Happy New Year!
We hope that you have recovered from the Christmas festivities and that 2013 will prove a happy and successful year for you.To kick start the New Year we are taking a quick look in this Beacon at some of the legal changes that employers need to be aware of for 2013.
Before we do that, however, we wanted to flag an important practical change, the consequences of which may not have been fully appreciated by all employers quite yet – which is the introduction by HMRC of a new mechanism for reporting PAYE/NIC – namely Real Time Information, or RTI.
Real Time Information
From April 2013, ALL employers will be legally required to report PAYE in real time. This means that information about all PAYE payments needs to be submitted to HMRC online each time a payment is made as part of the payroll process, rather than at the end of the year as they are now.It is crucial that employers undertake some preparatory work in advance if they wish to avoid financial penalties arising as a result of incorrect information being provided or late filing and/or (even worse and potentially more costly) an HMRC inspection. The following questions might help you assess the readiness of your business for RTI:
· If you use payroll software, is it capable of submitting RTI data?
· Have your payroll/finance staff been trained on the practical (as well as theoretical) requirements of RTI?
· Have you carried out a thorough review of all your employee and pension records to ensure the information you hold is accurate and complete (and includes new information that HMRC requires, including employees’ contracted hours and any irregular employment indication)?
If you have any concerns about your ability to meet your obligations under RTI, let us know. We work alongside employment tax specialists EICG Limited (www.eicg.co.uk) who understand how HMRC works and what RTI involves and would be pleased to assist you in this significant transition.
Forthcoming employment law changes
February 2013
Statutory redundancy payments and tribunal limits. On 1 February 2013 the upper limit on the compensatory award for unfair dismissal will increase to £74,200. Whilst no concrete plans have been announced to change this limit, clause 13 of the Enterprise and Regulatory Reform Bill does contain a power to vary the amount of the compensatory award, including a power to reduce it to the lower of one year’s median earnings (approximately £28,000) or one year’s actual earnings for the employee in question.
From 1 February 2013 the cap on a week’s pay (applied, for example, when calculating statutory redundancy entitlements) will increase from £430 to £450.
The government also intends to introduce a rounding-up mechanism for calculating the annual adjustments to various sums in employment legislation which can be awarded by the employment tribunal.
March 2013
Parental leave. The revised Parental Leave Directive (2010/18/EU) is to be transposed into UK law, increasing the number of weeks of parental leave from 13 for each parent to 18 weeks in respect of each child and extending the right to request flexible leave to employed agency workers on return from parental leave.
Third-party harassment. Employer liability for harassment of employees by third parties is to be removed.
Discrimination questionnaires. The obligation on an employer to respond to requests "from persons that have a potential harassment case" is to be removed.
April 2013
Collective redundancy consultation. The 90 day consultation requirement for redundancies involving 100 or more employees is to be reduced to 45 days.
New employment tribunals rules. The new employment tribunals rules of procedure will be introduced but as the government has not yet published its response to the consultation on the proposed new rules it is unclear at this stage to what extent Lord Justice Underhill's proposals will be adopted.
Whistleblowing. The government intends to amend the Employment Rights Act 1996 so that workers cannot bring a whistleblowing case relating to a breach of their own contract that is not in the public interest.
Employee ownership and share buy backs. The company law provisions on the buy-back of shares are to be simplified, including for the purposes of employees' share schemes.
Strict liability. Employer's strict liability for injuries to employees in the work place is to be removed.
Spring 2013 – DBS (formerly CRB) checks
The government has also announced in the Fifth Statement that a portable Disclosure and Barring Service (DBS) check which employers can view instantly online will be available from Spring 2013.
Summer 2013 – employment tribunal fees
For the first time in their history, employment tribunals are due to charge fees from this summer. A fee will be payable on issue of a claim (in the sum of £160 or £250 depending on the type of claim) and a further hearing fee payable in the sum of £230 or £950. The lower fees will relate to more straightforward and lower value claims (for example claims for unpaid wages and for notice and redundancy pay) with the higher fees payable for all other claims (including unfair dismissal, discrimination, equal pay and whistleblowing claims).
On the flip side, employers will face the possibility of financial penalties of up to £5,000 (reduced for early payment) if they are found to have breached employees' rights, and where there are “one or more aggravating features” (clause 14 of the Employment and Regulatory Reform Bill).
These changes are bound to have an effect on the behaviour of employers and employees. Compulsory ACAS pre-claim conciliation is envisaged, but employers may resist conciliation, preferring to test whether the employee is actually willing to put money into paying the tribunal fee.
For their part, employees may try to put pressure on employers to settle before a hearing and avoid the risk of a financial penalty being imposed by a tribunal.
There are going to be many implications of these changes that will need to be worked through over the coming year. One potential consequence may be the shifting of some unpaid wages claims away from the employment tribunal and into the small claims court (where the fee may be less).
