Latest News - Key legislative changes
Amendments to LGPS Regulations
The Local Government Pension Scheme (Miscellaneous) Regulations 2012 have been laid before Parliament and will come into force on 1 October 2012. The Regulations introduce a number of changes to the admission agreement procedure and will apply to admission agreements that are entered into after 1 October 2012. One of the key changes is that the contractor, rather than the administering authority, must now carry out the risk assessment on the requirement for a bond or indemnity ‘to the satisfaction of the administering authority'.
In addition, the Regulations introduce amendments that address the introduction of auto-enrolment from 1 October 2012, to enable LGPS scheme employers and admission bodies to comply with the auto-enrolment legislative requirements. The current position, where employees of admission bodies need to apply to join the LGPS, will change so that all employees ‘designated' by an admission body will become active members from the date of designation.
Government consults on further employment law reform
Following its call for evidence on introducing a ‘no fault dismissal' for micro businesses, the Department for Business, Innovation and Skills (BIS) has formally announced that the government will not be pursuing this. The government has now issued consultations on lowering the cap on unfair dismissal awards and on Mr Justice Underhill's proposals for reforming employment tribunal procedure.
The former consultation, ‘Ending the Employment Relationship', considers measures to increase the use of settlement agreements and reduce the cap on unfair dismissal awards. The consultation:
● Proposes reducing the compensation cap on unfair dismissal awards and subjecting this to a second cap of up to 12 months' pay where this is less than the overall cap.
● Seeks views on the content of a new Acas statutory code of practice on settlement agreements. The Enterprise and Regulatory Reform Bill will provide that offers of settlement are admissible as evidence in tribunal proceedings, subject to an exception for improper conduct (suggestions from the government as to what improper behaviour will constitute include discriminatory behaviour and undue pressure to accept an offer). The Acas code will give guidance on what is covered.
● Sets out a template letter and guidance on reaching a settlement agreement and asks if there is other information or guidance that could help agree a settlement, for example a guideline tariff for settlement.
The second consultation on Mr Justice Underhill's recommendations for reform of the employment tribunal rules seeks views on:
● Legal officers undertaking case management functions in employment tribunals.
● Payment of tribunal awards in order to decide whether to bring forward further proposals on the issue.
● Requiring judgments to include a 14-day deadline for payment, with interest accruing 14 days from the day after the judgment was sent to the parties, unless the award is paid in full within this period.
● Whether the proposed ‘Presidential Guidance' will give parties a better idea of what to expect at tribunal and what is expected of them.
● Treating lay representatives the same as legal representatives when awarding costs.
Both consultations close on 23 November 2012.
National Minimum Wage (Amendment) Regulations 2012
The National Minimum Wage (Amendment) Regulations 2012 change the rates of national minimum wage in accordance with recommendations from the Low Pay Commission. The following hourly rates of national minimum wage apply from 1 October 2012:
● the standard adult rate for workers aged 21 and over is £6.19;
● the development rate for workers aged between 18 and 20 is £4.98 (unchanged from last year);
● the young workers rate for workers aged under 18 but above the compulsory school age and who are not apprentices is £3.68 (unchanged from last year);
● the rate for apprentices is £2.65.
From 1 October 2012, the accommodation offset is £4.82 each day.
Public Service Pensions Bill
The Public Service Pensions Bill was introduced to Parliament on 13 September 2012. The Bill will implement the public sector pensions reforms agreed with the Local Government Association and trade unions following publication of the Hutton Report in March 2011.
The Bill will introduce new career average benefit pension schemes to replace existing final salary schemes and normal pension ages in the new schemes will be linked to state pension age. The NHS, teachers, Civil Service, fire-fighters, police and armed forces pension schemes will close to future accrual on 5 April 2015. The Local Government Pension Scheme will be closed from April 2014. Final salary benefits accrued in an existing scheme up until the date of closure will be calculated by reference to the member's final salary at the point they retire or otherwise leave pensionable service, not the point at which their final salary scheme was closed. The Bill provides transitional protection for persons who were, or who were eligible to be, members of an existing scheme as at 1 April 2012.
The detailed provisions of each scheme will be set out in regulations. However, the design of schemes will have to meet certain requirements. Each scheme will have to have an actuarial valuation in accordance with directions issued by the Treasury and scheme regulations must set an employer cost cap, expressed as a percentage of members' pensionable earnings. The Pensions Regulator role will be extended to cover the governance and administration of schemes established under the Bill.
