Despite the Government’s commitment to reducing the regulatory burdens on business, there has been much confusion over the changes expected to take effect this April. This blog summarises those changes that are no longer taking place, and considers those that still are, such as the abolition of the default retirement age and statutory retirement procedure, and the commencement of the general public sector equality duty and the positive action provisions in the Equality Act 2010.
What’s not coming into force?
Several measures previously expected to come into force in April 2011 will no longer do so, perhaps most notably the Bribery Act 2010, which will now come into force on 1 July 2011. Implementation was delayed while the Ministry of Justice developed guidance on what will amount to adequate anti-bribery procedures. The business sector had previously expressed concerns that the Act would criminalise corporate hospitality and this is one of the issues that the guidance addresses.
The right to request time off for training will not be extended to those employed by small- and medium-sized employers. The Government believes administering the ‘right to request’ process would have been proportionately more costly for smaller businesses. The right has been available to employees of organisations with 250 or more employees since April 2010 and operates in a similar way to the right to request flexible working.
The right to request flexible working will not be extended to parents of children under 18 and the Flexible Working (Eligibility, Complaints and Remedies) (Amendment) Regulations 2010 SI 2010/2991, which would have effected the change, will be repealed. However, the Government has stated that during 2011 it will consult on extending the right to request flexible working for all employees and creating a system of shared parental leave.
Implementation of the specific public sector equality duties set out in the draft Equality Act 2010 (Statutory Duties) Regulations 2011 has been put back and the duties will now come into force in July 2011. The specific duties, which are aimed at enabling better performance of the general equality duty (see below), will require public bodies to publish equality objectives every four years, annual information demonstrating their compliance with the general equality duty, and, for bodies with 150 or more staff, information relating to persons who share a relevant protected characteristic and who are their employees or other people affected by their policies and practices.
Moratorium exempting micro and start-up businesses from new domestic regulation begins. The moratorium will last for three years and only be breached in ‘exceptional instances’ where there is a compelling argument. It will therefore exempt qualifying businesses from the Government’s mooted flexible shared parental leave scheme and extension of flexible working rights.
In its Plan for Growth, the Government defines micro businesses as those with fewer than ten employees. A business is a ‘start-up’ when it has commenced a trade, profession or vocation on or after 1 April 2011 – subject to some qualifications.
Additional paternity leave and pay. The Additional Paternity Leave Regulations 2010 SI 2010/1055 (the APL Regulations), the Additional Statutory Paternity Pay (General) Regulations 2010 SI 2010/1056 (the ASPP Regulations) and other related regulations came into force on 6 April 2010 but apply to parents of children due (or matched for adoption) on or after 3 April 2011.
Under the scheme, a new mother will be able to transfer up to six months of her maternity leave to the father if she decides to return to work before the end of her leave. As with current paternity leave, additional paternity leave extends to partners and civil partners of mothers. Some of the leave may be paid if taken during the mother’s 39-week maternity pay period, at either the lower of the standard statutory maternity pay weekly rate – £128.73 from 11 April 2011 – or 90 per cent of the father’s average weekly earnings. Equivalent provisions allow for the transfer of adoption leave between the primary adopter and his or her spouse, civil partner or partner. A detailed consideration of the changes can be found in a feature in IDS Brief 921. The Government has said that the Regulations are an ‘interim measure’ until the new flexible system of shared parental leave, mentioned above, is in place.
Statutory Maternity, Paternity and Adoption pay increases from £124.88 to £128.73. The changes are brought about by the Social Security Benefits Up-rating Order 2011 SI 2011/821.
The General Public Sector Equality Duty in S.149 of the Equality Act 2010 comes into force. The general duty requires public bodies, and others who exercise public functions, to have due regard to the need to eliminate unlawful discrimination, harassment and victimisation; to advance equality of opportunity; and to foster good relations between people who share a protected characteristic and those who do not share it. The duty covers the protected characteristics of age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
The default retirement age will be phased out and the statutory retirement procedure abolished. Any purported retirement dismissal notified from 6 April onwards will, if not objectively justified, amount to unlawful age discrimination under S.13 of the Equality Act 2010. The dismissal will also have to be put on the basis of another potentially fair reason for dismissal, such as ‘some other substantial reason’. The original draft of the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 provoked much concern among employers, as a drafting error meant that the retirement procedure could not be relied on in respect of an employee whom it was intended to retire before 1 October 2011 and who was already 65 by 5 April.
This problem has now been addressed and the final version of the Regulations permits an employee to be retired under the transitional provisions provided he or she has been given notice of his or her compulsory retirement before 6 April 2011, and he or she is 65, or will reach 65, before 1 October 2011. Consequently:
- the last day on which an employer can issue a notice of retirement under the DRA provisions will be 5 April 2011
- as 12 months is the maximum notice of retirement that an employer can give, the last day on which an employee can be compulsorily retired will be 5 April 2012
- the last day on which an employee can make a statutory request to his or her employer not to retire on the intended date of retirement will be 4 January 2012
- if an employer agrees to allow the employee to work beyond his or her intended day of retirement, the maximum extension possible allowed by the DRA provisions is six months; thus the latest possible date for retirement will be 5 October 2012.
