Firms warned on huge company law changes

Sweeping changes to company law next month will hit businesses hard if they are not prepared for them, legal firm Mace & Jones has warned.

The firm is urging consultancies and constractors not to underestimate the complexity and scope of the changes, which will come into force on 1 October.

Head of employment law Martin Edwards said failure to comply with the changes could lead to costly and time consuming employment tribunal hearings.

“Common commencement dates, when legal changes come into force, can be viewed with a sense of dread by employers who often feel overwhelmed and confused," he said. “However, providing time is set aside for thorough preparation the changes can be efficiently dealt with. It is important to point out that some of the legislative changes actually help the employer and these should be grasped. Nevertheless the pitfalls of failing to comply properly with new legislation are severe.”

The key changes due to come info force include:

Age Discrimination

“The changes to discrimination law are possibly the most dramatic since the laws on sex and race discrimination were introduced 30 years ago," Edwards said. “The scope is exceptionally broad and affects many aspects of running a business.”

The main proposals - the age regulations will:

• Ban age discrimination in recruitment, promotion and training;
• Ban all retirement ages below 65 - except where objectively justified;
• Require employers to inform employees in writing, and at least six months in advance, of their intended retirement date and their right to request to continue working;
• Extend the right to bring unfair dismissal and redundancy claims to employees aged 65 and over; and
• Impose a duty on employers to consider employees' requests to continue working beyond age 65.

Do not include age limits in job advertisements, and avoid language which may suggest an intention to discriminate. Instead, keep recruitment adverts age neutral by avoiding phrases such as 'young and dynamic professional' and 'mature', or a requirement for a specific number of years' experience.

Place job adverts in the local media or specialist publications to ensure they reach different age groups and audiences, and monitor how many people from these age groups apply, to assess if the adverts are successful in attracting different audiences.

The Work and Families Bill

The key provisions of the Bill relate to: Maternity leave and adoption; Paternity leave; and flexible working for carers.

The position regarding maternity and adoption will change when the Bill is enforced so that a woman's right to paid maternity leave and an adopter’s right to paid adoption leave will be extended from six to nine months from April 2007, working towards the goal of a year's paid leave by the end of Parliament in 2010.

The period of notice that women returning from maternity leave must give to their employers will be extended from 28 days to two months. This allows employees to return to work early if they wish but provides employers with plenty of time in which to plan for their return - to address any arrangements made for maternity cover.

Employers and employees should benefit from improved communication during maternity leave. "Keeping in touch days" may well become the norm, allowing women on leave to work for a limited number of days without losing their entitlement to maternity leave. The clear message is that sensitive communication can be a good thing because reasonable contact between an employer and employee will not result in the loss of maternity leave either.

The first six months of maternity leave will remain "female only" and cannot be transferred to the father. However, after the first six months, couples will have the option to transfer unused maternity leave to the father to take as paternity leave. Therefore, from April 2007 up to six months may be taken by the father, with the first three months paid at the statutory rate.

National Minimum Wage

The new rates, effective from 1 October 2006 are:

Adults: £5.35

18-21 year-olds: £4.45

16-17 year-olds: £3.30