EMPLOYMENT LAW TRAINING AND EMPLOYMENT LAW CONSULTANCY

Section Two

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The Law in More Detail

Increased Statutory Holiday Rights (1 October 2007)

Statutory holiday entitlement under the Working Time Regulations is to be extended from the present 4 weeks (20 days including Bank Holidays if full time) to 4 weeks plus Bank Holidays a year. (i.e. 28 days per year full time).  The Government proposes to increase the statutory holiday entitlement in stages starting with an additional 4 days holiday from 1 October 2007. This will give 24 days holiday as a minimum (16 days plus 8 Public Holidays).

This means of course that workers will have the right to be paid for Bank Holidays in addition to their “normal” annual entitlement. However in these Regulations there is no right to take these holidays on specific dates, so the Employer can still require people to work on Public Holidays. Now however an alternative day must be provided in the annual entitlement to make up for the “lost” day if this is worked. Payments for, and any time off in lieu of, working a Public Holiday is an issue that should be dealt with in a staff handbook or holiday policy.

To work out an individual entitlement in the transitional stages from October 2007, you must multiply the proportion of the holiday year left to run, by the additional holiday due from 1 October. So for a part time worker on 3 days per week, whose leave year starts on 1 January 2007 the entitlement is 12.6 days for 2007. A full time employee on a 5-day week will get an extra day in 2007 (3/12 or 0.25 x 4 days)

There is no obligation to round the calculation “up”, but many employers probably will, at least to the nearest half-day. Employers cannot however round the holiday entitlement “down”!

The Government has set up an on-line calculator to help with this transitional period. It is on the following link: www.berr.gov.uk/employment

The practice of “buying out” holiday entitlement by providing payment in lieu is not encouraged by the Working Time rules. In fact it has not been permitted unless the entitlement exceeded the (previous) minimum of 4 weeks. However until April 2009, again as a transitional measure, Employers will be allowed to make a payment in lieu of the additional 4 days holiday entitlement. This was introduced to help Employers to overcome any difficulties in finding enough staff to cover the extra days off. After April 2009 it will no longer be permissible to buy out any statutory entitlement, by which time this will be set at 28 days per annum.

Another change is that in future Employers will be allowed to let staff “carry over” these additional statutory holidays to the next holiday year. (No carry over was allowed on the previous statutory minimum of 20 days per annum, and the new rules only apply to the extra days - there is still no carry over below 20 days). Do note that Employers are under no obligation to allow for any “carry over” days at all if they do not wish to.

Don’t forget the obligation (in the Employment Rights Act) on all employers to inform employees in writing of any changes to their employment terms. This should be done within a month of the changes coming into effect. It is a good time to check your employment policies to see what they say about holiday entitlement, payment in lieu, “carry over” rules and bank holidays.

Work and Families Act (Review)

The Work and Families made changes in four main areas of the law.

• Paid maternity and adoption leave was extended from 6 months to 9 months (39 weeks), at the same flat rate (currently £112.75 a week).   For adoption pay, the new rules apply for adoptions where the child is placed for adoption after that date. In the longer term, probably in 2009, the period of paid maternity/adoption leave will be extended to 12 months.
  Statutory Maternity Pay will still be calculated at 90% of the woman’s average earnings for the first 6 weeks, followed by up to 33 weeks at the SMP rate of £112.75.
• The right to request flexible working was extended to those caring for disabled or sick relatives (but not, at least at this stage, those with child care responsibilities for older but healthy children).  The Government has conducted a consultation exercise on the precise scope of caring responsibilities that would be covered by the change.
  A carer is an employee who is caring for a dependent adult who:
  • is married to, or the partner or civil partner of the employee;
  • is a 'near relative' of the employee;
  • falls into neither category but lives at the same address as the employee.
  The 'near relative' definition includes parents, parent-in-law, adult child, adopted adult child, siblings (including those who are in-laws), uncles, aunts or grandparents and step-relatives.”
• There is power in the Act to provide for maternity pay to be transferred from the mother to a partner, in the form of additional, paid, paternity leave.  The Government envisages that this would only apply after the first 6 months of maternity leave have been taken. This would potentially mean up to 3 months paid leave remains if the mother chooses to return at this point. Consultations on the (potentially quite complex) details of how this scheme would work are still in progress. This will be called Additional Paternity Leave.

