UK: What UK Employers Need To Know: Staying Ahead In 2012

Last Updated: 16 February 2012
Article by Suzanne Horne and Sarah Clarke


We outline the key forthcoming and recent legislative developments in UK employment law for 2012 and summarize the new rates and limits. We also take a look at what is on the horizon so you can stay ahead and we identify the key employment cases due before the European court, the UK courts and the employment tribunals this year.



1. Unfair dismissal basic and compensatory award and statutory redundancy payment increases1

On 1 February, the limit on a week's pay for calculating statutory redundancy and the basic award for unfair dismissal increased from £400 to £430 and the maximum compensatory award for unfair dismissal increased from £68,400 to £72,300. However, no maximum applies in certain circumstances, for example where the dismissal is for making a protected disclosure. The new maximum statutory redundancy pay is £12,900.


2. Parental leave increases from three to four months

Although a new EU Directive on Parental Leave Directive (2010/18/EU) comes into force on 8 March 2012 giving birth and adoptive parents the statutory right to four rather than three months leave, the Government has confirmed that it will rely on the exception that allows member states an extra year for implementation, and that it will implement the change by March 2013.


3. Qualifying period for unfair dismissal increases to two years

At present, employees need one year's continuous service to bring a claim of unfair dismissal against their employer (the "qualifying period"). On 6 April, the qualifying period will increase from one year to two years. The change will apply only to employees who start a new job on or after 6 April. Those who are already in employment before that date will retain the current one-year qualifying period.

4. Changes to tribunal procedure come into force

It costs employers a substantial amount each year to defend unmeritorious claims to the tribunal by current and former employees. In an attempt to combat the more spurious claims, the Government has announced changes to certain tribunal procedure. From 6 April, the maximum amount of a deposit order, which a tribunal can order a party to pay as a condition to continuing with tribunal proceedings, increases from £500 to £1,000. The maximum amount of a costs order, which a tribunal may award in favour of a legally represented party, increases from £10,000 to £20,0002. It remains to be seen if the tribunal exercises these powers.

5. New statutory payment rates

From 1 April, the standard rate of statutory maternity, paternity and adoption pay increases from £128.73 to £135.45 per week. From 6 April, the standard rate of statutory sick pay increases from £81.60 to £85.85 per week.


6. Automatic enrolment comes into force

All employers in Great Britain will be required to automatically enroll eligible jobholders into a pension scheme. The new duties will be formally implemented over four years starting on 1 October, with larger employers being affected before smaller employers and new businesses. The initial wave of employers will be able to voluntarily start auto-enrolment as early as July.

7. Increases to national minimum wage

Although no rates have been published yet, these are expected to increase in the normal way as of 1 October.


In 2011 it was difficult to avoid the vast number of consultations and calls for evidence published by the Government. Below, we touch upon those which we anticipate will have the most significant effect in 2012 and the issues still being considered.

8. Resolving workplace disputes: a consultation: Government's response

On 27 January 2011, the Department for Business, Innovation and Skills ("BIS") and the Tribunals Service consulted on proposals to deregulate business and reduce the regulatory burden facing British businesses. The paper marked a significant first step in taking forward the Government's review of employment law. The Government's response3 stated that it intends to bring into force a number of planned changes this year including, amongst others, early conciliation, financial penalties for employers and up-rating tribunal awards and statutory redundancy payments.

9. Charging fees in employment tribunals and the employment appeal tribunal

On 14 December 2011, the Government published a consultation entitled 'Charging fees in employment tribunals and the employment appeals tribunal', which seeks views on two significantly different fee charging structures which might be adopted for fees in the employment tribunal. The consultation closes on 6 March 2012.

10. Consultation on modern workplaces: flexible parental leave etc.

On 16 May 2011, the Government published 'Consultation on Modern Workplaces', which makes proposals for a new system of shared flexible parental leave, an extension of the right to request flexible working, revisions to the way annual leave is dealt with under the Working Time Regulations 1998 (SI 1998/1833) (the "WTR 1998") and compulsory pay audits for employers found guilty of pay discrimination. The consultation closed on 8 August 2011. However, on 6 December 2011, BIS advised that the Government's response would not be published until early 2012.

