The past year has been full of changes in employment law, and this spring is no exception. Many changes come into force in April – we have summarised the key April changes for you below, as well as including a reminder about some other important recent and upcoming changes.

Statutory Pay Increases

• SMP is paid for 39 weeks of maternity leave as follows:

–     For the first 6 weeks, SMP is paid at 90% of the employee’s normal weekly salary.

–     For the remaining 33 weeks, SMP is paid at either the lower of 90% of the employee’s normally                      weekly salary, or the “Prescribed Rate”.

• From 6 April 2014, the Prescribed Rate has increased from £136.78 to £138.18 per week.

• The Prescribed Rate for Statutory Paternity Leave, Statutory Adoption Leave and Maternity Allowance has similarly increased to £138.18 per week.
• From 6 April 2014, statutory sick pay increased from £86.70 to £87.55 per week.

Employment Allowance – National Insurance Reduction from April 2014

• From 6 April 2014, most employers can reduce the amount of National Insurance contributions they pay for their employees by up to £2,000. This is called the ‘Employment Allowance’.
• Not all employers are entitled to the employment allowance – most employers of domestic workers, such as nannies, gardeners and au pairs are excluded, as are most businesses that work more than 50 per cent in the public sector.

Tribunal Award Limit Increases

In most unfair dismissal cases, awards comprise two separate amounts:

1. the basic award, which is calculated by reference to the employee’s length of service, age and weekly salary (subject to a statutory cap); and
2. the compensatory award, which is based on the employee’s loss of earnings as a result of the dismissal. In most cases, the compensatory award is subject to a statutory cap, although there are exceptions e.g. whistleblowing or health and safety dismissals.

From 6 April 2014, the maximum amount of a week’s pay, used to calculate the basic award and redundancy payments will rise from £450 to £464.

Where the statutory cap for the compensatory award applies, the maximum compensatory award is the lower of:

1. one year’s gross salary; and
2. the limit set by the government. This limit is increasing from £74,200 to £76,574 from 6 April 2014.

Abolition of Discrimination Questionnaires

At the moment employees or ex-employees may serve Questionnaires on employers requiring information about alleged discrimination.  It can be very burdensome for employers to answer these Questionnaires, and a failure to do so can result in adverse inferences being drawn by an Employment Tribunal at any subsequent hearing. From 6 April 2014 onwards, individuals who are considering bringing or who have brought discrimination claims will no longer be able to use the Questionnaires to seek information from the employer. Instead they will be replaced with an informal approach. See ACAS’ new guidance which is not binding but sets out best practice for employers dealing with discrimination questions.

http://www.acas.org.uk/media/pdf/m/p/Asking-and-responding-to-questions-of-discrimination-in-the-workplace.pdf

Pre Claim ACAS Conciliation

Early conciliation will be introduced on an optional basis from 6 April 2014, and will become mandatory from 6 May 2014.

Claimants will have to provide details of their complaint to ACAS before bringing a claim. An ACAS conciliation officer will then be appointed who will attempt to reach settlement of the case for a period of one month. If, in the ACAS conciliation officer’s view, settlement is not possible, or the month expires without settlement having been reached, ACAS will issue a certificate and the claimant will then be able to submit his/her claim to the Tribunal. A claimant may not submit a claim without this certificate.

Early conciliation will “stop the clock” on the time limits that a claimant has to bring a Tribunal claim.

Financial Penalties for Employers who lose at Tribunal

For claims presented from 6 April 2014, Tribunals will have the power to impose a financial penalty on employers who lose at Tribunal. However this penalty will not be automatic but will be at the discretion of the Tribunal. Any penalty will be a maximum of 50% of any financial award, with a minimum threshold of £100 and a maximum cap of £5,000. Where a non-financial award is made, the Tribunal will be able to set a monetary value. The penalty will be reduced by 50% if paid within 21 days.

Increased Penalties for Employers who pay less than the National Minimum Wage

On 7 March 2014, the maximum penalty for employers who do not pay the National Minimum Wage increased from 50% to 100% of the total underpayment of the NMW, with a maximum total fine of £20,000 (increased from £5,000).

Changes to Statutory Sick Pay ( SSP) recovery and reporting

The scheme known as the “Percentage Threshold Scheme” has allowed employers to recover some SSP paid where the amount of SSP that an employer pays in any given month exceeds 13% of their class 1 NIC payments for that month. However, the government believes this creates a “perverse incentive” for employers not to improve sickness absence rates and is abolishing the Percentage Threshold Scheme from 6 April 2014.

