RTI

The pending introduction of Real Time Information will transform PAYE and with only three months to go, HMRC is working hard to generate interest and ensure that employers are ready for the most radical change to employee taxation admin for 70 years. So forget the demanding new administrative burden and test your knowledge on the PAYE system. There may even be a few items on the taxman’s list you never knew about PAYE.

Back in 1944 only 15m people were registered for PAYE; today, over 30m have the pleasure of being taxed at source.

The person who piloted PAYE – Sir Kingsley Wood – died unexpectedly on the day it was due to be announced to parliament. Let’s hope the same does not befall the inventor of RTI.

Back in the 1970s employers actually had to physically attach National Insurance stamps to a card, but the whole system was modernised in 1975 when NI was incorporated into PAYE

Not to state the obvious, but the world of work has changed beyond recognition. Who would even want to stay with the same employer for life these days? As HMRC helpfully points out, ‘when PAYE came in most people remained with the same employer they started working with for most of their working lives. Today people move jobs and change employers much more frequently’.

Every year HMRC receives incorrect or incomplete information from employers. A recent study found that 128 staff were entered as Mr, Ms or Mrs Dummy, while 40 people were apparently 200 years old after incorrect dates of birth were submitted to the PAYE system.

Over 80% of errors in employee data are due to an incorrect name, date of birth or National Insurance number so next time you change jobs, make sure your employer is reporting the correct information; or your savvy accountant may be in for a surprise at year end.

Winston Churchill was Prime Minister when PAYE first came in – now we have the joys of coalition government under David Cameron and Nick Clegg.

From 1 April 2013 all employers will be required to submit tax information in real time.

Go to the related articles below for comment and insight into the implications for business.

Detailed guidance information is available from the HMRC website.

Employee share schemes fall flat

Feedback to the Chancellor’s proposal for employees to give up their rights in exchange for shares in the companies they work for shows an overwhelming rejection to the idea.

Despite just five respondents to the plan expressing any form of support for the scheme, George Osborne is expected to press ahead regardless when he makes his Autumn Statement later today.

While the chancellor’s plan was trumpeted with some fanfare at the Tory party conference in Birmingham on 8 October, it has singularly failed to excite employers or their staff. In fact just 209 responses were received to the consultation.

Under the new employment contract, employees will be given between £2,000 and £50,000 of shares, of which any profits would be exempt from capital gains tax. In exchange, they will give up their rights on unfair dismissal, redundancy, and the right to request flexible working or time off for training, and will be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.

Owner-employee status will be optional for existing employees, but both established companies and new start-ups would be able to offer only this new type of contract for new recruits. Companies hiring owner-employees will continue to have the option of inserting more generous employment conditions into the employment contract if they want to.

ifs ProShare – the voice of the UK’s employee share ownership industry, said in a statement:

‘These proposals are about labour laws and employment contracts i.e. the offer of a financial incentive in exchange for the waiving of various employment rights from redundancy pay and unfair dismissal rights to the right to request training and flexible working.’

‘It is therefore regrettable that what is essentially a new form of employment contract is being sold as a new employee share scheme. It is not.’

Aside from the five respondents that expressed support, 85 “responded negatively” and a further 87 were lukewarm at best. Nine gave mixed responses. One said the idea of employee owner was good, but that the proposed “implementation is so restrictive as to remove the benefit for anyone except an unscrupulous employer seeking to bend the rules to exploit his workforce”.

The government response also noted that “almost all respondents who identified benefits added there were also costs involved.”

Ed Stacey, head of employment at PwC Legal, said:

‘Removing employment rights, such as unfair dismissal, is not an attractive option for businesses or employees and will not achieve the aim of increasing companies’ appetite for recruitment. The changes to arrangements for returning from maternity leave, request for flexible working and time to train have also been met with a largely negative response.’

‘If you take away people’s unfair dismissal rights there is a real risk that the number of discrimination cases will increase. These will prove far more costly for businesses in the long run.’

Just 11% of respondents said the proposal to remove employment rights would have a positive impact.

More details are available from the BIS website.

Employee shares

Government consults on removal of employment rights for new "employee owners"

