LCP’s guide to the 2012 changes to employment law

2012 will be a busy year for human resources departments, employers and employment lawyers with some big employment law changes due to come into force. Below all major confirmed changes are outlined – we’ll try to keep this updated when further HR legislation updates are announced.

Localism Act 2011 – 15 January 2012: Under Chapter 8 of the Localism Act, local authorities must produce a pay policy statement for each financial year beginning 2012/13. Read more on legislation.gov.uk.

Employment Rights Order 2011 – 1 February 2012: The Employment Rights Order 2011 comes into force, increasing limits on employment tribunal awards and other amounts paid under employment law; the limit on amount of compensatory award for unfair dismissal increases from £68,400 to £72,300 and the maximum amount of “a week’s pay” for the purpose of calculating a redundancy payment or for various awards including the basic or additional award of compensation for unfair dismissal increases from £400 to £430. There are a total of eight changes, read them in full on legislation.gov.uk.

Parental Leave Directive – 8 March 2012: Following a directive from the European Union, the minimum period of leave permitted to parents following childbirth or adoption increases from three to four months, and at least one month of the four cannot be transferred to the other parent. This will come into force across the EU by 8 March this year.

Income tax thresholds change – April 2012: The income tax personal allowance increases by £630 to £8,105. The higher income tax rate (40%) threshold decreases to £34,371 (previously £35,001). View the full rates and thresholds on the HM Treasury website (PDF).

Statutory maternity, paternity and adoption pay increase – 1 April 2012: The standard rate increases to £135.45 from £128.73.

Qualifying period for unfair dismissal increase – 6 April 2012: The one year qualifying period in order for employees to bring a claim of unfair dismissal increases to two years

Tribunal procedure changes – 6 April 2012: The maximum deposit order amount increases from £500 to £1000 and the maximum costs order from £10,000 to £20,000. Further changes and explanations in full can be seen in Resolving Workplace Disputes – Government Response to Consultation on the BIS website (PDF).

Contracting out of the state additional pension abolished – 6 April 2012: This will be abolished under the Pensions Act of 2007 and the Pensions Act of 2008. Employees will be brought back into the state system automatically and begin to accrue entitlement to additional State Pension.

Statutory sick pay increase – 6 April 2012: The standard rate increases from £81.60 to £85.85 per week.

Lower earnings limit for National Insurance contributions increase – 6 April 2012: Limit for Primary Class 1 contributions increases from £102 to £107.

Basic state pension increase – 9 April 2012 TBC: Basic state pension increases from £102.15 to £107.45 per week according to the Schedule of proposed benefit rates from April 2012 on the DWP website (PDF).

Employers’ Duties (Implementation) Regulations 2010 – 1 September 2012: From this date employers’ obligations under the National Employment Savings Trust (NEST) pensions scheme are set out (see below). View the Employers’ Duties (Implementation) Regulations 2010 on legislation.gov.uk.

Auto-enrolment into pension scheme required – 1 October 2012: From this date all employers with over 50 employees must enrol workers into a qualifying pension scheme or the National Employment Savings Trust (NEST) if they are not already in one, and if they earn over the personal allowance for income tax, have worked for 12 weeks or more, are aged over 22 and under the State Pension Age. Employees’ contributions will be supplemented by a minimum employers’ contribution as well as tax relief. Employees can opt out if wished. Read the Employers’ Duties (Registration and Compliance) Regulations 2010 on legislation.gov.uk.

National Minimum Wage increase – 1 October 2012 TBC: Wage increase will be confirmed depending on Low Pay Commission’s recommendations in February 2012.

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