity leave and pay will be available to parents of babies due on or after 3 April 2011 (as well as parents who are notified that they have been matched with a child for adoption on or after that date).
  • Default retirement age - From 6 April 2011, the default retirement age of 65 will be abolished. Click here to read our recent update on the key changes and transitional provisions.
  • Public sector equality duty - The general equality duty is due to come into force on 5 April 2011. The specific duties, which are designed to help public bodies with the better performance of the general duty, are due to come into force in July 2011.
  • Equality Act 2010 - The provisions relating to positive action in recruitment and promotion are due to come into force on 6 April 2011.
  • Codes of Practice - The Equality and Human Rights Commission's Codes of Practice to accompany the Equality Act 2010 will be brought into force on 6 April 2011.
  • Treatment of termination payments - From 6 April 2011, the PAYE treatment of termination payments will change. Click here to read our recent summary of the changes.
  • Statutory payment rates - The standard weekly rates will increase for the following payments:  
    • statutory maternity pay, statutory paternity pay and statutory adoption pay: these increased on 3 April 2011 from £124.88 to £128.73
    • statutory sick pay: this will increase on 6 April 2011 from £79.15 to £81.60 

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Tax treatment of employee's legal costs

An employer's ability to pay an employee's legal costs on termination tax free may be restricted from 6 April 2011. Under extra-statutory tax concession A81, an employer is currently able to pay an employee's legal costs incurred in connection with the termination of his or her employment free of tax if it is either ordered to do so by a court or tribunal or the fees are paid direct to the employee's solicitor under a specific term in a settlement agreement. Following a recent consultation, A81 will now be withdrawn and will be formally enacted into legislation by the Enactment of Extra-Statutory Concessions Order 2011. This Order is intended to affect payments made on or after 6 April 2011.

Unfortunately, the Order, in its current form, is not as widely drafted as A81. It would limit the tax concession to cases involving a court or tribunal order or a compromise agreement which satisfies the conditions regulating compromise agreements under the Employment Rights Act 1996. The tax concession would therefore not apply, for example, to cases involving a COT3 agreement or a compromise agreement which only refers to legislation such as the Equality Act 2010 but not the Employment Rights Act 1996.

HMRC has been made aware of the potentially restrictive scope of the Order. It has reportedly confirmed that for any compromise agreements under the Equality Act 2010 (and equivalent Northern Ireland legislation), the extra statutory concession may continue to be used, pending an amendment to the legislation (which will be sought as soon as possible). The HMRC will also consider the exclusion of COT3s and other settlement agreements from the legislation and, if necessary, seek an amendment. HMRC will also need to consider whether other statutes should be mentioned in the Order, as many contain their own provisions covering how the conditions regulating compromise agreements are satisfied. We will report on any developments in future Employment Updates. 

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Local authority two tier code withdrawn

The Secretary of State for Communities and Local Government, Eric Pickles MP, announced on 23 March 2011 that the Code of Practice on Workforce Matters in Local Authority Service Contracts and related guidance would be repealed with immediate effect.

The Code effectively sought to avoid a "two-tier workforce" where a local authority transfers employees to a private or voluntary sector partner. The Code was aimed at ensuring that when staff joined the relevant workforce after a transfer (wherever they joined from), the new staff were employed on terms and conditions which were, overall, no less favourable than those of staff transferred from the public sector.

The Government has confirmed that the withdrawal of the Code will not have retrospective effect and existing contracts will not be affected. The Government is considering whether the Code should be replaced with a statement of "good employment principles".

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EHRC reform

The Government Equalities Office has published plans for major changes to the way in which the Equality and Human Rights (EHRC) operates. The proposals are contained in a consultation that closes on 15 June 2011.

Legislative and non-legislative reforms are proposed in three key areas:

  • EHRC's remit - the Government will amend the legislation that established the EHRC, the Equality Act 2006, to clarify the EHRC's core functions.
  • Stopping non-core activities - the Government has considered what activities presently being carried out by the EHRC are not required to deliver its core functions - as an independent equality regulator and national Human Rights Institution - and/or may duplicate activity elsewhere.
  • Improving transparency and value for money - the proposals include a legal requirement for the EHRC to publish an annual business plan in Parliament and comply with the same rules as all other public bodies when spending money. 

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Not ready for additional paternity leave?

Four in ten employers are not ready for additional paternity leave (APL) but one in five employers promise enhanced pay, according to a survey by Working Families.

The survey also reveals that:

  • 60% of employers have already updated their policies to reflect the introduction of APL and additional statutory paternity pay. Most of those who have not made changes plan to do so within two months.
  • 19% of the employers who have made policy changes plan to pay fathers six weeks on full pay when they take APL. A wide range of policies are proposed for after the first six weeks – some plan to offer further enhancements, others reflect statutory maternity pay rates, with six weeks of enhanced pay followed by the statutory rates.
  • two out of three employers who have made policy changes plan to pay fathers only the statutory paternity pay of £128.73 per week (or 90% of the employee's average weekly earnings, whichever is lower) during APL, even though 65% of these employers offer enhanced maternity pay for the equivalent weeks to a female employee on maternity leave.
  • 64% of employers saw APL as a legal obligation that they would have to comply with, but 22% saw its potential as a means of improving operational effectiveness. 

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Flexible working during the Olympics

A third of large companies intend to allow flexible working in order for staff to watch the Olympic and Paralympic Games, according to research from Deloitte.

The research shows that:

  • 32% of respondents saying they would be happy for staff to take time out to watch live events and make up hours at the start or end of the working day.
  • 44% of companies surveyed are intending to encourage staff to attend live events.
  • 42% plan to install big screens in staff canteens or other communal areas to allow staff to watch the Games.
  • 30% of respondents would be more understanding if staff have difficulty getting into work during the Games period.
  • 11% of companies in London will encourage staff to work more often from client sites further away from Games venues, whilst 8% will allow greater use of homeworking.
  • 60% do not expect to make any changes to their flexible working policy at all.

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New employment training programme

Our new employment law training programme for 2011/2012 can be accessed here. Aimed specifically at HR professionals and senior managers, our informative and interactive training programme offers a range of sessions designed to bring you up to speed with the rapid changes in employment law.

If you would like to register for any of our forthcoming events, please email seminars@Fieldfisher.com, specifying whether you would like to attend the London or Manchester event. 

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