Monday 1 October saw twice annual implementation of employment and company law changes, including the expanded audit exemption, the start of pensions auto-enrolment and an increase to the new national minimum wage.
This article presents a brief over view of the changes, with advice from Karen Thomson, associate director of policy, research and strategic visibility at the Chartered Institute of Payroll Professionals (CIPP) and links to further information on what to do about them.
1. Pensions automatic enrolment
Auto-enrolment was officially launched on Monday, with organisations employing more than 120,000 staff now required to put employees aged 22 and over into pension schemes. Under the phased implementation programme companies with 250 employees will be brought in in stages between October 2012 and February 2014, while those with fewer than 50 will be phased in from 1 June 2015 to April 2017.
Although the changes will not affect small businesses for three years or more, Karen Thomson advised employers to get processes in place early.
“Some of the difficulties with auto-enrolment would be communicating with workers, checking the age of workers to ensure they’re eligible and implementing the changes. It would be advisable for employers to have everything in place as soon as possible,” she said.
The main challenges companies will be procedural, ensuring that a pension scheme is in place and altering payroll processes to direct and record payments into the fund.
The Pensions Regulator offered the following advice:
- Be aware of your staging date. You can find this out on the official Pensions Regulator website
- Identify and automatically enrol any eligible workers
- Decide whether you want to use postponement
- Review your existing pension arrangements, or set up a new one
- Let your workers know about the changes, as required by law
- Register with the Pensions Regulator after your staging date.
2. Audit exemption expanded
As auditors should know by now, the requirement for small companies to undergo statutory audits has fallen victim to the government's campaign to strip back red-tape. Companies will not have to subject their accounts to an external audit if they meet two out of the three qualifying criteria for small company accounts (fewer than 50 employees; balance sheet total <£3.26m; turnover below £3.26m). Subsidiary companies do not need mandatory audits if their parent companies guarantee their liabilities and dormant subsidiaries will no longer need to prepare and file annual accounts, provided they receive a similar guarantee.
The rules have also been relaxed to allow companies using IFRS to change their accounting framework to UK GAAP to take advantage, as long as they have not moved to UK GAAP in the previous five years.
3. National minimum wage increased
Te national minimum wage for workers aged 21 and over increased 11p on Monday 1 October to £6.19 an hour. This is mandatory for every company. “Anything with an hourly rate will have to be changed. This happens every year, so it should be quite straight forward for businesses,” Thomson said.
The minimum wage does not apply to the self-employed.
Companies that employ apprentices should note their rate increased from £2.60 to £2.65 per hour, with the accommodation offset increasing from £4.73 to £4.82 per day.
For more information on the new national minimum wage, visit the official UK legislation website.
Other possible changes
According to Thomson, “There are a lot of other possible changes to keep your eye on over the coming months, for example salary-sacrifice, and changes to the maternity/paternity leave. There are a lot of other changes employers really need to keep their eye on.” These include:
- Cuts to the maximum compensation of unfair dismissal
- Parental leave, which could increase from three to four months
- Reforms to the Access to Work scheme
- Possible financial penalties to be imposed on employers to breach employment rights.
