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Employers Guide to 2013

Napthens - January 17th 2013

Each year we are accustomed to having to grapple with the changes to employment legislation and this year is no exception with the introduction of employee-owner contracts and Real Time PAYE information and changes to family–friendly right changes, employment tribunal procedures/rules and criminal record checks. These developments impact all employers, regardless of size.

  • New compensation limits have been set by the Government for unfair dismissals and will come into force, and apply to dismissal after 1st February 2013. The limit on compensation for unfair dismissal will be raised to £74,200 from £72,300. The limit on a week's pay, used to calculate redundancy payments or for unfair dismissal compensation will go up to £450 from £430.
  • The Employment and Regulatory Reform Bill implements various reforms to the employment tribunal system including allowing employers to have a "protected conversation" with an employee with a view to terminating his or her employment under a settlement agreement; rebranding of compromise agreements as settlement agreements with a standard format and allowing the secretary of state to change the current limits on the unfair dismissal compensatory award.
  • Unpaid parental leave – an employee's right increases from 13 weeks leave to 18 weeks from 8 March 2013.
  • Employee-Owner contracts - following George Osborne's announcement last October, a new type of employment contract, under which employees will be given shares in exchange for waiving certain employment rights, is intended to be introduced in April this year. The idea is that the employee will waive certain employment rights ie unfair dismissal, redundancy in return for shares in the Company of up to £50,000 which will be free from capital gains tax. Although interesting, it raises a number of difficulties and only time will tell how this concept develops.
  • CRB Checks, now known as Disclosure and Barring Service (DBS) checks are at long last to become portable between employers, from March 2013. This should save much needed time, resources and money.
  • Real-time information for payroll - Employers will be required to use real-time information to report payroll deductions/changes before or when they make them from 6 April 2013. This will be a significant change to the current system and employer need to be preparing now for the changes. Penalties can be imposed on those employers failing to report changes/deductions via the new system.
  • Collective consultation - where 100 or more redundancies are proposed the 90 day consultation period required will reduce to 45 days from 6 April 2013. This is a key change for any employer contemplating large scale redundancies and may affect the strategic timing of implementing such redundancies.
  • Statutory Pay rates - Statutory maternity, paternity and adoption pay increases to from April 2013 to £136.78. Statutory sick pay will increase to £86.70.
  • Pension Auto enrolment - will apply to employers with between 500 - 50,000 workers. Those with 500 staff will have to implement by November 2013, and note, this time next year auto enrolment will start to apply on a monthly staged basis for most employers.
  • Employment Tribunal Fees - those who bring claims to an employment tribunal will have to pay a fee to lodge a claim from Summer 2013 onwards and a further fee as the case progresses. This should deter vexatious litigants.