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Latest developments in Employment Law

Employment Law has been especially dynamic in recent months, presenting a challenge to businesses who must keep abreast of the legislative changes. Here is a snapshot of some current developments:

Pensions

Pursuant to the Pensions Acts of 2008 and 2011, the “auto-enrolment” pension scheme comes into force on 1st October. The obligation for employers to enrol workers automatically into a pension scheme will kick in over a four year “staging period”, with larger employers being affected first. Even small employers who will not be required to implement the auto-enrolment scheme in the near future are advised to plan well ahead. The relevant legislation is complex, having been drafted over a long period of time and two governments. In particular, employers will need to examine the range of contribution structures that the Act provides for and decide which best suits their circumstances.

National Minimum Wage

The National Minimum Wage increased on 1st October from £6.08 to £6.19 per hour (main rate) and from £2.60 to £2.65 (apprentice rate). The government has, however, frozen the rate for workers aged 18-20 and 16-17 at £4.98 and £3.68 respectively. This may be due to rising concerns over youth unemployment as well as pressure from the British Chamber of Commerce and BIS.

Retirement

In line with the transitional arrangements applied to the repeal of the default retirement age of 65 last year, the last possible date for a retirement under the old rules is 5th October. Businesses wishing to continue with a compulsory retirement age must provide a business justification for this. Otherwise, termination of employment for those aged over 65 is subject to the same procedural requirements and justifications as for any other employee. Employers risk falling foul of age discrimination legislation if they are not compliant with the new rules.

In the short term this is likely to create significant uncertainty for employers. However, the recent case of Seldon V Clarkson (April 2012) has shed some light on what the courts will consider an adequate justification for continuing with a compulsory retirement age. In this case the court held that employers can, in setting a compulsory retirement age, pursue legitimate objectives of a public interest nature. These can include inter-generational fairness (like creating employment opportunities for younger workers) and dignity (pre-empting the necessity to dismiss older workers on the ground of poor performance).

As well as implementing the most recent changes to employment law, businesses will need to monitor forthcoming developments. Under the EU Parental Leave Directive, the minimum period of leave in the UK must be increased from three to four months before March 2013. The current government’s reforming zeal promises further changes in the near future. Vince Cable’s recent announcement of a number of measures relating to employment disputes is only at the consultation stage but seems likely to lead to significant legal developments. This will hopefully achieve the stated aim of creating a more flexible legal environment for employers.

This article was written and provided by Contact Law.

This was posted in Bdaily's Members' News section by Jonny Marshall .