News The Department for Business, Innovation and Skills has published a consultation setting out plans for a new employment status called an "employee owner".  Employee owners will give up basic employment rights in exchange for shares in their employer's company of between £2,000 and £50,000.  The shares will be exempt from capital gains tax.   Implications The new proposals have been added to the Enterprise and Regulatory Reform Bill which is currently making its way through Parliament.  It is likely that the scheme will come into force in April 2013.  Closing in early November, the consultation is only open for a very short period and focuses on the practical implementation of the scheme rather than whether or not the scheme should be introduced. The scheme can be used by companies of all sizes, but is principally intended for fast growing small and medium sized companies that would benefit most from a flexible workforce.  The scheme is entirely voluntary. Commentators have questioned how the scheme will work in practice and what safeguards will need to be put in place to avoid abuse.  It is suggested that the new scheme has the potential to lead to an increase in the number of legal disputes over the valuation of an employee's shares.  Presently, it does not appear that the intention is for these disputes to be resolved within the employment tribunal system, but rather through civil litigation.   Details Under the scheme, the employee owners will agree to waive certain employment rights in exchange for shares.  The intention is that employment rights will be varied as follows: Employee owners will not be able to claim unfair dismissal. There will be no right to statutory redundancy payments. The statutory right to request flexible working will be removed except where employee owners are returning from parental leave in which case, the Government proposes that they must request flexible working within 4 weeks of their return to work.  This will not prevent employers from agreeing to other flexible working arrangements, but it will prevent employee owners from bringing tribunal claims where they think their request has not been properly considered. Employee owners will lose their right to request time to train which is usually given to employees in companies with over 250 people.  Again, this does not prevent employers from offering training but removes the requirement for employers to follow the administrative procedures specified in the legislation and the ability of the employee owner to bring a tribunal claim where the procedure has not been followed. Employee owners will have to give 16 weeks' notice of their intention to return early from maternity or adoption leave instead of the current 8 weeks' notice.  This will give employers additional notice of an employee owner's plans and is intended to help them better plan for maternity periods, particularly in small businesses where there is no dedicated HR function.  Employers can agree to an earlier return to work or request that the employee owner does not return until the 16 weeks' notice has expired. Employee owner status would not affect the employee's ability to claim for an automatically unfair dismissal or where the dismissal is on discriminatory grounds.  It is therefore possible that employers may see an increase in discrimination claims as a result of the limitations placed on the right to claim unfair dismissal. The employer can also add to the package of rights that it offers to its employee owners (for instance, by including a right to flexible working). It is intended that the scheme would be implemented through an employees' share scheme.  Employers are likely to place restrictions on the shares offered including the compulsory surrender of an employee's shares on leaving, dismissal or redundancy. The shares will be valued according to their unrestricted market value at the time they are awarded. There may be difficulties in valuing shares in certain cases, particularly for unquoted companies (which are intended to be the primary users of the scheme).  The Government is keen to ensure that companies are not placed under any more stringent valuation requirements than already exist when valuing companies for other tax purposes and is encouraging comments on this point in its consultation. The Government is also keen to strike the right balance between helping businesses and ensuring that individuals taking up employee owner status understand the full implications of the scheme.  In order to do this, it is seeking views on the appropriate level of information and guidance that individuals might need to ensure they understand the contracts they are signing. If you require further assistance, please contact a member of the team.

Changes to the employment law regulations

The amendments to the Enterprise and Regulatory Reform Bill announced by the Government will:-

1.   Enable a Government minister to make regulations which require Employment Tribunals to order employers who have lost equal pay claims or who have been found to have discriminated because of sex in non-contractual pay (such as a discretionary bonus) to carry out an equal pay audit.

An audit is described as being "designed to identify action to be taken to avoid equal pay breaches occurring or continuing".  Regulations will spell out such details as the content of equal pay audits, any sanctions to be applied for failure to comply with an order and publication requirements.

However an equal pay audit cannot be ordered in all circumstances and there will be exceptions for:-

• Where an audit has already been completed by the employer in the previous 3 years and meets prescribed requirements.
• Where the breach of equal pay law gives the Tribunal no reason to think that there may be other breaches by the employer.
• Where the disadvantage of an equal pay audit would outweigh its benefits; and
• Where it is clear what, if any, action is required to avoid equal pay breaches occurring or continuing without an audit.

2.   Remove the provision in the Equality Act 2010 which makes the employer liable for harassment of its employees by third parties (such as customers or clients) over whom the employer does not have direct control.

In the Government's view this provision "imposed an unnecessary burden on business".

3.   Abolish the statutory questionnaire procedure in discrimination claims.  This procedure is used by an individual who thinks they may have been unlawfully discriminated against, harassed or victimised to obtain information from their employer or former employer.

The answers provided by the employer in response are admissible as evidence in a discrimination case brought against by them by the individual.  Tribunals can also draw inferences from an employer's failure to respond within 8 weeks or from evasive or equivocal answers. 

However employers should be aware that, as the Government acknowledges, an individual can still ask an employer questions and a Tribunal could still conclude adverse inferences from an employer's refusal to respond or from their evasive answers.

This means that in practice although employees will no longer be able to send a formal statutory questionnaire to an employer, they or their representative will instead be able to write to them asking the same sorts of questions.  The only difference is that those questions will be in another format (e.g. a letter) rather than in a formal questionnaire.

