Archive for the ‘Employment Law’ Category
If you haven’t started your pension project – start here!
We don’t need to remind you that the biggest pension change in a generation is almost upon us. The biggest employers in the UK have to start enrolling all their employees in a pension from October.
The supermarkets are probably the biggest employers in this group. So from October there’s a good chance that the checkout lady that asks you if you want help with your packing will have automatically joined the pension scheme.
Smaller employers have a bit more time. On the fact it many will have a couple of years or so to comply. But in real terms it’s only two year ends and two pay reviews. Time soon passes.
If you haven’t worked out when you have to comply then you really need to start looking at it now. The first stage is to work out how many employees you have as that dictates when you need to comply.
There’s plenty of guidance on The Pensions Regulator’s web site. You can get to it by clicking here. 
The all round good eggs at the law firm DLA Piper have also published the first in a series of updates on the new pension rules. The first one is all about assessing exactly who your workforce are for the new rules. You can read the update by clicking here.
If you’re ready to start your project and you need some guidance and support 44 Financial would be delighted to help. You can contact us here to arrange an initial consultation – at our expense.
Steve Clark
Director
Related articles
Surrogate parents & maternity leave
A tribunal is to refer to the European Court of Justice the question of whether a mother expecting a baby through surrogacy is entitled to maternity leave and various benefits including paid leave.
The argument is that she needs the time so that she can bond with her baby, establish breastfeeding and maintain and develop her family life.
There’s probably a long way to go on this case but it clearly represents a change in thinking about the scope of maternity leave and who qualifies.
Watch this space as always.
Steve Clark
Salary Sacrifice – Is yours effective? 4 Top Tips to help you make sure
A recent case involving Reed Employment and the HMRC has led to an estimated tax bill of £158 million. It all revolves around a Salary Sacrifice arrangement covering temporary workers’ travel expenses.
However, one of the main things that has come out of the ruling is that HMRC have had to be a bit clearer on what constitutes a valid arrangement. As Salary Sacrifice is used by a huge number of employers to cover anything from Childcare Vouchers to Pension Contributions and Bike to Work. We’ve therefore set out five tips to help you make sure that your Salary Sacrifice arrangement is effective.
1. Don’t let your employees opt-in or opt-out at their will
HMRC have always stated that if a “lifestyle change” occurs the employee could withdraw from the arrangement. Allowing your employees to opt in and out willy-nilly will probably mean that your arrangement is not effective.
Rather helpfully HMRC have never defined what they mean by “lifestyle change”. Generally it’s taken to mean unforeseen life events (e.g. redundancy of a partner, pregnancy of employee or partner, marriage or divorce of employee) where an employer might agree to revisit an existing contractual arrangement to take account of a change in circumstances.
2. If your employees give up salary it must be for an identified benefit
If your employee has reduced their salary it’s got to be in return for some clear benefit. A good example if pension contributions where, in return for taking less salary, the employee gets a pension contribution from the employer.
3. Your employees must be able to make an informed decision
Communication is the key here. The employee has got to be able to understand the consequences of entering into a Salary Sacrifice arrangement. It’s difficult for an employer to work out whether it’s in every employee’s interest as that’ll be down to their own financial and tax position. What the employer can do is provide a balanced view on the advantages and disadvantages of the arrangement.
4. Your scheme must be incorporated into your employee’s employment contract
Entering into a Salary Sacrifice arrangement means that the employee has accepted a change to their terms and conditions of employment. Therefore their contractual agreement with you as their employer has changed.
Although it’s not a requirement of the legislation an employer can submit the Salary Sacrifice agreement to HMRC for approval. When they get asked HMRC basically check three things.
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That an effective variation of the contractual terms and conditions has taken place
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The employee’s cash earnings have been reduced and a benefit-in-kind provided
- The benefit-in-kind has been treated correctly for tax and National Insurance – e.g. p11d
Summary
Salary Sacrifice is a great way for employers to provide benefits in a tax efficient way for employees. However, if the arrangement isn’t set up properly you and your employees could end up with a large tax bill. The watchword, as always, is to tread carefully and get some professional advice.
Steve Clark
44 Financial Ltd regularly advises on Salary Sacrifice arrangements for our clients and works with other professionals to ensure that these are effective. To find out more about what we can do for you contact us by clicking here.
Employment Law–What happens when?
If you are involved in the HR function for your organisation – whether directly or indirectly, you’ll know that the pace of legislation and regulation is relentless.
We are therefore indebted to Innes Cark (no relation!) of Morton Fraser for the following information that was published in their February Employment E-bulletin. You can click through to the publication by clicking this link. So in terms of employment law this is how 2012 and beyond is shaping up.
6 April 2012
- Increase to Qualifying Period for Unfair Dismissal (but only for employees commencing employment on or after 6 April 2012)
- Subject to parliamentary approval, various Employment Tribunal reforms come into effect. These are:
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Witness statements being taken as read unless Employment Judge directs otherwise (this will not apply in Scotland where witness statements are not normally used);
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Removal of witness expenses;
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Judges sitting alone in unfair dismissal cases unless Employment Judge directs otherwise; and
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Changes to limits for cost awards that a Tribunal can make (increase from £10,000 to £20,000) and deposit orders (increase from £500 to £1,000).
Other Employment Tribunal reforms, which are to be implemented by way of primary legislation, will come into effect at a later date. These will include reforms relating to early conciliation, financial penalties for employers who lose Tribunal claims, judges sitting alone in the Employment Appeal Tribunal and the formula for up-rating Tribunal awards.
1 & 6 April 2012
- Flat rate for statutory maternity, paternity, additional paternity and adoption pay increases to £135.45 (applicable for complete pay weeks commencing on or after 1 April for employees earning £107 or more per week).
- Statutory sick pay increases to £85.85 (6 April 2012).
1 October 2012
- Pension auto-enrolment to be implemented (note that the duties upon employers come into effect in stages and initially only very large organisations will have to auto-enrol their eligible jobholders).
- Likely increase to National Minimum Wage rate. There has been no formal announcement to this effect as yet, however this would be in keeping with the position in previous years.
March 2013
Pensions in 2012–A Summary
Well 2012 has got off to a great start here at 44 Financial. We’re working with a number of individual clients on their retirement options as well as three different new corporate tenders. What a fantastic start to the Olympic year!
Conscious as ever that there is so much going on in the pensions world we always try to look out for great articles and documents that will help our clients and blog subscribers to keep up to date. Sometimes its just enough to know what’s going on at a general level so you can decide how much you need to delve into the detail.
To that end we are grateful to those legal types at SNR Denton for their Pensions 2012 article. You can click through to the article here.
As a list to know what you should be keeping an eye on it’s great. There’s brief sections on Auto-enrolment, the abolition of contracting out, gender pricing of annuities.
We hope that you find this useful. As ever if you would like to look at the implications of any of this for your own arrangements please contact us. You can click here to complete our enquiry form.
We’d love to hear from you.
Steve Clark