The positive action in recruitment and promotion provisions in S.159 of the Equality Act 2010 will be brought into force. As a result, an employer making a recruitment or promotion decision will be allowed to take a protected characteristic into account if the employer reasonably thinks a candidate has a protected characteristic listed in the Equality Act 2010 that is under-represented in the workforce or that people with the characteristic suffer a disadvantage.
However, S.159(4) provides that this option will only be available where:
- the person in question is ‘as qualified as’ other applicants to be recruited or promoted
- the employer does not have a policy of treating persons of the particular under-represented or disadvantaged group more favourably in connection with recruitment or promotion than persons who do not share the relevant protected characteristic; and
- the more favourable treatment is a proportionate means of achieving the aim of overcoming or minimising the disadvantage, or encouraging participation.
The Government’s commencement of S.159 surprised many given that the Conservatives’ position on it in pre-legislative debates was at best lukewarm. In its ‘Quick start guide to using positive action in recruitment and promotion’, the Government stresses that positive action is entirely voluntary – employers are not required to use the provisions, nor can they lead to ‘quotas’ or giving someone a job just because they are a woman, disabled or from an ethnic minority, as this would constitute unacceptable and unlawful positive discrimination. Accordingly, individuals cannot challenge someone merely for not taking positive action.
Many employers will be wary of taking positive action even when the conditions set out above are satisfied, fearing a challenge from the unsuccessful candidate. One big area of uncertainty is the meaning of ‘as qualified as’. The Guidance suggests that employers should use the provision in a ‘tie breaker’ situation where two individuals have equal merit in relation to a set of criteria specific to the job or position they are applying for.
The Equality Act codes of practice come into force. The Equality Act 2010 Codes of Practice (Services, Public Functions and Associations, Employment, and Equal Pay) Order 2011 SI 2011/857 brings into force the codes of practice on employment; equal pay; and services, public functions and associations issued by the Equality and Human Rights Commission earlier this year. The codes take account of the changes introduced by the Equality Act 2010 and, unlike the current codes on race, sex and disability, give guidance on all the protected characteristics. As with the current codes of practice, which are revoked from this date, the new codes will be admissible as evidence in tribunal proceedings. Employers should therefore familiarise themselves with the changes and review their policies and practices.
Changes to the points-based immigration system. These include a limit of 20,700 on the number of migrants entering the United Kingdom under Tier 2 (General). However, employers filling vacancies with salaries of £150,000 or more will not be subject to this limit in order to ‘attract the brightest and the best’. Employers will also no longer be granted an annual allocation for the number of migrants they can bring into the country. Instead, employers will have to apply for a certificate of sponsorship for each individual post. An additional 1,000 visas will also be made available under the Tier 1 (Exceptional Talent) route.
Tax changes for post-termination payments after a P45 has been issued. Such payments – for example, those made under compromise agreements and bonus schemes – will be taxed at the same rate of tax as if they were made during the course of employment. Currently such payments are taxed at the basic rate with higher-rate tax payers liable for any further tax due. Consequently PAYE should be deducted using code 0T rather than BR. This will ensure that tax is deducted from payments at the basic, higher and, if appropriate, additional rate of tax. Note that statutory redundancy payments and some damages payments are only taxable on amounts over £30,000. For further information see HMRC’s ‘Employer further guide to PAYE and NICs’ 2011 (CWG2 (2011)).
Changes to tax reliefs for employer-supported childcare. In December 2009 the Government announced plans to reduce tax relief on employer-supported childcare for higher and additional rate tax payers. The change is being introduced to make the tax system ‘fairer’, so that higher earning employees no longer receive a greater tax saving than those who pay tax at the basic rate.
From 6 April 2011, the tax relief for employer-supported childcare schemes providing childcare vouchers (CCVs) or directly-contracted childcare will be the same for all taxpayers. This will be achieved by reducing the monetary value of the exemption for higher rate and additional rate taxpayers.
Currently, the first £55 a week of directly-contracted childcare (i.e. where the employer arranges the provision of childcare) or CCVs per employee is exempt from both income tax and national insurance contributions (NICs) for all employees. This translates into an annual tax relief saving of up to £1,200 for a higher rate taxpayer, while basic rate tax payers receive up to £900 per year.
From 6 April anyone who joins an employer-supported childcare scheme will receive the same level of income tax exemption; the monetary equivalent of the tax relief entitlement for all tax payers will be based on £11 per week. Current scheme members and those who join before 6 April 2011 will not be affected by the changes.
Statutory sick pay increases from £79.15 to £81.60. The change is brought about by the Social Security Benefits Up-rating Order 2011 SI 2011/821.
Maternity Allowance increases from £124.88 to £128.73. The change is brought about by the Social Security Benefits Up-rating Order 2011 SI 2011/821.