Peninsula blog

Harris & Co have worked with Peninsula Business Services, the leading Employment Law and Health and Safety consultancy in the UK, for quite a while and many of you will have attended our joint seminars that have been held over the years.

 

As a partner of Peninsula we work together to keep you informed and up to date with any legislation changes. Should you ever need help or advice on Employment Law or Health & Safety, you can now visit our site at www.harrisandco.peninsulapartner.com where you can contact Peninsula directly or you can call us at Harris & Co on 01604 660661.

Covenants

http://howespercival.cmail1.com/t/ViewEmail/y/184E18D42930F309/E6E3736259D9BD4F1A01488700E2614F

Interesting article.........

changes to employment law

http://howespercival.createsend4.com/t/ViewEmail/y/73D9EDA8A00E25E6/D1AD857D3159C6E2148F9D201EEB5695

Pensions

According to research by Prudential, one on four higher rate taxpayers cannot afford to contribute to a pension scheme. This is worrying news given that the Government is about to force us all to make pension contributions under their new auto-enrollment scheme.

Equal pay

The Government has confirmed that it is pressing ahead with its plan to impose equal pay audits on employers who lose an equal pay claim and to allow employers to make settlement offers without such offers being used against them in an unfair dismissal claim.

Overhall of employment law

I was driving to a meeting last evening and was listening to the sports news. There was a story about how the Norwich City manager Paul Lambert had resigned and was going to join Aston Villa under some pretty dubious circumstances.

Essentially an employee (Lambert) has "quit" to join a competitor, despite that competitor being denied access to the employee by his employer (Norwich City) under the terms of their contract with the employee. So essentially the employee can leave their employer in the lurch and run off to join a competitor and suffer no consequences. However if the employer had tried to get rid of the employee, they would have had to have jumped through endless hoops, run up huge legal bills to make sure they did it right, and still end up in a Tribunal as it costs the employee nothing to make a complaint!

It made me think just how wrong employment law is, how heavily biased it is in favour of the employee and how Vince Cable is totally out of touch to resist reform of employment law.

New employment tribunals

The Government has published the Enterprise and Regulatory Reform Bill which, if it becomes law, will radically alter the way employment tribunal claims are conducted.

Business Secretary out of touch

http://www.bbc.co.uk/news/uk-politics-18142544

This shows how out of touch the Business Secretary is - with restrictive employment laws heavily biased in favour of the employee is it any wornder that businesses are slow to employ people at the first signs of the green shoots of recovery??

Changes to Discrimination Law

From Howes Percival

News The government have published proposals to make a number of significant changes to the existing law on discrimination as contained in the Equality Act 2010. It has also set out the changes it is going to make to the Equality and Human Rights Commission's remit and functions.

Implications Some of the government's proposals will have little practical impact on employers, for example the proposal to repeal the socio-economic duty contained in section 1 of the Equality Act 2010, which has never been bought into force. However, others are more significant, in particular the proposal to abolish the statutory questionnaire procedure in discrimination claims and to repeal employer's liability for harassment of employees by a third party (e.g. a customer). All the government's proposals are set out in our Details section below. The consultation closes on 7 August 2012. Therefore legislation to amend the Equality Act 2010 is likely to be published in the autumn. We will update readers as soon as more information becomes available.

Details The government is consulting on: 1) Repealing section 138 of the Equality Act 2010 (the statutory questionnaire procedure) The ability of potential claimants to submit a statutory questionnaire to their former, current or potential employer was not a new right created by the Equality Act. The ability to submit a questionnaire existed under all the former discrimination laws (e.g. The Sex Discrimination Act 1975, The Race Relations Act 1976 and The Disability Discrimination Act 1995). This right was simply replicated in the Equality Act 2010 which consolidated all discrimination laws into a single act of parliament. The government's view is that the statutory questionnaire procedure is sometimes used as a 'fishing exercise' by potential claimants and businesses find the forms very long and technical. However the consultation document notes that repeal of section 138 will not prevent employees asking for the type of information commonly asked for in the statutory questionnaires anyway by simply writing direct to the employer. 2) Repealing section 40 of the Equality Act 2010 (employer's liability for third party harassment) Under section 40 an employer can be held liable for the repeated harassment of their employees by third parties (such as customers or clients). The government's view is that employees are adequately protected from third party harassment under other laws such as the Protection from Harassment Act 1997 and health and safety legislation, as well as breach of contract/constructive dismissal claims following an employer's failure to comply with their common law duty of care. 3) Repealing section 124(3)(b) of the Equality Act 2010 (Tribunal's power to make wider recommendations) The tribunal's power to make recommendations to an employer who they have found has discriminated against an employee, was extended by the Equality Act 2010 to cover cases where the employee had left their employment. A tribunal's recommendations can be wide ranging, for example that an employer introduces an equal opportunity policy or the employer trains their managers on equal opportunities. The government wants to repeal this provision because it goes beyond the minimum required under EU law. Instead, the tribunal's powers to make recommendations will revert back to being limited to cases where the employee is still employed (and therefore the tribunal's recommendations are for the individual claimants benefit). 4) Repealing the socio-economic duty in section 1 of the Equality Act 2010 This is a legal obligation on public bodies to consider the impact of their decisions on social class. However section 1 has never been bought into force. In addition the government is also going to: 1) Review the operation of the Public Sector Equality Duty Under section 149 of the Equality Act 2010, public bodies are required to consider the impact of their decisions on groups who share a relevant protected characteristic (e.g. sex or race). The review will establish whether or not this obligation is operating as intended. 2) Reform the Equalities and Human Rights Commission (EHRC), including: Repealing some of the EHRC's powers and duties under the Equality Act 2006 such as its "good relations duty" at section 10. Repeal the EHRC's powers to arrange provision of conciliation in non work place disputes. A new chairman and a smaller board, with stronger business skills and experience, will be recruited over the summer. The EHRC's progress will be reviewed in Autumn 2013.

