October is set to be a busy month for HR professionals, with new employment laws and changes to existing legislation coming into force. Employers need to be aware of three key changes affecting pay, pensions and retirement:
1. National minimum wage increases
On 1 October 2012, the main rate of the national minimum wage increases from £6.08 to £6.19 per hour.
The youth rate (which applies to workers aged 18 to 20) and the rate for workers aged 16 to 17 will not change this year.
The apprentice rate increases from £2.60 to £2.65 per hour and the accommodation offset, which allows an employer to offset housing costs against the national minimum wage, increases from £4.73 to £4.82 per day.
- National minimum wage rates from 1 October 2012
- Who is eligible for the national minimum wage?
- What rate of the national minimum wage is payable when 1 October 2012 falls within a worker’s pay reference period?
- Can employers use tips to count towards payment of the national minimum wage?
2. Pensions auto-enrolment begins
The new duty to auto-enrol eligible jobholders not already participating in a workplace pension scheme into a qualifying scheme or the National Employment Savings Trust is to be implemented in stages.
The employer’s staging date depends on its PAYE scheme size and reference on 1 April 2012. The first staging date is 1 October 2012, which applies to employers with 120,000 or more employees.
Employers may postpone enrolment for three months, although employees will be able to opt in during this period.
- What changes to workplace pension law will be made by the legislation on auto-enrolment?
- Staging dates
- Categories of worker
- How much must employers and employees contribute into their pension scheme under the pensions auto-enrolment provisions?
- Do the auto-enrolment provisions affect employers that already provide their employees with access to a pension scheme?
3. Last date for retirement under the default retirement age
Under the transitional provisions, where an employee was given the maximum 12 months’ notice of his or her proposed retirement date on the last possible date of 5 April 2011, the intended date of retirement would have been 5 April 2012 (according to the Government). The last day for submitting a request to continue working beyond the intended retirement date in these circumstances would have been 4 January 2012, because the employee could submit a request to continue working more than three months, but not more than six months, before the intended date of retirement.
The employer could agree to an extension of not more than six months beyond the employee’s proposed retirement date. In these circumstances, if the employer agreed that the employee could continue working for a period of six months, the employee’s retirement date will be 5 October 2012. This is the last possible date for a retirement under the statutory procedure.
- What is the timetable for the abolition of the default retirement age?
- Under the transitional provisions relating to the abolition of the default retirement age, can an employer agree to an employee’s request to continue working after his or her retirement date and still retire the employee at a later date?
- How will employers deal with retirement after the abolition of the default retirement age?
Full details of all the employment law changes coming into force in October 2012 are available in the XpertHR legal timetable.