Employment legislation update - Forthcoming changes October 2008-April 2009

Employer institutions will be affected by a number of forthcoming legislative changes that will come into force, or take effect, in October of this year and April of next year. Here is a reminder of some of the key changes and a summary of information provided in earlier briefings in readiness for October.

National minimum wage increase

From 1 October 2008, hourly national minimum wage rates will increase from £5.52 to £5.73 for workers aged 22 or over, from £4.60 to £4.77 for workers aged between 18 and 21 and from £3.40 to £3.53 for under 18s.

Sex Discrimination Act 1975 (Amendment) Regulations 2008

Earlier this year, we reported on the changes to the Sex Discrimination Act, introduced on 6 April 2008. One of those changes was the removal of the distinction between the rights of employees on ordinary and additional maternity leave. Under the amended regulations, the same employment benefits must be afforded during additional maternity leave (the second 26 weeks of maternity leave) as is awarded in ordinary maternity leave (the first 26 weeks). During both periods of leave, an employee will benefit from the terms and conditions that would have applied to her had she been at work, except for the terms providing for her remuneration (that is, wages or salary). Contractual benefits such as annual leave and pensions will continue during additional maternity leave as well as ordinary maternity leave. This amendment will affect women due to give birth on or after 5 October 2008. Institutions should therefore ensure that their policies and procedures for maternity leave are compliant with the new regime by that date.

Women whose expected week of childbirth begins on 5 October will also benefit from a change to the rules for calculating bonuses for employees on maternity leave. During maternity leave employees are entitled to receive any bonuses that fall outside the definition of “remuneration” (this effectively means any bonuses that are non-contractual and discretionary). However, in assessing an employee’s entitlement to a bonus where that bonus is assessed by reference to a period of employment, employers are permitted to reduce the bonus to take account of any part of that period during which the employee is on maternity leave. It has previously been established that, in making this assessment, the period of “compulsory maternity leave” (that is, the two weeks immediately following childbirth) should be treated as working time and should not be discounted by the employer for the purposes of calculating that bonus. The Amendment Regulations have now incorporated this rule into the Sex Discrimination Act. Again, this change will also apply to women whose expected week of childbirth is on or after 5 October 2008.

Fixed Term Employees (Prevention of Less Favourable Treatment) (Amendment) Regulations 2008

Previously, employees under fixed-term contracts who were employed through an agency had a different entitlement to statutory sick pay in comparison to other workers. However, as of October 2008, agency workers on contracts of less than three months will be entitled to receive statutory sick pay during periods of sickness absence.

Employment Bill 2007-2008

Key parts of this important piece of employment legislation are due to come into force in April 2009. As we reported in May 2008, the most important of these is likely to be the repeal of the statutory dismissal and grievance procedures.

Introduced in October 2004, the provisions currently require employers to follow a minimum statutory procedure when disciplining or dismissing an employee or when they receive a written grievance from an employee. The Government now intends to repeal these statutory procedures and replace them with a requirement that employers follow the ACAS Code of Practice on discipline and grievance. It is also intended that, under this new regime, employment tribunals may take into account a failure to follow the code when assessing compensation. There will be other important changes introduced under this legislation relating to employment tribunals’ powers to determine cases and the extension of ACAS’s powers to conciliate in disputes.

Working Time (Amendment) Regulations 2007

These regulations introduced an increase in the minimum annual holiday entitlement from 4 weeks to 5.6 weeks. This increase is being introduced in two phases. In October 2007, minimum holiday entitlement was increased by 0.8 week. It will increase by a further 0.8 week from 1 April 2009. This will take the total annual leave entitlement for a full-time worker (working a five-day working week) to 28 days.

Diane Gilhooley is HR expert in the education team at Eversheds.