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Tax-free childcare scheme comes into force

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BOND ADAMS EMPLOYMENT UPDATE by Dispute Resolution Partner, Rafique Patel

In families where both parents work and each parent earns less than £100,000 per year, and a minimum weekly income at least equivalent to 16 hours at the rate of the national minimum wage, the Government will pay 20% of their yearly childcare costs (capped at £2,000 for each child).

The scheme will apply to parents with children aged under 12. The Government has said that the scheme will be introduced in early 2017.

 

Tax-Free Childcare scheme delayed until 2017

 

Self-employed parents and those with more than one child who’ve been waiting for the Government’s new Tax-Free Childcare scheme to launch this autumn will now have to wait till 2017, following a Supreme Court judgment today.

Two providers of the existing Employer Supported Childcare voucher scheme mounted a legal challenge against the Government’s new scheme following concerns about how it would be delivered and the effect it would have on parents trying to access childcare support.

 

But the Supreme Court has today thrown out this argument and confirmed the scheme is “lawful”. However, as the court placed a suspension on the scheme being developed during the 15-month legal proceedings, the new Tax-Free Childcare scheme now won’t come into force until 2017 – a delay of over a year.

The news is a blow for those who will better off under the new scheme, but it will benefit those who gain more from the existing provision as they’ll be able to continue using it up until it’s replaced.

It is disappointing that some organisations involved in the existing scheme felt the need to take and persist in this costly and wasteful course of action, which has led to a delay in the launch of Tax-Free Childcare.

 

“We are now pressing ahead with the scheme as part of our on-going commitment to support working families.”

 

What are the two schemes?

 

  • Tax-Free Childcare: Under the Government’s new Tax-Free Childcare scheme, which will now launch in “early 2017” – no specific date has been given by the Government – eligible families will get 20% of their annual childcare costs paid for by the Government.

 

The way it works is that for every 80p you pay into a newly-created Childcare Account, the Government will contribute 20p. This could mean up to £2,000 per child (the scheme assumes a maximum of £10,000 per year childcare costs per child. If you pay more, you won’t get more help).

But crucially, both parents need to be working in order to qualify.

 

  • Employer Supported Childcare: The childcare vouchers scheme on the other hand enables many taxpayers with kids aged up to 15 to pay for childcare with vouchers each month via salary sacrifice from their employer.

 

As an example, you give up £1,000 of salary, worth £700ish in your pocket after tax and National Insurance. You get £1,000 of childcare vouchers in return. This means you’re £300 better off per £1,000. This is per parent, so the maximum two [basic rate tax paying] parents could get is £486 of vouchers each month.

 

So which scheme is best for me?

 

For a full rundown on the winners and losers see our Childcare Vouchers guide. But in brief:

Those who win Tax-Free Childcare:

 

  • Self-employed people or couples who earn less than £150,000 each, as they’re eligible for Tax-Free Childcare, but can’t get childcare vouchers.

 

  • Parents with more than one child and high childcare costs, as the help available goes up with the number of children. There’s a limit for childcare vouchers, which isn’t dependent on the number of children.

 

Those who win with childcare vouchers:

 

  • Couples where one parent doesn’t work, as they’re not eligible for Tax-Free Childcare, but the employed parent is eligible for vouchers (provided their employer offers a scheme).

 

  • Basic-rate taxpayer parents with total childcare costs of £9,336 or less. Under this amount, the saving you make with childcare vouchers exceeds the saving you can make with Tax-Free Childcare.

 

 

  • Higher-rate taxpayer parents with total childcare costs of £6,252 or less. Under this amount, the saving you make with childcare vouchers exceeds the saving you can make with Tax-Free Childcare.

 

  • Additional-rate taxpayers, as anyone earning £150,000+ aren’t eligible for the scheme, whereas additional-rate taxpayers can get childcare vouchers.

