October 2012 employment law changes: what employers need to know

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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.

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.

3. Last date for retirement under the default retirement age

The default retirement age of 65 and associated statutory retirement procedure were repealed on 6 April 2011.

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.

Full details of all the employment law changes coming into force in October 2012 are available in the XpertHR legal timetable.

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