February 2010 UK Emplyment Law Changes in 2010: New Statutry Rates, Limits and Entitlements BY CHRIS BRACEBRIDGE AND ANNA SANFORD At a Glance Varius changes t emplyment related cmpensatin, benefit and tax rates take effect during Spring 2010. At the same time, legislative changes have effect in several areas f imprtance t emplyers with UK emplyees. CONTENTS 1. New Statutry Cmpensatin Limits and Statutry Benefits Rates 2. New Incme Tax/Natinal Insurance Cntributins Rates 3. New Pensin Scheme Allwances 4. Time Off Fr Training 5. Additinal Paternity Leave and Pay 6. Fit Fr Wrk Ntes 7. Fines fr Breach f UK Data Prtectin Laws 8. What Emplyers Shuld Be Ding Nw 1. New Statutry Cmpensatin Limits and Statutry Benefit Rates The maximum cmpensatry Emplyment Tribunal award fr mst unfair dismissal claims with an "effective date f terminatin" n r after 1 February 2010 will decrease frm 66,200 t 65,300 (due t the decrease in the Retail Prices Index ver the year t September 2009). 1 1
The effective date f terminatin is the date n which the emplyment cntract, viewed bjectively, cmes t an end. Frm 6 April 2009, the prescribed rate f statutry maternity, paternity and adptin pay and maternity allwance will increase frm 123.06 t 124.88 per week (r 90% f nrmal weekly earnings, if lwer). 2. New Incme Tax/Natinal Insurance Cntributins Rates Frm 6 April 2010: the persnal incme tax allwance fr tax payers with grss incme in excess f 100,000 will be reduced by 1 fr every 2 f grss incme in excess f 100,000 until the allwance is reduced t nil; the incme tax rate fr grss incme in excess f 150,000 will be increased frm 40% t 50%; incme tax rates and taxable bands fr 2010-2011 will be: starting rate fr savings nly (10%): 0-2,440 (NB: if nn-savings incme is abve this limit then the 10 per cent starting rate fr savings will nt apply); basic rate (20%): 0 37,400; higher rate (40%): 37,401-150,000; and additinal rate (50%): ver 150,000; and the natinal insurance cntributins lwer earnings limit fr class 1 cntributins will increase frm 95 t 97. The upper earnings limit will remain 844 a week. 3. New Pensin Scheme Allwances Frm 6 April 2010: the pensin scheme individual annual allwance in respect f scheme cntributins will increase frm 245,000 t 255,000 per annum; and the pensin scheme individual lifetime allwance will increase frm 1.75 millin t 1.8 millin. 4. Time Off Fr Training This new right - fr emplyees t request time ff wrk t undertake study r training - applies frm 6 April 2010. The right will initially apply t emplyers with 250 r mre emplyees and is expected t be extended t all emplyers frm 6 April 2011. 2 2
T qualify fr the right, emplyees must have mre than 26 weeks' service and the prpsed training must be fr the purpse f imprving their effectiveness at wrk and the perfrmance f their emplyer's business. Fllwing receipt f an applicatin fr time ff wrk, emplyers must fllw the prcedure set ut in The Emplyee Study and Training (Eligibility, Cmplaints and Remedies) Regulatins 2010 and The Emplyee Study and Training (Prcedural Requirements) Regulatins 2010 (the "Regulatins"). This bradly invlves meeting with the emplyee, cnsidering the request fr time ff, infrming the emplyee f the decisin t allw r refuse the request and allwing the right f appeal. Emplyers may refuse a request fr ne r mre f several prescribed reasns listed in the Regulatins. 5. Additinal Paternity Leave and Pay The Gvernment has published draft regulatins setting ut the detail f the Additinal Paternity Leave and Pay Scheme (the "Scheme"). The Scheme will apply t parents f babies due n r after 3 April 2011, and adptive parents wh are ntified f having been matched with a child n r after that date. The Gvernment has stated that it intends the regulatins t cme int frce in 2010 but n firm date has been annunced. Under the Scheme, emplyees (generally fathers) will be permitted t take up t six mnths' leave t care fr a child, if the child's mther (r primary carer, in the case f adptin) returns t wrk withut having taken their full entitlement t maternity leave (52 weeks). Leave may nly be taken: in relatin t a child under ne year ld, r in the first year it is placed fr adptin; nce the mther, r primary carer, has returned t wrk; and if the child is ver 20 weeks ld, r has been with its adptive parents fr at least 20 weeks. The Scheme prvides that fathers, r secndary carers, may be entitled t received additinal statutry paternity pay ("ASPP") prvided: the mther (r primary carer), is entitled t statutry maternity r adptin pay r maternity allwance, and returned t wrk; and the emplyee must have cmpleted at least 26 weeks' emplyment ending with the week immediately preceding the 14th week befre the expected week f childbirth and remained in emplyment until the perid when ASPP is due. It remains t be seen whether this legislatin will be enacted befre the 2010 General Electin, which is likely t ccur in May. 6. Fit Fr Wrk Ntes The new Statement f Fitness t wrk ("Fit Ntes") will be intrduced n 6 April 2010 fr use by General Practitiner dctrs ( GPs ) in relatin t sick, r previusly sick, emplyees. Currently, GPs may certify patients as either "fit t wrk" r "nt fit t wrk". Hwever, frm 6 April GPs will nly be able t certify that an emplyee "may be fit fr wrk", rather than "fit fr wrk" - t 3 3
