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The latest changes to employment law


Each October new employment law legislation is introduced, resulting in some important changes for employers. Here we outline some of the key changes coming into effect on 1 October:

National Minimum Wage increase

The National Minimum Wage increases from £6.50 to £6.70 for workers aged 21 and over from 1 October 2015. The minimum wage will also rise for younger workers (those aged 18-20, and under 18s) with the minimum hourly rate being increased to £5.30 and £3.87 respectively. Apprentices also stand to gain from a wage increase as the hourly rate of £2.73 rises to £3.30 per hour.
Smoking in cars containing children is banned

Company vehicles are already covered by existing smoke-free legislation. However, from 1 October, drivers of private cars in England and Wales will be banned from smoking cigarettes if passengers aged under 18 are present. The new legislation will affect those employees using a company car for family purposes, so employers are advised to review their company car and smoking policies.

Section 54 of the Modern Slavery Act 2015 becomes law, subject to Parliamentary approval

Issues such as forced or compulsory labour, servitude and human trafficking are examples of existing modern slavery. From October 2015, businesses with a turnover of £36 million or more per annum will be required to publish a modern slavery statement every year. Such employers will have to state the measures that they have taken to prevent modern slavery from existing in their business or supply chain.

New Fit for Work service to begin accepting employer referrals  

The new Fit for Work service (FFW) introduced by the Government is to be fully functional by the autumn. The service aims to aid employees in returning to work after a period of sickness or absence. Advice from occupational health can be obtained through the Fit for Work website and telephone helpline. As part of the new service, employers will be able to refer their employees for free occupational health assessments if an employee has been absent from work for a minimum of four weeks.

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New Living Wage 'to benefit one-in-three working women'

The introduction of the National Living Wage (NLW) means that some 3.7 million women will benefit from a pay rise by 2020, according to new research from the Resolution Foundation.
Conor D’Arcy, the think tank’s policy analyst, advises that ‘because of their concentration among the low paid, women will account for the majority of the winners.
This will have a positive – though modest – effect on the gender pay gap, and will particularly help those working part-time’.
Additionally, the report also suggests that 2.3 million male workers will benefit from the introduction of the NLW.
In total, some six million employees – nearly one in every four workers – stand to see their wages increase by 2020 either as a direct or indirect result of the new NLW.
Announced in the Chancellor’s July Budget, the NLW of £7.20 an hour comes into effect in April 2016. This wage will only apply to those workers aged 25 and above.
The research indicates that some workers who already earn more than the recommended NLW will gain from the ‘ripple effect’ of rises.
However, many employees’ earnings will rise in line with the current National Minimum Wage (NMW). The NMW currently stands at £6.50 an hour, rising to £6.70 next month.
Earlier this week, the Government unveiled plans for tougher penalties for employers who fail to meet minimum wage requirements.

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Employment, commercial, pension & tax updates

Read some of the latest cases and judgements that may affect you.
Indirect discrimination: protected characteristics
Businesses should be made aware of an ECJ judgment that will have huge implications for indirect discrimination law in the UK. The court held that a person may claim indirect discrimination under the Race Directive (2000/43/EC) even though they do not possess the protected characteristic that has given rise to the discriminatory practice in question. If everyone is intended to be the beneficiary of the rule against indirect discrimination, it will become harder for businesses to identify who might bring a claim. People who could not previously establish that they belonged to a disadvantaged group may seek to bring claims if they are "suffering alongside" a disadvantaged group.
A man making a request to work part-time for childcare reasons and being refused, on the basis that there is a requirement to work full-time, is a good example. He would struggle to establish that he belonged to a disadvantaged group (it being commonly accepted that a requirement to work full-time disadvantages women more than men due to their greater role in childcare). However, this case strongly suggests he could bring his claim as a person suffering alongside the disadvantaged female group.
Partnership: joint liability of partnerships
A Court of Appeal decision provides a warning to owners of businesses that trade as a partnership. The court held that a partner was jointly and severally liable to a third party for the breach of fiduciary duty of another partner (L). This was the case even though L's breach of duty occurred after L had resigned from the partnership.
In this instance, the innocent partner was not exonerated from liability arising from acts that were sufficiently closely connected with the acts that the defaulting partner had been authorised to do, as they were regarded as being done in the ordinary course of the partnership's business.
The partners were also held to be jointly and severally liable for the claimants costs in pursuing the claim and appeal, subject to a 50% reduction to reflect the fact that the claim in negligence had failed.
Pensions auto-enrolment: guidance for businesses
The Pensions Regulator has issued further guidance for small and micro employers in response to research that suggests they need support in choosing a pension scheme for auto-enrolment purposes. The Regulator now estimates that 1.8 million small and micro employers are likely to reach their staging dates over the coming three years, up from the previous estimate of 1.3 million. According to the Regulator, the rise is attributable to an increase in small business start-ups and a decline in the number of business failures. The peak is likely to occur in the second quarter of the 2017/18 financial year when about 349,000 mainly micro employers reach their staging dates.
Data protection: monetary penalty notices
According to its annual report, in 2014/15, the Information Commissioner's Office (ICO) imposed civil monetary penalties amounting to over £1 million, including fines for data loss (£692,500) and unsolicited marketing communications (five penalties totalling £386,000). The ICO also prosecuted in 13 cases involving unlawfully obtaining or disclosing personal data, resulting in ten criminal convictions.
SMEs: tax relief for research and development expenditure
Small or medium-sized enterprises (SMEs) in financial difficulties will be reassured by a First-tier Tribunal (Tax Chamber) decision concerning research and development (R&D) relief. The tribunal held that debt restructurings, such as debt-for-equity swaps, should not lead to a loss of R&D relief, as long as the investor leaves the day-to-day management of the business in the hands of the existing management team.
In this case, a company remained entitled to R&D relief as a SME despite a banking group being a substantial shareholder. The group's shareholding was such that, absent any exemption, the group's balance sheet would have to be taken into account in applying the SME limits (leading the company to lose SME status). However, the group was an "institutional investor" and was therefore ignored for these purposes as it was not involved in the day-to-day running of the company, and did not provide the company with financial strength or advantage exceeding that of other SMEs.
Working Time Regulations: statutory holidays and sickness absence
The Employment Appeal Tribunal (EAT) has held that the Working Time Directive (2003/88/EC) does not require workers on sick leave to provide evidence that they are physically unable to take annual leave to carry over accrued unused statutory holiday to a subsequent leave year. It is sufficient that they are absent on sick leave and do not choose to take annual leave during that period.
However, the EAT also held that the right to carry over leave is not unlimited. Consequently, businesses should read the Working Time Regulations 1998 (WTR) as permitting a worker to take annual leave within 18 months of the leave year in which it accrues where they are unable or unwilling to take it because they are on sick leave. Accrued leave that goes beyond that cut-off period will lapse.

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