Employment law changes: potential impact on HR and business

The latest round of employment law changes come into effect on 1 October. Their implications for the workplace should not be underestimated. Tara Craig asked industry figures for their thoughts on the changes to the National Minimum Wage rates, Work and Families, Workplace Parking, and tipping and the NMW regulations.



What it means

Industry response 

XpertHR adds… 

The National Minimum
Wage Regulations 1999 (Amendment) Regulations 2009

HR impact rating: 3/10

• The main National Minimum Wage rate will increase from £5.73 to £5.80.

• The development rate (for workers aged 18 to 21) will rise from £4.77 to £4.83.

• The youth rate (for 16- and 17-year-olds) will rise from £3.53 to £3.57.

“The modest increase in the minimum wage will put more money into the pockets of nearly a million low-paid workers. The government was right to dismiss calls from employer lobby groups for a wage freeze. It would be wrong to punish the low paid for the mistakes of rich bankers, especially as there is no economic case for doing so”.

Brendan Barber, general secretary, TUC 

“There are further changes afoot. From October 2010, the main National Minimum Wage will be extended to workers aged 21, following recommendations from the Low Pay Commission. The commission also recommended that there should be a minimum wage for apprentices. The government is also looking at the commission’s recommendation that there should be information available on employers that wilfully disregard the law on the minimum wage”.

Clio Springer, editor, XpertHR

Are employers required to pay school children on work experience the national minimum wage? For this and other questions on the minimum wage, see the XpertHR FAQs section.


Work and families
(Increase of Maximum Amount) Order 2009

HR impact rating: 5/10

The maximum weekly amount for calculating unfair dismissal and redundancy payments increases from £350 to £380.


“Statutory redundancy pay is a concern. It will clearly have a disproportionate impact on manufacturers, as it will only affect people earning more than £350 per week. Many manufacturers pay that amount. And quite a lot of companies have supplementary redundancy schemes, which are often a multiple of statutory redundancy pay, so they could get hit twice. We have concerns about the government increasing the statutory redundancy payment at this time – clearly there were political reasons for them having to do so. But the fact that they’re not going to increase the statutory redundancy pay limit until February 2011 has helped.”

David Yeandle, head of employment policy, EEF

“Statutory redundancy pay will increase by £30 to £380 a week. This is a welcome step in the right direction. But further increases are needed to bring statutory redundancy pay into line with average earnings and to help employees faced with redundancy to meet household bills before they find another job”.

Brendan Barber, general secretary, TUC

“So which employees will benefit from the increase? For redundancy purposes the important date is the ‘relevant date’, which, in most cases, is when the notice of dismissal expires. The change will benefit employees whose relevant date is on or after 1 October 2009. This increase affects compensation awards too. These include the basic award for unfair dismissal, which compensates employees for loss of job security, and the additional award, which is payable when the employer fails to comply with a tribunal order to reinstate or re-engage the employee.”

Jo Stubbs, editor, XpertHR

Where an employee has recently changed from full- to part-time hours how should the employee’s redundancy payment be calculated?

See the XpertHR FAQs section for the answer to this and other questions on redundancy and redundancy pay.






Workplace Parking Levy
HR impact rating: 7/10

Employers will have to pay for their staff parking, with the option to pass the charges to employees. This will be launched as a pilot scheme in Nottingham.  

“This will put an additional tax burden of more than £500,000 a year on our business at a time when Nottingham businesses, workers and households will be recovering from a deep recession. We will be seeking to challenge this decision and we are calling for an immediate public inquiry. We are in the fortunate position of being able to look at the best use of open space on our site, which straddles both city and county boundaries, if the levy goes ahead.”

Peter Gibson, director of public policy, Alliance Boots 

“The aim of these schemes is to provide an incentive to employers to discourage car commuting by imposing a levy depending on the amount of workplace parking provided. In particular, the regulations provide for exemptions from the requirement to have a scheme order confirmed, liability to pay licence charges, the setting of penalty charge rates, notification of penalty charges to the person liable, and the adjudication of appeals.”

Bar Huberman, editor, XpertHR

About one in five employers offer free car parking to at least some of their employees. Source: IRS benefits and allowances survey 2009: travel and subsistence benefits – published exclusively on XpertHR


National Minimum
Wage Regulations 1999 (Amendment) Regulations 2009

HR impact rating: 7/10


This will change the way that tips, service charges and tronc payments are treated for National Minimum Wage purposes. Employers will not be permitted to take into account gratuity payments paid to workers when assessing whether the national minimum wage is being paid. 

“The fact that the service charge cannot now be used to make up the National Minimum Wage may benefit the tax man but few workers will gain. Waiters will now have to pay national insurance on their earnings at least up to the level of the minimum wage (previously, the service charge element was exempt) and so will the employer. The combined cost to the restaurant industry is, in the government’s own admission, more than £60m. Nevertheless, the BHA supports transparency and has issued a code of practice urging restaurants to explain exactly how the service charge is distributed.”

Martin Couchman, deputy chief executive, British Hospitality Association (BHA)

“The Landmark has troncmasters, usually senior members of staff, who look after the tips and gratuities. At no point do any of these tips or gratuities account for the staff’s wage calculation and we are keen to provide staff with fair and competitive pay and reward for the contribution they make to our business. To calculate any tips or gratuities towards this pay would not be acceptable.”

Ciara Hassan, HR director, The Landmark London

“We’re pleased that the industry will no longer be able to exploit staff by using customer tips to top-up staff wages. We’ve always made sure our staff receive 100% of their tips, as we strongly believe they should be rewarded for providing an excellent service. Customers shouldn’t be hoodwinked into contributing to company profits.”

Jens Hofma, chief executive, Pizza Hut UK & Ireland


“For pay reference periods beginning on or after 1 October, employers will no longer be able to use tips towards discharging their obligation to pay the minimum wage. But there is no obligation on employers under the minimum wage legislation to ensure that employees receive the full value of any tips paid by the customers they serve. What they can’t do is to use tips towards their obligation to pay the minimum wage. Restaurant customers keen to ensure that the individual who has served them receives the full value of their tip should pay it directly to them in cash.”

Jo Stubbs, editor, XpertHR



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