make it clear that emplyers still need t carry ut a risk assessment n the emplyee's return. The Fit Nte will als list recmmended changes an emplyer culd adpt t facilitate an emplyee's return t wrk. The maximum duratin that Fit Ntes can be issued fr in the first six mnths f an emplyee's illness will be limited t three mnths (reduced frm six mnths under the current illness certificatin scheme). 7. Fines fr Breach f UK Data Prtectin Laws It is expected that frm 6 April 2010, the UK Infrmatin Cmmissiner ( ICO ) will have the pwer t impse fines f up t 500,000 fr breaches f the Data Prtectin Act 1998 ("DPA"). The DPA impses a range f bligatins n businesses, emplyers, prfessinals and gvernment departments wh are respnsible fr prcessing persnal data ("Data Cntrllers"). The DPA als prvides that persnal data must be prcessed in line with specified data prtectin principles ("Data Principles"). Data Cntrllers in breach f the Data Principles may currently be issued with an enfrcement ntice requiring cmpliance within a specified perid. Failure t cmply with the enfrcement ntice is a criminal ffence punishable by a maximum fine f 5,000. A Data Cntrller may als face civil prceedings if his r her breach has caused damage t an individual abut whm data is cllected. The ICO s new pwer t impse mnetary penalties applies where: there has been a serius cntraventin f ne f the Data Principles; this was likely t cause substantial damage r distress; and the cntraventin was deliberate, r the Data Cntrller knew r ught t have knwn that there was a risk cntraventin wuld ccur and that it wuld be likely t cause substantial damage r distress and failed t take reasnable steps t prevent it. A Data Cntrller has the right t make representatins befre a final decisin n the penalty is made and is als allwed a right f appeal against any penalty. 8. What Emplyers Shuld Be Ding Nw Relevant references in handbks and written plicies r prcedures shuld be updated as apprpriate t take accunt f the new: benefit, tax and scial security rates; and right t request time ff fr training. Similar updates shuld be made in relatin t the additinal paternity leave and pay scheme, if enacted. In-huse emplyment lawyers, HR persnnel and line managers shuld als receive ntificatin and/r training abut these new rights. Staff dealing with the administratin f applicable plicies and/r benefits shuld be ntified f the benefit, tax and scial security rate changes. 4 4
Cmpliance and risk staff, and each rganisatin s data prtectin fficer, must be made aware f the ICO s increased pwers and shuld urgently assess current cmpliance with data prtectin plicies and practice t ensure avidance f serius breaches f the DPA. If yu have any questins cncerning these develping issues, please d nt hesitate t cntact any f the fllwing Paul Hastings Lndn lawyers: Chris Bracebridge 44-20-3023-5138 chrisbracebridge@paulhastings.cm Helena Laughrin 44-20-3023-5144 helenalaughrin@paulhastings.cm Christpher Walter 44-20-3023-5129 christpherwalter@paulhastings.cm 18 Offices Wrldwide Paul, Hastings, Janfsky & Walker LLP www.paulhastings.cm StayCurrent is published slely fr the interests f friends and clients f Paul, Hastings, Janfsky & Walker LLP and shuld in n way be relied upn r cnstrued as legal advice. The views expressed in this publicatin reflect thse f the authrs and nt necessarily the views f Paul Hastings. Fr specific infrmatin n recent develpments r particular factual situatins, the pinin f legal cunsel shuld be sught. These materials may be cnsidered ATTORNEY ADVERTISING in sme jurisdictins. Paul Hastings is a limited liability partnership. Cpyright 2010 Paul, Hastings, Janfsky & Walker LLP. IRS Circular 230 Disclsure: As required by U.S. Treasury Regulatins gverning tax practice, yu are hereby advised that any written tax advice cntained herein r attached was nt written r intended t be used (and cannt be used) by any taxpayer fr the purpse f aviding penalties that may be impsed under the U.S. Internal Revenue Cde. 5 5