This year is another bumper year for employment law changes. In a series of articles we look at the key changes for employers in 2012, planned changes to Employment Tribunal practice and procedure and further employment law developments still in the pipeline.


Annual Increases

From 1st February 2012, the maximum limit on a week's pay (i.e. for statutory redundancy calculation purposes) will increase from £400 to £430 and the maximum unfair dismissal compensatory award will increase from £68,400 to £72,300. These new awards will only be applicable to dismissals which take effect on or after 1 February 2012.

MARCH 2012

Parental leave increases from three to four months

This is a European initiative which increases parental leave following the birth or adoption of a child, to 4 months. There is also scope under the Directive for parents to transfer some of their parental leave entitlement. (Please note Member States can postpone implementation until March 2013 so watch this space).

APRIL 2012

Unfair dismissal qualifying period

Although much of the detail is still expected from Government, from 6th April 2012 the qualifying period of service to bring an unfair dismissal claim increases from one to two years.

It is hoped that the number of tribunal claims will be reduced by 3,000 per year. However, at this stage we do not know if this change will apply to existing or new employees joining after April 2012. It should also be remembered that this change does not affect the automatic entitlement employees have to bring unfair dismissal claims; for example, for pregnancy or trade union related dismissals.

Employees are also able to bring claims for discrimination without any service requirement therefore employers should ensure if they are seeking to dismiss before a two-year period (or at any time), they use consistent procedures and have evidence to demonstrate a dismissal was for a non-discriminatory or fair reason.

Increase in Statutory Payments

From 6th April, these will increase as follows:-

  • Standard rates for statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £128.73 to £135.45.
  • The weekly earnings threshold for these payments will rise from £102 to £107.
  • Statutory sick pay will increase from £81.60 to £85.85.
  • The weekly earnings threshold rises from £102 to £107.
  • Maternity allowance will increase from £124.88 to £135.45, with the earnings threshold remaining at £30.

Default Retirement Age Procedures (DRA)

Although the DRA has now been abolished, there are still some residual dates employers need to be mindful of this coming year. Under the DRA's transitional provisions, the last day when an employer was able to notify a qualifying employee of their intended date of retirement was 5 April 2011. As the maximum notice of intended retirement under the DRA is 12 months, key retirement dates to note for this year are:-

  1. For those employees given notice on 5 April 2011, the last date on which they can be retired under the DRA is likely to be 5 April 2012. This is subject to any agreed extension - see point 3 below.
  2. The last day on which an employee could have requested to work beyond their intended date of retirement was 4 January 2012.
  3. If an employer agrees to allow an employee to work beyond their intended date of retirement, the maximum extension possible is 6 months; therefore, the last possible date on which an employee can be retired under the DRA procedure is likely to be 5 October 2012.

For other employees reaching retirement, employers will have to rely on an 'employer justified retirement age' or simply having no set retirement date.


Automatic enrolment into a pension scheme

From 1 October 2012, employers (in Great Britain) must automatically enrol all 'eligible employees' into either the employer's pension scheme or the National Employment Savings Trust pension scheme (or NEST scheme).

'Eligible employees' are those not already participating in an employer's pension scheme or those employed for less than 12 weeks. The threshold for automatic enrolment is aligned with personal allowances for income tax purposes. To encourage participation, employees' pension contributions will be supplemented by employers' contributions and be subject to tax relief. There will be a staged introduction with employers employing 120,000 employees being the first to introduce automatic enrolment, although employers will be able to voluntarily start auto-enrolment as early as July 2012.

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.