Auto-enrolment: earnings trigger and qualifying earnings band for 2013/2014
The Department for Work and Pensions (DWP) has issued a consultation on the earnings thresholds for auto-enrolment for the 2013/14 tax year. The DWP is seeking views on the factors it should take into account when revising the earnings trigger and qualifying earnings band.
The DWP proposes that:
● the earnings trigger (the level of qualifying earnings that an eligible jobholder must earn in a year in order to be auto-enrolled) should rise from £8,105 to £9,205 in line with the increase in the PAYE threshold;
● the lower end of the qualifying earnings band, used for calculating minimum contributions, should rise from £5,564 to £5,720 in line with the increase in the lower earnings limit; and
● the upper end of the qualifying earnings band should fall from £42,475 to £41,450, reflecting the reduction in the upper earnings limit (UEL) from 6 April 2013 that forms part of wider tax changes. As this would mean a reduction in mandatory minimum contribution levels on behalf of auto-enrolled jobholders, the DWP recognises that alternative approaches would be either to freeze the upper end of the band at £42,475 or to uprate it to £42,971 in line with the increase in national average earnings.
The consultation closed on 17 October 2012. The final figures will be confirmed around the time of the Chancellor's autumn statement (5 December 2012) and will subsequently be implemented by an affirmative order.
Discrimination questionnaires and third-party harassment
A couple of consultations closed on 7 August. The first asked whether discrimination questionnaires and the power of tribunals to make non-binding recommendations should be abolished. The second sought views on removing the provisions governing third-party harassment from the Equality Act 2010, on the basis that there are already adequate alternative routes of redress for employees who consider they have been harassed by a third party.
The government has recently announced amendments to the Enterprise and Regulatory Reform Bill. These include the removal of employer liability for third-party harassment under the Equality Act 2010, and the questionnaire provisions in s 138 of the Equality Act 2010. Section 138 allows a person who thinks that he or she may have been unlawfully discriminated against, harassed or victimised to obtain information from his or her employer.
Equal pay audits
The government has the power under the Enterprise and Regulatory Reform Bill to issue regulations on mandatory equal pay audits for employers who lose employment tribunal claims. These regulations will be able to require tribunals to order any employer found to have breached equal pay law or discriminated because of sex in non-contractual pay, such as discretionary bonuses, to carry out an equal pay audit.
Under the power to make regulations, an equal pay audit cannot be ordered where:
● a tribunal considers that an audit completed by the respondent in the past three years meets prescribed requirements;
● it is clear without an audit whether any action is required to avoid equal pay breaches occurring or continuing;
● the breach found by the tribunal gives no reason to think that there may be other breaches; or
● the disadvantages of an equal pay audit would outweigh its benefits.
The regulations may make further provision on the content of audits, the powers and duties of a tribunal when deciding whether its order has been complied with, any circumstances in which an audit may be required to be published or disclosed to any person and what should happen where an order is not complied with. The first equal pay audit regulations will exempt start-up and micro-businesses from any such order, although this may be changed by further provision.
Response to TUPE consultation
BIS has published its response to its core evidence on the effectiveness of TUPE. The response identified the concerns raised by employers and points out that there are arguments against all those concerns. It also points out that the government's freedom to act in this area is limited by the Acquired Rights Directive. The response concludes by saying that there will now be a period of ‘policy design', during which the government will look at the issues respondents have raised and seek to determine where action might be desirable.
The government has also stated that it will consult in due course on:
● whether the 2006 service provision changes should be retained or repealed;
● whether, generally, liability should pass entirely to the transferee as now, or be held jointly and severally by transferee and transferor;
● whether employee liability information should be provided earlier to the transferee; and
● whether an amendment to TUPE would be possible to ensure that a change of location of the workplace following a transfer does not necessarily lead to automatic unfair dismissal, ie it is capable of constituting an ETO reason.
Although the consultation did not focus on pensions, the responses contained several queries on how pension rights should be treated on a TUPE transfer. The responses raised concerns about the general uncertainty surrounding the protection of occupational pension rights with regard to TUPE. It was suggested that guidance should be issued setting out specific examples of which pension rights are covered by TUPE and those that are not and making clear what the rules are on future changes.
Law and Practice
The status of employment rights on the transfer of an undertaking is an extremely complex area of...