UK: What’s Happening In 2013? - Key UK Employment Issues

Last Updated: 8 January 2013
Article by Alison Wallace

Welcome to the latest issue of the Steptoe Employment Law Update.

The Employment Law Updates are aimed at providing information on recent developments in UK employment law. It is our desire to provide you with not only an update of the law, but also a practical insight in managing workplace issues on a proactive basis.

  1. Unfair dismissal compensation

    Consultation continues on limiting compensatory awards to a multiple of annual median earnings or 12 months' pay. In the meantime the annual rises for compensation limits with effect from 1 February 2013 have been announced. The maximum unfair dismissal basic award rises to £13,500, the compensatory award to £74,200 and the cap on a week's pay to £450. This will apply to all dismissals which take effect on or after 1 February 2013.
  2. Revised Unpaid Parental Leave

    This is expected to come into effect on 8 March 2013 increasing the amount of unpaid parental leave that can be taken per child from 13 to 18 weeks but limited to a maximum of 4 weeks per year. The age limit on children eligible for parental leave will increase from 5 years to 18 years in 2015.
  3. Flexible Parent Leave

    The Government intends to implement flexible parental leave by way of shared maternity leave by 2015 in addition to fathers' 2 weeks' paternity leave and pay. Surrogate and adoptive parents will also be eligible for this leave.
  4. New 'employee-owner' employment contracts – shares for rights

    This is being widely promoted and will be effective in April 2013. In return for a waiver of certain employment rights an employee may have the new status of 'employee-owner'. Under this new status employee-owners will receive shares between £2,000 and £50,000 which will be exempt from capital gains tax in return for which they will give up certain employment rights. The Department for Business, Innovation and Skills has published an Impact Assessment on affected groups under the Growth and Infrastructure Bill clause 23. The new employment status would have an impact at various points during the employment lifecycle. The Impact Assessment provides a useful table summarising which employment rights will be given up and which will be retained by those taking up this new status.
  5. Collective redundancies

    The Government has announced that the current 90-day minimum consultation period where employers are proposing to make 100 or more redundancies at one establishment will be reduced to 45 days. This will give businesses the flexibility to respond to changing market conditions and to restructure more effectively, and ensure that employee uncertainty is not unnecessarily prolonged. In addition, the Government will legislate to exclude the expiry of fixed-term contracts from the scope of the rules and introduce new non-statutory ACAS guidance to help employers deal effectively with the key issues arising in the context of collective consultation. The amended legislation and guidance will be in place for a commencement date of 6 April 2013.
  6. Employment Tribunal Reform

    Employers can expect to see mandatory pre-claim conciliation requirements with ACAS in order to fulfil the aim of parties reaching agreement at an early stage on claims in 2013. The Government is consulting on new Tribunal Rules where an early strike-out will be permissible and the cap on costs of £20,000 removed. However, it is widely expected that fees will be payable at the commencement of proceedings in the Tribunal and for the hearing itself with effect from Summer 2013.
  7. Settlement agreements

    A model template is now being proposed by the Government for employers and employees who seek a clean break on the termination of employment at the behest of one party or the other after non-discloseable settlement negotiations during 2013. There will still be a requirement for taking legal advice on the agreement.
  8. TUPE

    Consultation continues on the "service provision change" provisions and whether this concept should be revised or abolished altogether to remove unnecessary burdens on business.
  9. Working Time and Time Off

    The Government has not yet published its response regarding the annual leave proposals, which include bringing the UK law into line with the EC Judgment in Stringer so that workers who are unable to take annual leave during one holiday year will be able to carry over unused leave to the next holiday leave.
  10. Income tax

    Income tax for high earners will fall from 50% to 45% in April 2013 when new policies and tax measures come into play, hopefully providing to George Osborne a much needed boost to his plans for the economy and an increased revenue stream. The personal allowance rises to £9,440 in April 2013. The Government has also provided new statutory residency test with effect from April 2013.
  11. Executive remuneration

    Planned reforms in reporting for financial years ending on or after October 2013 include specific information on executive pay in relation to which shareholders will have enhanced voting rights by way of a binding vote on the report at least once every 3 years in order to increase their right to determine remuneration of the directors.
  12. Protection of Freedoms Bill

    This achieved Royal Assent on 1 May 2012. There are planned changes to the vetting and barring scheme and Criminal Records Bureau checks. The CRB check will be instantly accessible online and portable but there is no date yet when these changes come into force in 2013.
  13. Auto-enrolment Pensions

    Various staging dates between January and November 2013 will apply to employers for moving eligible job holders of between 500 and 49,999 in number into a pension scheme.
  14. Repeal of the Third Party Harassment and Discrimination Questionnaire provisions in the Equality Act 2010

    These will take effect during 2013 under the Enterprise and Regulatory Reform Bill.
  15. Whistleblowing Disclosures

    A public interest requirement will be included in the definition of a qualifying disclosure and is this expected to come into force in 2013 in the Enterprise and Regulatory Reform Bill. An employee will no longer be able to blow the whistle for alleged breaches of his or her own employment contract. The EU Commission has also adopted new guidelines to staff on whistleblowing if and when they discover corruption, fraud or other serious irregularities.
  16. Flexible Working Rights

    This right to work flexibly for all employees with at least 26 weeks' continuous service has been postponed at present in the present economic climate. The Government intends to extend the right to employees to work flexibly from 2014. Micro businesses will not be exempt.
  17. Diversity - Women On Boards

    Although the level of disclosure on gender diversity is improving, the Government has moved ahead with draft regulations requiring listed companies to report on gender balances of managers in the company. A manager is defined as "a person who has authority and responsibility for planning directing and controlling the activities of the Company...". The aimis to enable CEOs to understand the composition of their workforces and monitor attrition rates. Companies with reporting years ending after October 2013 will need to consider the regulations when preparing annual reports.

    In the interim the European Commission has also published its proposed Directive on the increasing number of women in non-executive Board member positions between 40% and 49% in publicly listed companies by 1 January 2020 at the latest. Quotas will not be introduced but Boards will be required to take certain steps where there are less than 40% of women non-executive directors. Small and medium sized companies with fewer than 250 employees and with a turnover of less than €50 million or a balance sheet under €43 million will be excluded.

    Studies suggest a more diverse and collective mind set, which incorporates a wider range of perspectives, reaches more balanced decisions.

All these measures are part of the Government's objectives in its ambitious plans for growth:

  • To create the most competitive tax system in the G20
  • To make the UK the best place in Europe to start, finance and grow a business
  • To encourage investment and exports as a route to a more balanced economy
  • To create a more educated workforce that is the most flexible in Europe

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Alison Wallace
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