There are also a number of changes to the law on maternity leave.  The requirement for 6 months’ qualifying service to be entitled to take additional maternity leave is scrapped – with the result that all working women will be entitled to 6 months of Ordinary maternity leave, immediately followed by a further 6 months of Additional Maternity Leave.  On the other hand, the notice that a woman will have to give if she intends to return to work early from maternity leave, or to change her previously stated intended date of return is increased to 8 weeks, from 4. The Employer can waive this if they wish.

New “keep in touch days”. These provide that a woman can return to her employer and carry out some paid employment for a few days without this impacting on her right to claim statutory maternity pay. The Regulations permit employees to do occasional work during maternity leave without loss of statutory rights or causing the maternity leave to come to an end prematurely.  These are to be known as “keeping in touch days” and will be limited to a maximum of 10 days in any one period of maternity or adoption leave. These are voluntary in nature – the Employer cannot insist on a woman coming in for any of these days. These KIT days do not extend the period of maternity or adoption leave. A woman can be paid for occasional days, perhaps important training or a staff briefing, without loss of SSP entitlements.

As a separate point, the Regulations make clear that employers are entitled to maintain reasonable contact with their employees during maternity leave.  All of these changes will apply where the expected date of childbirth falls on or after 1 April 2007. Statutory Maternity Pay can now also commence on any day of the week, to coincide with the start of maternity leave.

Work and Families Act - Some Questions answered

Question

Is it correct that employees still need 26 weeks' service to qualify for adoption leave, but not for additional maternity leave?

Answer

Yes. An employee with an expected week of childbirth on or after 1 April 2007 will qualify for both ordinary maternity leave (OML) and additional maternity leave (AML) regardless of her length of service. To qualify for adoption leave, however, an employee must have been continuously employed by the same employer for 26 weeks by the end of the week in which they are notified of having been matched with a child for adoption.

Question

Given that the maternity pay period has increased to 39 weeks, are employees entitled to all their contract terms and conditions, other than pay, for 39 weeks?

Answer

No. Despite the extension of the maternity pay period to 39 weeks for employees with an expected week of childbirth on or after 1 April 2007, the distinctions between Ordinary ML and Additional ML remain. Therefore, an employee will continue to be entitled to her contractual benefits (excluding remuneration), such as gym membership and use of a company car, during her 26 weeks of OML, but not during AML, unless the employment contract provides for this (some employers continue to offer them for simplicity).

Question

If an employee with an expected week of childbirth on or after 1 April 2007 wants to return to work at the end of her OML does she have to notify her employer?

Answer

Yes. An employer will usually expect an employee to return to work on the first working day after her AML finishes, ie 52 weeks after her maternity leave began. If an employee wishes to return to work at the end of her OML, or at any time before the end of her AML, she must give her employer eight weeks' notice of the new return date. This is an extension from the previous 28-day notice requirement and is designed to allow both parties to plan more effectively for the employee's return to work. If an employee returns to work early without giving her employer eight weeks' notice, the employer can postpone her return for eight weeks or until the date on which she was due to return, whichever occurs sooner.

Question

Does the extension of SMP to 39 weeks affect an employee's payment of pension contributions?

Answer

While an employee is receiving SMP and/or contractual maternity pay, the employer's pension contribution should be calculated as if the employee were working and receiving her normal salary. The extension of SMP to 39 weeks therefore affects an employee's entitlement to pension contributions, in that she will benefit from full employer pension contributions for the extended period. If the employee belongs to a final salary pension scheme, she will be entitled to continue to accrue pensionable service as normal during her paid maternity leave. The employer's contributions should, therefore, continue at the normal rate. Where the employee is required to make contributions, she need only make payments calculated by reference to her rate of contractual maternity pay or SMP; the employer will need to make up the shortfall to ensure that the scheme remains appropriately funded.

If the employee belongs to a money purchase scheme, during her paid maternity leave the employer must continue to make contributions based on her normal rate of pay, rather than on her contractual maternity pay rate or SMP. The employee is obliged only to make contributions calculated by reference to her contractual maternity pay rate or SMP.

These contributions will usually be lower than those calculated by reference to her normal salary - it is unclear whether or not the employer is required to make up the shortfall.