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October 2012 Updates

The Government announces new "owner employee" contracts

The Chancellor of the Exchequer, George Osborne, has announced the introduction of a new type of employment contract, known as an "owner employee" contract.

As part of this contract, employees would give up their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off for training. Employees will also be required to give 16 weeks notice of a firm date of their return from maternity leave, instead of the usual eight. In exchange for this, employees would be given between £2,000 and £50,000 of shares that are exempt from Capital Gains Tax.

New legislation bringing in the owner-employee contract is expected to come later this year, and be in force from April 2013. Further consultation on the details of the contract is due to be undertaken by the Government later in the month.

In light of these changes, employers may want to consider altering their policies and procedures. Contact us for more information.

10% increase in compensation awards

In the recent case of Simmons v Castle the Court of Appeal revised its earlier judgement and held instead that, with effect from 1 April 2013, the level of damages in all civil claims will be 10% higher for:

  • Pain and suffering.
  • Loss of amenity.
  • Physical inconvenience and social discomfort.
  • Social discredit.
  • Mental distress.
  • Loss of society of relatives.

Whilst this case concerns a personal injury claim, many feel that it is likely that the injury to feelings award in discrimination claims will also go up by 10%, a very significant development in Employment Law.

Is flexibility the key to combating economic austerity?

According to a recent report by the Recruitment and Employment Confederation's (REC) Flexible Work Commission, employers who are more open to flexible working are flourishing in spite of the harsh economic climate. The report stated that organisations that adopted less traditional business structures were more able to compete and regain commercial ground in today's market.

The report highlighted the increased use of freelancers, interims and temporary workers, coupled with the ever growing trend of employers hiring experts on a project-by-project basis.

A survey conducted by the Confederation of British Industry (CBI) last year found that 96% of UK employers offer at least one form of flexible working, whilst 70% offer three or more.

Contact us for information and advice about flexible working policies.

BA pilots annual leave payments set to soar

The recent decision of the European Court of Justice ("ECJ") in British Airways plc v Williams may significantly affect the way holiday pay is currently calculated across the UK, especially now that the Supreme Court has overturned the Court of Appeal's previous ruling so it reflects the ECJ's.

Up until this ruling, BA had been paying their pilots basic pay only during annual leave, and not including certain additional payments which were mentioned in their contracts, such as the Flying Pay Supplement (FPS), paid at £10 per hour, or the Time Away from Base allowance (TAFB) paid at £2.73 per hour.

The court decided that pilots holiday pay should include payment for anything directly linked to the performance of the tasks set out in their contracts.

Although this case concerns holiday pay for pilots, rather than holiday pay in general, the ECJ has proceeded on the basis that the same principles will apply to both.

This, therefore, brings into question whether the current methods for calculating holiday pay in all other areas of employment are consistent with this recent ECJ decision.

Saving for a rainy day: the pension auto-enrolment scheme begins

On 1 October 2012 the new pension auto-enrolment legislation came into force. The new scheme is designed to enable millions of people to save for their retirement, reversing years of decline in saving.

The legislation will be implemented over a five and a half year staging period and will eventually require all employers to auto enrol eligible jobholders into a pension scheme and make mandatory minimum contributions to it.

The new legislation has received a warm welcome from many. According to the National Association of Pension Funds (NAPF) 89% of people believe that every worker should be entitled to a workplace pension, but only 46% of them are currently members of a scheme.

In light of these developments, employers will need to facilitate the auto enrolment scheme and update any of their relevant policies and practices. Contact us for more information.


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