 

For advice on all aspects of employment law including representation in the employment tribunal, representation in the Employment Appeal Tribunal and the courts, contact our partner Rafique Patel on rafique.patel@bondadams.com

Rights of Sunday shop workers enhanced

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BOND ADAMS EMPLOYMENT UPDATE by Dispute Resolution Partner, Rafique Patel

Shop workers will be given greater protection under new rules. They include a new right for shop workers to object to working more than their normal hours on a Sunday; and a reduction in the notice period for shop workers in large shops to opt out of Sunday working.

 

A start date for the changes to the rules has yet to be disclosed.

 

In February 2016 the government announced that it was pressing ahead with proposals to devolve to local authorities and mayors in England and Wales the power to set their own Sunday trading hours.  To balance these proposals to extend hours, the Enterprise Bill sought to introduce additional protection for workers.  For more information see our previous article.

 

Ultimately, the proposals to allow the extension of Sunday trading hours were defeated in the House of Commons.  However, despite this, some significant changes to strengthen the rights of Sunday shop workers have made their way through into the Enterprise Act which received Royal Assent on 4 May 2016.  These changes may have occurred somewhat “under the radar” for many retailers.  We explain the changes below, when they are coming into force and what this may mean for employers.

Changes

 

The Enterprise Act 2016 will strengthen the rights of shop workers to opt out of working on Sundays with the introduction of the following provisions:

 

  • Shop workers in large shops will be required to give only one month’s notice that they object to working on Sundays, rather than the previous three months. ‘Large shops’ are generally those whose floor area exceeds 280 square metres.

 

  • There will be a new right for all shop workers to opt out of working additional hours over and above their normal Sunday hours. This new right will also be subject to one month’s notice for shop workers at large shops, and three months’ notice for those at small shops.

 

  • Employers’ obligations to provide information about the new opt-out rights will be clarified. Employers will still be required to provide an explanatory statement notifying employees of their opt-out rights and this will need to include the right to opt out of working more than their normal Sunday hours.  For new shop workers this will need to be provided within two months of the individual becoming a shop worker.  For those who are already shop workers this will need to be provided within two months of the date the legislation commences. Future regulations will determine the commencement date and the form and content of such explanatory statements.

 

  • Where an employer fails to notify their shop workers in accordance with these requirements, the notice period will, in respect of both opt-out rights, be automatically reduced. For shop workers in large shops the notice period will be reduced from one month to seven days and for shop workers in small shops, from three months to one month.

 

  • After an employee has given the appropriate objection notice to working additional hours, any contradictory contractual provisions will be unenforceable.

 

  • Any detriment suffered by workers because they have served notice or refused to work such additional hours will be unlawful.  Any dismissal for these reasons will also be automatically unfair (and the individual will not need to have qualifying service to be able to bring such a claim).

 

  • Where an employment tribunal finds that an employer failed to notify a shop worker of their opt-out rights as required, the tribunal will be able to award the shop worker a guaranteed minimum award (two weeks’ pay, or four weeks’ pay where the tribunal considers it just and equitable).

When is this coming into force?

The timing for these provisions to come into effect is not currently clear as regulations will need to be made to bring them into force and clarify what “normal Sunday Working hours” are and how this is calculated.

 

The Enterprise Act 2016 suggests that “normal Sunday Working hours”  may be calculated by, for example, averaging the number of hours worked during a specified period allowing for variation in special cases. The regulations may also specify how this is calculated where the shop worker has not been employed for a specified period and may introduce a service requirement (of less than a year) for shop workers to be able to object to additional hours.

 

What does this mean for retailers?

 

Retailers should “watch this space” for the regulations as, when they come into force, they will need to, in particular:

 

  • Amend and issue new explanatory statements within set time frames to shop workers including new recruits and current staff

 

  • Implement processes to calculate what “normal Sunday Working hours” are for shop workers and

 

  • Consider how they will practically address any gaps in staffing on Sundays (bearing in mind that shorter notice periods for objecting will apply)

 

We will keep you up to date with these developments but, in the meantime, if you have any queries on this and the practical steps employers can take to address these issues please contact Rafique Patel, Partner.

