Julian Hoskins on the essential employment law news for March 2016: the Budget for employers; important news on engaging public sector contractors and a free contract review offer; April 2016 changes; new guidance on Freedom to Speak Up Guardians and new guidance on important data protection changes. We also provide an update on what is happening in the junior doctors contractual dispute.
What did the Budget announced on 16 March 2016 hold for employment law? The key reforms affecting HR and in-house legal advisers are set out below.
- 'Grandparents' leave
A consultation will launch in May 2016 on how to implement the proposal to extend Shared Parental Leave and Pay to working grandparents. The consultation will also cover options for streamlining the Shared Parental Leave and Pay system, including simplifying the eligibility requirements and notification system.
- Termination payments & NICs
From April 2018, termination payments that are subject to income tax on amounts in excess of £30,000 will be subject to employer National Insurance Contributions (NIC). The existing £30,000 exemption will remain, and no employee NICs will be payable on any of the termination payment. In addition, legislation will be introduced to ensure that all payments in lieu of notice and certain damages payments are taxed as earnings. Before these changes are introduced, there will be a further consultation over the Summer.
- Salary sacrifice
The government is considering restricting the range of benefits that may be offered through salary sacrifice schemes. However, it has confirmed that salary sacrifice for enhanced employer pension contributions, childcare benefits and health-related benefits, such as the cycle to work scheme, would be unaffected. In related news, please click here to read our article published this month on the status of childcare vouchers and salary sacrifice schemes during maternity leave.
- Apprenticeship levy
Under the proposed apprenticeship levy, employers will receive a government payment equal to 10% of their monthly apprenticeship levy contributions that will be available for them to spend on apprenticeship training.
- Loss of NICs allowance for employers of illegal workers
From April 2017, employers will be denied the NICs employment allowance for a period of one year if they are subject to a civil penalty for employing illegal workers.
- Off-payroll working in the public sector: important tax reform
The government will reform legislation around the taxation arrangements for intermediary companies for work undertaken by individuals for public sector organisations, with significant responsibility shifting to the public sector organisation engaging the intermediary (for more information please see below).
CONTRACTING WITH SELF-EMPLOYED WORKERS – IMPORTANT CHANGES & FREE COMPLIANCE CHECK
We are increasingly being asked to advise on the engagement of self-employed contractors, whether through intermediary personal service companies, through direct engagement of an individual or via an agency. These arrangements can be beneficial for both parties, but can throw up complexities, particularly around taxation and compliance issues and the framework is especially restrictive for public sector organisations.
Furthermore, it was announced in the March 2016 Budget that from April 2017, where an individual provides their services via an intermediary company, responsibility for collecting and paying the correct taxes will move from the worker's own company to the public sector body or agency / third party paying the company.
The intention is to bolster legislation introduced in 2000, which requires individuals working through an intermediary to pay broadly the same tax and NICs as would have been payable if they had provided their services direct, as an employee. The need to meet the requirements of the applicable guidance and statutory requirements around the use of self-employed workers brings a greater risk of non-compliance, and a need to minimise litigation and exposure to potential fines and penalties. In the public sector, where engagements are for 6 months or more and for a daily rate of £220 or more, contracts must be drafted to ensure compliance with HM Treasury guidance.
We are regularly working with our clients to ensure that they are compliant in the documentation that they are issuing to self-employed workers. We are offering existing clients a free review of your standard consultancy agreements by way of a compliance check.
For further information regarding a compliance review check and how we can support you in managing your temporary workforce and consultancy arrangements in order to meet NHS TDA, Monitor and NHS England and HM Treasury requirements, please contact
For detailed information on the support we provide in relation to contracting with self-employed workers in the NHS, please click here.
Following a review of Tier 2 immigration, the government has announced that it will retain nurses on the shortage occupation list, and a new £1000 'levy' will be imposed on businesses for each non-EU skilled migrant employed. The changes will come into effect in two stages: Autumn 2016 and April 2017. Further details are anticipated in due course and, in the meantime, the full ministerial statement is available here.
As regularly as the Easter bunny (albeit much less cuddly) the Department for Business Innovation and Skills (BIS) announces each Spring its increases to the calculation of compensation payments and statutory payments. This year's changes are set out below, and apply to detriments and dismissals occurring on or after 6 April 2016.
Click here to view table.
NEW LEGISLATION IN FORCE – APRIL 2016
Several new legislative developments will take effect in April 2016.
On 1 April 2016, the 'National Living Wage' will come into force, introducing a premium of 50p per hour on top of the National Minimum Wage (i.e. £7.20 per hour), for workers over the age of 25. Since this change was announced, we have been working with clients to prepare for, and limit the impact of this extra cost. Are you prepared for the National Living Wage? If not, click here for our explanation of the practical steps to take and some of the hidden pitfalls. Please also click here to read an article we published this month on the latest developments affecting employers of low earners, particularly in the health and care sector.
In addition, the following changes will be taking effect on 6 April 2016.
Financial penalties for unpaid tribunal awards and settlements.
The Small Business, Enterprise and Employment Act 2015 will introduce a new scheme for penalising employers who fail to pay tribunal awards or settlement sums under a COT3.
Tribunal postponement provisions of SBEEA.
New powers will be introduced to assist tribunals with managing the postponement of hearings, including
- limiting the number of postponements to two for each party in each case
- introducing a deadline for postponements of seven days before the hearing; and
- requiring a costs or preparation order to be considered where a successful application for a postponement is made less than seven days before the hearing.
Abolition of contracting-out on a salary related basis.
National Insurance rebates for contracting out of the State Second Pension (S2P) will be removed and employers and employees will have to contribute in full.
FREEDOM TO SPEAK UP
In whistleblowing news, the Office of the National Guardian has published new guidance on appointing Freedom to Speak Up Guardians – the guidance can be accessed here.
JUNIOR DOCTORS' CONTRACT CHALLENGE
A group of doctors and patients are to challenge the government's proposed new contract for junior doctors in the courts. The group have instructed solicitors to initiate judicial review proceedings, which will focus on the impact of the proposed new contract on patient safety, as well as on the stability of the NHS as a whole.
Jeremy Hunt told parliament last month that he would impose the revised terms and conditions on junior doctors in August after two months of negotiations failed to end the long-running dispute.
The British Medical Association (BMA) has announced further strikes to take place on 26 and 27 April, including Accident and Emergency cover. The BMA is also seeking a judicial review over the imposition of the contract.
A 'DATA DOZEN': 12 STEPS TO TAKE NOW IN PREPARATION FOR THE GDPR
The Information Commissioner's Office (ICO) has published guidance for organisations on preparing for the EU General Data Protection Regulation (GDPR), in the form of a 12-step checklist. The ICO has also created a webpage dedicated to EU data protection reform linking to the new GDPR guidance and other relevant sites.
The GDPR is expected to be formally adopted this Summer, and will come into effect in 2018, replacing the EU Data Protection Directive (95/46/EC) on which the UK Data Protection Act 1998 (DPA) is based.
At the ICO annual conference held this week, the ICO strongly encouraged organisations to begin preparing for the GDPR now, rather than delaying until the outcome of the EU "Brexit" referendum in June 2016, which would mean potentially losing valuable compliance preparation time.