There ARE two other significant changes to employment legislation in 2012 which will have implications for all employers.  To give you a heads up on these changes, we thought a quick summary before the turn of the year would be useful.

Changes to Parental Leave

From 8^th March 2012, the maximum parental leave following the birth or adoption of a child will increase from three months to four months unpaid leave.  To promote equal opportunities and try and encourage a more equal take-up of leave by both parents, at least one of the four months shall be provided on a non-transferable basis. For example, the mother can take three months and the remaining one month must be allocated to the father who can choose whether or not to take it.

This legislation has been approved by the Council of the European Union, however the UK Government are yet to confirm the specific changes that will be made to existing Parental Leave legislation within the UK.  We will provide you with further updates on this as they become available.

Government announces changes for small business to the automatic enrolment timetable - Pensions Act 2008

It has been confirmed by the government that automatic enrolment for Pensions will begin in Autumn 2012.

However, the Chancellor has announced that SME’s, (a small business is one with fewer than 50 employees) will be given addition time to prepare for automatic Penions enrolment. Auto-enrolment for SME’s will now begin in May 2015 rather than April 2014. The previously published timetable has been adjusted to show this recently announced news.

Minister for Pensions Steve Webb said:

"Our society and economy needs to be based on a foundation of saving, not debt. Automatic enrolment will help millions save, and to not act will leave people poorer in retirement. That is why I am confirming today that automatic enrolment will start on time and all employers will be part of it.

"We recognise that small businesses are operating in tough economic times so we are softening the timetable for implementation to give them some additional breathing space. This is a sensible step that ensures long term pension issues are addressed while meeting the short and medium term needs of small business.

“We are committed to ensuring the employees of these small businesses get the chance to save and that is why no one will miss out."

The table below shows the different staging dates, which are determined primarily by PAYE scheme size.

As an employer, you will be required to contribute a minimum of 3% of each employee’s eligible earnings which is intended to incentivise them to join.  Their own contributions and tax relief will be added to this to meet a minimum of 8% contribution rate. 

Employees eligible for automatic enrolment will be:

•         those who aren’t already active members of a qualifying scheme; and
•         are aged between 22 years and the State Pension age; and
•         earning above the earnings threshold. (The earnings threshold for eligibility has been linked to the income tax personal allowance  - £7,475 in 2011/2012)).

Under the Act, employers are not automatically required to enrol individuals employed for under 12 weeks.  The Pensions Act also brings forward the increase in state pension age to 66 by 2020 and brings women's state pension age in line with men's to 65 by 2018.

If you aren’t on top of this important change, now is the time to give us a call to fix a meeting with our partner Financial Advisors, Jelf, or to start talking to your own Financial Advisors. And if your staff will become eligible for the first time to receive Company pension contributions it is also worth planning how you will pay for it! For example, if you can afford a pay rise in 2012 it may be worth thinking about at least a part of it being in the form of a pension contribution. Your staff will may also need some help planning towards this change; their first reaction may be that having to pay something or more towards their pension is not good news in these straightened times.

Advice for employers

If you require further advice on this topic then please call your HR Consultant, or call 01494 451 681 to speak to a member of our team.