 

 

For advice on all aspects of employment law including representation in the employment tribunal, representation in the Employment Appeal Tribunal and the courts, contact our partner Rafique Patel on rafique.patel@bondadams.com

Trade union law reformed

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BOND ADAMS EMPLOYMENT UPDATE by Dispute Resolution Partner, Rafique Patel

HR practitioners working in unionised environments will need to get their head round important changes to trade union law made via the Trade Union Act 2016.

 

The majority of the changes are to the rules on industrial action, including the introduction of new voting thresholds.

 

It is anticipated that the changes will come into force soon, but as yet there is no confirmed date for implementation.

 

The Trade Union Act 2016 was passed on 4 May 2016. A key element of the reform is that industrial action will be lawful only when there has been a ballot turnout of at least 50%.

 

We don’t yet know but expect the majority of the provisions to come into force later this year, with some delayed into the start of 2017.

 

The main changes are:

 

  • A strike ballot must currently have the support of a simple majority of those voting. In addition to this, the Act requires at least 50% of all eligible members to have voted, or 40% in certain ‘important public services’ including health, education of those under 17, fire, transport, nuclear decommissioning and border security. The full list of what sectors fall under ‘important public services’ has not yet been published. The 40% requirement will be triggered where the majority of workers are normally engaged in the provision of ‘important public services’.

 

  • Unions will have to include additional information in ballot papers, including a clearer description of the trade dispute and the planned industrial action, so that workers know exactly what they are voting for.

 

  • Unions will have to give 14 days’ notice of any industrial action (unless the employer agrees that 7 days’ notice is enough). The current requirement is to give 7 days’ notice.

 

  • Currently, industrial action must take place within 4 weeks of the date the ballot closed, unless the union and employer agree to extend it to up to 8 weeks. The Act provides instead that ballot mandates will expire after 6 months (or 9 months if the employer agrees). After this time, the union will need to seek a new ballot for any proposed industrial action.

 

  • For employers in the public sector (and some private sector employers that provide public services), ‘check-off’ (i.e. the deduction of trade union membership subscriptions via payroll) will only be permitted if the worker can pay its subscriptions by other means (such as direct debit) and the union contributes to the cost of administering the system. This change will come into force next year to allow time for arrangements to be put in place.

 

  • Some of the current Code of Practice on picketing has been given statutory force e.g. the requirement to appoint a picket supervisor.

 

  • A new transparent process for trade union subscriptions is being introduced that allows new members to make an active choice about whether to pay into political funds. Information on opting out from such contributions will need to be provided on an annual basis.

 

  • Employers in the public sector (and some private sector employers that provide public services) will have to publish information on ‘facility time’ such as the amount of paid time off for union duties and activities. The Act also allows the government to issue regulations restricting facility time at particular employers.

 

  • The government must commission an independent review of possible methods of electronic balloting, although the Act does not include any commitment to its introduction.

 

  • There will be new powers for the Certification Officer to investigate and take enforcement action against trade unions for breaches of their statutory duties.

 

The proposal to repeal the ban on using agency workers to replace striking workers is not contained in the Act. There has been no update on whether and when this change might happen.

The devolved governments in Scotland and Wales previously made it clear that they were strongly opposed to the Act. However, trade union law is not devolved and the Act is set to apply equally in Scotland, England and Wales.

 

 

For advice on all aspects of employment law including representation in the employment tribunal, representation in the Employment Appeal Tribunal and the courts, contact our partner Rafique Patel on rafique.patel@bondadams.com

 

New rules on public-sector exit payments implemented

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BOND ADAMS EMPLOYMENT UPDATE by Dispute Resolution Partner, Rafique Patel

The Government has confirmed it will proceed with additional limits to exit payments across the public sector, following on from plans to cap exit pay and to require repayment if exiting workers re-join.