Employment Law changes from 1 April 2012

http://howespercival.createsend5.com/t/ViewEmail/y/464D47F63EF2468D/7DC6EE1C5B102B86FE6194DE962A274B

Very useful update from Howes Percival

How to avoid constructive dismissal claims

Lord Sugar is as famous for his business success as he is for his “You’re Fired” catchphrase, but after seven series of ‘The Apprentice’ producing seven winners, only one still works for him.
Claire Best and Karen Plumbley-Jones of Bond Pearce recently wrote in HRZone.co.uk about Stella English, the winner of series six, who recently announced plans to sue Lord Sugar for constructive dismissal.
In a move that could result in a swathe of constructive dismissal cases, Lord Sugar is alleged to have told her that her contract would end in December and that he had already met his obligations to her.

Top tips to minimise claims
1. Have effective policies and procedures in place and ensure managers implement and communicate them
2. Address employee issues head on without delay and ensure that you are fair and consistent in your approach
3. Communication is key - be honest and open with your personnel and encourage them to act in the same way
4. Be fair and reasonable in all situations - as a rule of thumb, treat people as you would like to be treated yourself
5. Offer leavers an opportunity to reconsider.

Whether English will be successful or not remains to be seen as constructive dismissal claims are notoriously difficult for (ex-) employees to prove.
Constructive dismissal occurs when an employee resigns (with or without notice) and can show that they were entitled to do so by virtue of their employer’s conduct. But to succeed in their claim, it would be necessary to establish the following elements:

• That there had been a sufficiently serious repudiatory breach (actual or anticipatory) by their employer of an express or an implied term of their contract. This is a high hurdle to overcome
• That the employee accepted the breach, treated their contract as having ended and resigned in response to the breach. Whether they accepted the breach is a question of fact for the employment tribunal to determine
• That they have not delayed too long in accepting the employer’s breach. If they delay, it could be seen as evidence that they have accepted it

If a staff member is successful in proving that they were constructively dismissed, it gives rise to a claim for damages for wrongful dismissal. If they have put in the requisite service (currently 12 months), they will also be able to claim unfair dismissal.
If an employee resigns and you have any reason to suspect that a constructive dismissal claim may follow, consider writing to them and offering them the opportunity to reconsider. Ask them to confirm their decision in writing within a couple of days.
If any conduct leading up to the staff member’s resignation could amount to a repudiatory breach or the resignation follows in the wake of a misunderstanding, this is your opportunity to explain the situation, remind the individual that they are a valued employee, invite them to a meeting to talk things through and hopefully head off a claim at the pass.

Claire Best is a solicitor and Karen Plumbley-Jones is a practice development lawyer at law firm Bond Pearce.

Employment Law update

http://howespercival.cmail3.com/t/ViewEmail/y/348499B71CFDB423/C3E17A65C601885CD8E2A916412CAE5B

Latest tax news

http://taxwise-express.com/w/m/0l1,thu5

Latest employment news

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Take care when dismissing

http://www.bbc.co.uk/news/business-16662636

Ex Woolworths workers get £67m in compensation

Top 5 areas where businesses need HR advice

Top Five Reasons Why Clients Call Us For HR Advice

By Alan Price, Employment Services Director

The Peninsula Advice Services receives over 10,000 calls per week and I thought you may be interested to know the top five reasons why clients call us. Can I stress that if you are dealing with any of the below, or indeed any particular HR issue then it is vitally important that you call the Peninsula Advice Service on 0844 892 2772. My team will be happy to advise you, 24 hours a day. So here are the top five most sought after HR advice issues this week: 1. Conduct 2. Terms and Conditions 3. Redundancy 4. Absenteeism 5. Grievances