11. Executive remuneration discussion paper

On 19 September 2011, BIS published a discussion paper on the governance of executive remuneration in quoted companies. The Government published its response on 23 January 2012 and proposed that there should be more detailed regulation of the content of remuneration reports, greater diversity in remuneration committees, greater transparency on the work of remuneration consultants, amendments to the UK Corporate Governance Code to put an end to the practice of serving executives sitting on the remuneration committees of other large companies and requiring large public companies to adopt incentive clawback provisions. The proposals are likely to result in a consultation paper later this year.

12. Call for evidence on collective redundancy consultation rules

On 23 November 2011, BIS published 'Call for Evidence: Collective Redundancy Consultation Rules', which sought to explore the consequences of reducing the current 90-day period for collective consultation in a large-scale redundancy to 60, 45 or 30 days. The call for evidence closed on 31 January 2012 and the evidence will be used to formulate policy proposals to be put forward for public consultation.

13. Call for evidence on the effectiveness of the transfer of undertakings (protection of employment) regulations 2006

On 23 November 2011, BIS published 'Call for evidence: Effectiveness of Transfer of Undertakings (Protection of Employment) Regulations 2006', seeking views on the effectiveness of TUPE 2006 given concerns that the regulations gold-plate the EU Acquired Rights Directive and are overly bureaucratic. There is a particular focus on service provision changes, insolvency proceedings and collective redundancy consultation. The call for evidence closed on 31 January 2012 and the evidence will be used to formulate policy proposals to be put forward for formal public consultation.

14. Further reviews: protected conversations, compromise agreements

The Government intends to consult on the introduction of "protected conversations" this year, which will enable employers to raise workplace issues in an open way without the worry that they will be used in evidence at an employment tribunal. The Government also intends to consult on compromise agreements, particularly in relation to their use, costs, advantages and disadvantages.


2012 promises to be another busy year. We anticipate perhaps a trickle of cases in respect of the relatively new Bribery Act 2010 and the Agency Worker Regulations 2010. We set out below the key cases that have already been decided this year, those where decisions are yet to be handed down and those yet to be heard.

Working time: requirement to take four weeks annual leave has direct effect

The European Court of Justice ("ECJ") has held in Dominguez v Centre Informatique du Centre Ouest Atlantique that Article 7(1) of the Working Time Directive4, which obliges member states to take measures to ensure that workers are entitled to at least four weeks' paid annual leave, is sufficiently precise and unconditional to have direct effect against an emanation of the state. It follows that public sector workers will be able to enforce Article 7(1) in employment tribunals even if the WTR 1998 cannot be interpreted as giving full effect to the Directive's requirements. However, the ECJ confirmed that national provisions in conflict with Article 7(1) cannot be set aside in cases against private employers.

Holidays & sickness absence

The question of whether the carry-over of holiday is allowed under the WTR 1998 depends on whether the WTR 1998 can be interpreted in line with the ECJ's decisions in Stringer5 and Pereda, which confirmed that under the EU Working Time Directive, workers on sick leave continue to accrue annual leave and that a worker must have the option to defer annual leave if sick whilst on annual leave. It is for member states to decide whether workers can actually take their statutory holiday during a period of sick leave and the post-Stringer UK employment tribunal decisions are inconsistent in this regard. In Larner6, the EAT held that a worker on long-term sick leave for a whole leave year was entitled to carry over her holiday and be paid in lieu on termination. The employer is appealing the decision and it is due to be heard in March. This decision is important as it impacts a number of cases at lower levels of the tribunal system.

Limits of UK's unfair dismissal and discrimination legislation

We are awaiting decisions by the UK's Supreme Court in the case of Ravat7 in respect of the territorial scope of unfair dismissal law and BA v Mak8 in respect of discrimination legislation. These decisions are expected in February and October respectively and will prove significant due to the lack of legislation in these areas.