The Treasury proposals will hit some of the lowest-paid and longest-serving public servants hardest – Garry Graham, Prospect

 

In its response to the consultation on reforms to public-sector exit payments, the Government has said that departments will be tasked with negotiating changes to their compensation schemes with trade unions and other employee representatives within the framework outlined in the consultation.

Chief secretary to the Treasury David Gauke said: “These reforms ensure public-sector exit payments are consistent and fair, and that they are also fair to taxpayers too.

 

“By applying these reforms across public-sector workforces for the first time, appropriate standards will be in place for workers and public services will remain protected.”

 

The framework to further limit public-sector exit pay includes:

 

Additional public-sector resources

 

  • A maximum tariff of three weeks’ pay per year of service to be used to calculate exit payments;

 

  • A maximum of 15 months’ salary to be used to calculate redundancy payments;

 

  • A maximum salary of £80,000 to be used to calculate exit payments;

 

  • Application of a taper on lump-sum compensation as employees get closer to their normal pension retirement age; and

 

  • Workforce-specific action to limit or end employer-funded early access to pension as an exit term.

 

The Government acknowledged that a majority of responses from the public opposed the proposals on the basis that exit payment terms in the public sector have historically been set by collective agreements that reflect employer and employee needs in different workforces.

 

However, it maintained that the reforms are necessary to create more consistency between public-sector workforce exit payments and to reduce spending on public-sector exit pay.

 

The framework to limit public-sector exit payments is being introduced alongside a £95,000 individual cap on public-sector exit pay and a requirement that employees with annual earnings above £80,000 repay exit payments if they return to work in the public sector within one year.

 

Both the individual cap and the repayment requirement are currently found in draft Regulations that have not yet been finalised. The Government expects that departments will complete negotiations to apply the exit-payment framework within nine months.

“To the extent that public-sector employers have difficulty negotiating a compensation scheme in line with the exit payment framework, the Government has reserved the option of implementing the reforms through legislation,” said Qian Mou, employment law editor at XpertHR.

 

“As reforms to public-sector exit pay are quite unpopular with workers, it remains to be seen whether or not, nine months down the line, the Government will need to revisit imposing the framework through legal changes, and what such changes would look like across public-sector workforces.”

Deputy general secretary Garry Graham at the union Prospect said: “The Government looks set to ignore the vast majority of those who responded to the consultation and peddle tired old myths about fat cats and rewards for failure.

 

“In reality, the Treasury proposals will hit some of the lowest-paid and longest-serving public servants hardest.”

 

If they earned £80,000 per year or more, employees who return to work in the public sector within one year of leaving will need to repay any exit payment made by their previous public-sector employer.

The amount to be repaid will be tapered depending on the length of time since leaving the role. The requirement to repay will apply whether or not the employee returns to the same part of the public sector.

 

There will also be a new cap on the amount of public-sector exit payments, which will be set at £95,000.

 

It is anticipated that these reforms will be introduced soon, but the Government is yet to provide a commencement date.

 

For advice on all aspects of employment law including representation in the employment tribunal, representation in the Employment Appeal Tribunal and the courts, contact our partner Rafique Patel on rafique.patel@bondadams.com

Changes to apprenticeships introduced

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BOND ADAMS EMPLOYMENT UPDATE by Dispute Resolution Partner, Rafique Patel

All large employers will be required to pay an apprenticeship levy, set at 0.5% of the employer’s paybill. The money gathered via this scheme will be distributed to fund the cost of apprenticeship training and assessment.

 

Other reforms to the rules applying to apprenticeships include that, to protect the term “apprenticeship”, training providers will be unable to describe a course as an apprenticeship where the course or training is not a statutory apprenticeship.

 

In addition, public-sector bodies in England with 250 or more employees will be subject to an apprenticeship target. Apprenticeship starts will need to comprise at least 2.3% of the total workforce each year.

