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Annie Hayes



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Trigger happy: Employment legislation October 2008


emp_lawOctober is the second trigger point of the year for new employment legislation. Annie Hayes soothes HR’s brow with a round-up of what to look out for.

Employment legislation – October 2008 implementation:

  • 1 October 2008: National Minimum Wage Regulations increases.
  • 1 October 2008: Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2008.
  • 5 October 2008: Amendments to the Maternity and Parental Leave Regulations.
  • 27 October 2008: Fixed Term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008.
  • 27 October 2008: Employment and Support Allowance Regulations 2008.
  • October 2008: Companies Act.
  • October is one of the two traditional months in which new employment legislation is brought into effect; the other month being April. The big hitters that we have seen in recent years, such as age discrimination legislation, are notably absent from this trigger point line up, but nonetheless there are some regulations that require attention. Kicking-off on the first of the month is increases to the national minimum wage.

    1 October 2008: National Minimum Wage (NMW)

    A hike in the wage rate will see those aged 22 and over earn £5.73 per hour from the previous £5.52, whilst those aged 18-21 will receive £4.77 up from £4.60 and for 16-17 year olds, £3.53 per hour – an increase from £3.40 per hour.

    Leon Deakin, solicitor at Thomas Eggar LLP, says that as a result, any employer with low paid staff will need to review their pay levels to ensure they remain complaint with the new legislation to avoid claims and/or enforcement notices: “As this tends to be an area in which employees are well aware when a change occurs, HR will need to ensure they are on the ball otherwise they are likely to be caught out.”

    Next year, the NMW will celebrate 10 years in circulation. It was first implemented back in April 1999 when workers aged 22 years and over received just £3.60 per hour. Despite the rise in earnings recently reported that employees continue to demand hikes in pay to match rising living costs. London was recently ranked third in the most expensive cities listing by Mercer.

    1 October 2008: Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2008

    The amendments mean that the requirements for the display of an employer liability insurance certificate will be satisfied if the certificate is made available in electronic form and is reasonably accessible to the relevant employees.

    Deakin says: “As a result, a copy can, for example, be kept on internal intranet. However, HR practitioners will need to ensure they have communicated to employees where they can view a copy of the certificate and ensure it is accessible but something like an email with a link should suffice.”

    Next up is amendments to the Maternity and Parental Leave Regulations – it’s a further ‘swings and roundabouts’ change to the much-tinkered with maternity and parental laws.

    5 October 2008: Amendments to the Maternity and Parental Leave Regulations

    This amendment removes the non-pay benefits during ordinary maternity leave (OML) and during additional maternity leave (AML).

    Esha Dasgupta, associate, employment team, Norton Rose LLP, explains: “Pursuant to the Sex Discrimination Act 1975 (Amendment) Regulations 2008, which came into force on 6 April 2008, women whose expected week of childbirth is on or after 5 October 2008 will have the right to enjoy the same terms and conditions of employment during AML as they currently enjoy during OML.”

    It’s an amendment which brings English law in line with European law. Dasgupta continues: “Women on OML are entitled to the benefit of all terms and conditions of employment which would have applied, save for those relating to remuneration. Previously, women on AML were entitled to a far more limited range of benefits. The extension of rights during AML has triggered a re-assessment of exactly what benefits should be offered to women on maternity leave and exactly what constitutes ‘remuneration’.”

    “The extension of rights during AML has triggered a re-assessment of exactly what benefits should be offered to women on maternity leave and exactly what constitutes ‘remuneration’.”

    Esha Dasgupta, Norton Rose LLP

    An interesting point that has arisen for employment lawyers and HR teams is whether or not pension contributions amount to ‘remuneration’ for these purposes and therefore whether employers should continue to make pension contributions during maternity leave.

    Dasgupta points to The Social Security Act 1989 which provides further clarification. This makes it clear that for any periods of maternity leave during which an employee is paid (whether statutory or contractual maternity pay), her pension benefits must be maintained.

    “Therefore, where an employee is on unpaid maternity leave (i.e. during AML) or where an employee does not qualify for statutory maternity pay, the question arises as to whether her pension benefits should be considered to be ‘remuneration’ and therefore continued during this time,” she says.

    The most recent guidance from the government states that pensions should be viewed as remuneration and therefore do not need to be provided during any unpaid period of maternity leave. However, this conflicts with decisions of the European Court of Justice which has held that pensions should not be viewed as remuneration.

    Dasgupta says: “Common sense would also seem to indicate that pensions fall within the scope of ‘benefits’ separate to an employee’s basic salary which would be considered ‘remuneration’.

    “While not all employers make pension contributions or the same level of pension contributions (as this is a benefit to be provided at the discretion of the employer), all employers pay a basic salary to their employees. Despite the guidance of the Department for Business, Enterprise & Regulatory Reform, we would recommend that in the light of the European case law, HR teams consider whether it is worth running the risk of defending a sex discrimination claim in order to avoid making pension contributions during maternity leave.”

    Over and above pensions, Deakin says that overall this change to maternity allowance is relatively significant as it now means employers will potentially need to bear the costs of continuing benefits such as car allowance etc for a longer period: “HR practitioners need to be aware of this change in order to amend internal policy documents and ensure information is accurately communicated to employees. As part of this, it may be necessary to ensure employees are aware of the distinction between the date the legislation comes into force and the qualifying date of 5 October 2008 to avoid confusion.”

    27 October 2008 – Fixed Term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008:

    The Fixed Term employees (Prevention of Less Favourable Treatment) (Amendments) regulations 2008 come into force towards the end of the month. This states that agency workers on contracts of less than three months are not excluded from statutory sick pay with effect from 27 October 2008. Therefore agencies need to be aware of this change and amend their contracts and policies accordingly.

    Of this change, Deakin says: “Again the legislation is likely to have the impact of increasing costs for agencies which could potentially be passed on to the end user company through an increase in charges.” We await the fallout.

    Also coming into play on 27 October 2008 is the Employment and Support Allowance Regulations 2008. This is payable to those who claim benefit on the basis that they have, or are treated as having, a health condition or disability that affects their ability to work. It is payable in respect of new claims arising from 27 October 2008.

    The Companies Act is a further October player, which puts the minimum age for a director at 16-years-old (any directors under 16 will automatically cease to be a director) and all companies must have one natural person as a director, that is they cannot have all corporate directors.

    Sadly the law rarely allows for a ‘teething’ period exemption for those that fall foul, so HR must be ready and armed to deal with this latest regulatory burden, with amendments to maternity leave looking like the biggest contender for an HR headache.

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    Annie Hayes


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