From 6 April 2014, employers will not be able to reclaim any payments under the Percentage Threshold Scheme. However they will continue to be able to recover unclaimed SSP for previous years for a limited period.

The associated SSP record-keeping requirements will also be abolished from 6 April 2014. Employers will, however, still be required to maintain records for PAYE purposes and to demonstrate they are meeting their SSP obligations.

The savings made by abolishing the Percentage Threshold Scheme will fund a new service, called the Health and Work Service; an independent assessment service, aiming to make expert health and work advice available to employers, employees and medical practitioners. This service is due to begin in Autumn 2014, and is expected to be fully operational by April 2015.

TUPE

Significant changes to TUPE came into force on 31 January 2014, including the following:

• Obligations relating to providing employee liability information to the new employer remain, but from 1 May 2014, the information needs to be given by the old employer 28 days, rather than 14 days before the transfer.
• From 6 April 2014, there will be changes to the current pension protection regime that operates on a TUPE transfer. These changes are intended to reflect the introduction of auto enrolment duties, and generally aim to allow employers in some circumstances to match the transferor employer’s contributions instead of the present requirement to match the employee’s chosen contribution rate up to 6%.
• TUPE is amended so that genuine place of work redundancies following a TUPE transfer should no longer run the risk of being automatically unfair, although there may be circumstances in which such dismissals are found to be unfair for other reasons.
• Changes to terms of employment may be permitted where the employer and employee both agree to the change.
• For TUPE transfers that take place after 31 July 2014, micro-businesses (those with 10 or fewer employees) will be allowed to inform and consult about a transfer with their employees directly (rather than with elected representatives) where there is no recognised independent union or existing appropriate representatives.

Changes to rehabilitation periods

Reforms came into place in March 2014 which will reduce the period during which certain convictions need to be disclosed to potential employers. However those applying to work in sensitive workplaces will continue to have to disclose previous convictions.

The changes are part of the government’s plan to reduce re-offending by helping offenders get back into ‘honest work’.

Generally speaking, where an ex-offender has not re-offended for a specific length of time, they will be considered ‘rehabilitated’, and the ex-offender will be entitled to present him or herself to employers as if he or she had never been convicted of an offence (subject to exceptions for certain occupations). Currently the period of time after which an ex-offender can be considered ‘rehabilitated” starts from the date of conviction.  Under the new system, this period will comprise the period of the sentence plus an additional specified period. This is likely to reduce the rehabilitation periods for many sentences and community orders. See the government guidance for more details:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/286421/rehabilitation-of-offenders-guidance.pdf

Flexible Working

At present, only those who qualify as carers of children or adults have the right to request flexible working. From 30 June 2014, the right to request flexible working will be extended to all employees who have 26 weeks’ service or more.

The current prescriptive procedure for considering a flexible working application will be replaced with a duty on employers to consider requests in a reasonable manner – which will be supported by a new ACAS Code of Practice.

It is likely that when considering whether they can accommodate flexible working requests, employers will still need to assess the level of risk involved in declining each application – for example there could still be potential sex discrimination arguments where a woman requests to work flexibly to care for children.

Minimum Wage Increases from October 2014

The government has announced that from 1 October 2014, the minimum wage will increase as follows:

• the adult rate for 21 year olds and over will increase to £6.50 an hour;
• the rate for 18-20 year olds will increase to £5.13 an hour;
• the rate for 16-17 year olds will increase to £3.79 an hour;
• the apprentice rate will increase to £2.73 an hour.

Scully Twiss Recommendations

• Revise your flexible working policy ahead of June 2014, to ensure that you are not committing yourself to follow the old statutory procedure.  Consider how you will approach/prioritise applications once the right to request is extended.
• Review your SMP recording provisions to ensure that whilst they meet the legal requirements, they also suit your business needs.
• Check that your employees are being paid at least the new National Minimum Wage.
• If you are involved with recruitment, take a look at the changes to rehabilitation periods so you know how the changes may affect job applicants and any background checks that are carried out.
• If you are involved with TUPE transfers, update your timetable to reflect the change in the timescale for providing employee liability information from 14 days before the transfer to 28 days before the transfer.
• If you are dealing with a TUPE transfer, consider whether the changes to the pension protection regime would benefit your business.
• Review your maternity, paternity and adoption policies and update any references to the statutory Prescribed Rates.