 

The apprenticeship levy is expected to come into force on 6 April 2017, but there is no confirmed commencement date for the other measures.

 

Apprenticeship levy will go ahead next year, government confirms

the Scheme will start in April 2017, despite business groups’ call for a delay because of economic uncertainty

 

 

The UK government is sticking to plans for a levy on employers to help fund apprenticeships, ignoring business groups’ calls for the charge to be delayed because of the economic uncertainty sparked by the Brexit vote.

 

Some business lobbyists reacted with dismay at the confirmation on Friday that the levy on larger companies in England will be launched as planned in April 2017. They were already critical of the plan before the referendum result, claiming it was poorly designed and risked reducing rather than raising the quality of training.

Other groups, however, have welcomed the scheme as an important step in addressing skills shortages and a way of broadening young people’s routes into decent careers.

Theresa May has made tackling inequality a key theme of her new government, and this marks the second time in a week the prime minister has stood up to big business groups concerned about rising salary bills. On Monday, Downing Street dismissed pressure to slow the implementation of the “national living wage”.

 

Robert Halfon, the apprenticeships and skills minister, said the levy would help to ensure “people of all ages and backgrounds have a chance to get on in life”.

 

“Apprenticeships give young people, especially those from disadvantaged backgrounds, a ladder of ‎opportunity. That’s why we continue to work tirelessly to deliver the skills our country needs. The apprenticeship levy is absolutely crucial to this,” he said.

 

The levy is designed to fund 3m places for apprentices. It will be paid by employers in England with a payroll of more than £3m and charged at a rate of 0.5% of their annual pay bill. When George Osborne unveiled the levy last year, the former chancellor said those paying it would “get out more than they put in”.

 

The government has also said employers that are too small to pay it – around 98% of those in England – will have 90% of the costs of training paid for by the state. Extra support, worth £2,000 per trainee, will also be available for employers and training providers who take on 16 to 18-year-old apprentices or young care leavers.

 

One body for the construction industry described the levy as a “fair settlement for small employers”. The Federation of Master Builders (FMB) said the only cure for the industry’s skills shortages was to recruit and train more people.

 

The FMB’s chief executive, Brian Berry, said: “Small and medium-sized firms do the majority of training in our industry. Micro businesses [those employing fewer than 10 people] alone train around half of all construction apprentices. It is therefore crucial that new apprenticeship funding arrangements work for these firms and do not impose higher costs on them.”

 

The CBI, which represents companies that employ nearly 7 million people, has criticized the levy and called on the government to push back the April 2017 start date.

 

 

Carolyn Fairbairn, the CBI’s director general, said: “We welcome the government’s focus on growing investment in apprenticeships, and business stands ready to step up and increase its own commitment. However, the apprenticeship levy in its current form risks turning the clock back on recent progress through poor design and rushed timescales.”

 

“The levy is too narrowly defined. It covers only one type of training and employers can only reclaim off-the-job costs. As a result, valuable forms of training risk being cut back, with quantity put ahead of quality.

 

”The trade group for the human resources sector, the Chartered Institute of Personnel and Development (CIPD), said the levy in its current form risked devaluing apprenticeships by putting the number of beneficiaries ahead of the quality of training they receive.

 

Ben Willmott, the CIPD’s head of public policy, said: “It is irresponsible for the government, particularly in a time of economic uncertainty in the aftermath of the referendum, to simply press ahead with a policy that is not fit for purpose.”

 

Employer groups have also said the levy could prompt some firms to rebadge existing jobs as apprenticeships to meet training targets and recoup the costs of the charge.

 

The British Retail Consortium also called for a delay. “The government should delay its introduction to 2018, allowing more time to design a truly viable system that delivers high-quality training,” said Helen Dickinson, its chief executive.

 

For advice on all aspects of employment law including representation in the employment tribunal, representation in the Employment Appeal Tribunal and the courts, contact our partner Rafique Patel on rafique.patel@bondadams.com