Age discrimination & retirement

In January, the UK's Supreme Court reviewed the justification of direct discrimination, and in particular whether the forced retirement at 65 of a partner in a law firm was justified as a proportionate means of achieving legitimate workplace-related aims in the case of Seldon9. In addition, the Supreme Court considered in the case of Homer10 whether a 61 year-old employee's rejection for a top salary grade on account of his not having a law degree was discriminatory on the ground of age, or simply a consequence of age. The Court is yet to hand down the judgments in either case. As of 6 April 2011 any termination on the grounds of age must now be objectively justified. Therefore, these are important decisions for employers to understand their obligations in the absence of a default retirement age.

Religion & belief: whether preventing an employee wearing a cross at work was a breach of her human rights

The European Court of Human Rights will decide in Eweida11 whether the UK courts contravened Articles 9 and 14 of the European Convention on Human Rights in rejecting the claimants' indirect discrimination claims on the basis that they were unable to identify others with their beliefs who suffered particular disadvantage as a result of their employers' dress codes.

Associative pregnancy discrimination: is it unlawful under European law?

The Court of Session will refer to the ECJ the issue of whether under the recast EU Equal Treatment Directive12 it is unlawful discrimination on the grounds of sex to treat someone less favourably on the ground of their association with a pregnant woman. The case of Kulikauskas13 could be an interesting new development in associative discrimination.

The trigger for collective redundancy consultation

In Nolan14, the ECJ will determine if an employer must start collective consultation under the EU Collective Redundancies Directive15 when the employer is proposing a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies or only when that decision has actually been made and it is then proposing consequential redundancies. The case came before the ECJ in January 2012 and we await the judgment.

What happens to collective agreements after a TUPE transfer?

Under TUPE, any collective agreements which apply to the in scope employees transfer to the transferee. In Parkwood Leisure16, the UK's Supreme Court confirmed that there should be a reference to the ECJ as to whether European law17 means that on a TUPE transfer, the transferee should be obliged to honour any changes to terms and conditions collectively agreed after the transfer (the "dynamic approach") or if the transferee is only bound by the terms and conditions as at the date of transfer (the "static approach"). Until a ruling is handed down, the current UK position is that the static approach prevails and the transferee is not bound by changes collectively agreed post-transfer.18


1 The increase to the statutory cap on a week's pay from £400 to £430 on 1 February 2012 has raised the limit on certain other awards a tribunal can make. These include the award for refusing to allow an employee to be accompanied at a disciplinary or grievance hearing and for failure to follow the statutory procedure in relation to a request for flexible working.

2 Other changes to employment tribunal procedure, include changes to witness statements, which are no longer read aloud, and are instead taken "as read", unless the tribunal directs otherwise. Tribunals have the power to direct that the parties to a dispute are responsible for paying witnesses' expenses and that the party who loses the case should reimburse the successful party for any such costs already paid out. Employment judges will hear unfair dismissal cases alone in the employment tribunal, unless they direct otherwise, and judges will hear all cases alone in the Employment Appeal Tribunal, unless they direct otherwise.

3 A link to the Government's response can be found here: 'Resolving Workplace Disputes: Government Response to the consultation'.

4 2003/88/EC.

5 HM Revenue & Customs v Stringer and others [2009] IRLR 214.

6 NHS Leeds v Larner [2011] IRLR 894.

7 Ravat v Halliburton Manufacturing and Services Ltd [2010] CSIH 52; [2010] IRLR 1053.

8 British Airways Plc v Mak and others [2011] EWCA Civ 184.

9 Seldon v Clarkson Wright and Jakes (A Partnership) [2011] ICR 603.

10 Homer v Chief Constable of West Yorkshire [2010] IRLR 619.

11 Eweida v United Kingdom and Chaplin v Royal Devon and Exeter NHS Trust Hospital [2011] ECHR 738

12 No.2006/54.

13 Kulikauskas v MacDuff Shellfish and anor EAT 0062-3/09.

14 United States of America v Nolan [2010] EWCA Civ 1223; [2011] IRLR 40.

15 No.98/59.

16 Alemo-Herron and ors v Parkwood Leisure Ltd [2011] UKSC 26, 15 June 2011.

17 Article 3.1 of the EU Acquired Rights Directive.

18 SI 2006/246.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.