Friday, 2 March 2018

New Tax Rules for Termination Payments

'The HM Revenue and Customs Employer Bulletin issue 70' has reported that there will be new rules for termination payments made on, or after 6 April 2018

As an employment lawyer terms such as the 'PENP' will be alien..

'Payments in lieu of notice'

With effect from 6 April 2018, some payments and benefits made in connection with the termination of an employment will be chargeable to income tax and Class 1 National Insurance Contributions (NICs) as general earnings and will not benefit from the £30,000 threshold. This change applies to payments, or benefits received on, or after 6 April 2018 in circumstances where the employment is also ended on, or after 6 April 2018. The legislation being introduced splits payments and benefits, which fall within Section 401(1) ITEPA 2003, into two elements.

The first element, post-employment notice pay (PENP) is taxable as general earnings and will be subject to Class 1 NICs from 6 April 2018, subject to parliamentary approval. The PENP represents the amount of basic pay the employee will not receive because their employment was terminated without full, or proper notice being given.

PENP is calculated by applying a formula set out in the legislation to the total amount of the payment, or benefits paid in connection with the termination of an employment.

The second element is the remaining balance of the termination payment, or benefit, which isn’t PENP. This is taxable as specific employment income to the extent that it exceeds £30,000 and is treated in the same way as other payments and benefits taxable under section 403 ITEPA 2003.
PENP calculations should not be applied to statutory redundancy payments. These payments are always taxable as specific employment income and subject to the £30,000 exemption where appropriate.

As an employer you will be required to apply the PENP formula to the total amount of relevant termination payments, or benefits. You should operate PAYE to deduct income tax and Class 1 NICs from the amount of PENP from 6 April 2018. You should then apply the £30,000 exemption, where applicable, to the second element of the relevant termination payment and deduct income tax (but not NICs) accordingly.

Thursday, 1 March 2018

Whistleblowing - knowledge of decision maker

Predictably and logically The EAT has held that a decison-maker must have personal knowledge of a protected disclosure and be motivated by the disclosure when subjecting a whistleblower to a detriment , in order to be liable in a whistleblowing detriment claim.The knowledge and motivation of others cannot be attributed to an innocent decision-maker who does not know about the protected disclosure.

In this case ,the EAT, in dismissing the appeal,found that the ET did not err in failing to refer expressly to an aspect of the Claimant's case that was neither pleaded nor identified in the agreed List of Issues

Malik v Cenkos Securities Plc

Expiry of Fixed -Term Contracts

A recent decision from the EAT serves as a useful reminder  for employers that the law on unfair dismissal still applies  to the non-renewal of a fixed -term contract and that the usual procedures to avoid a claim for unfair dismissal  may need to be followed  when the fixed-term comes to an end.

In this case, concerning a locum doctor employed on a series of fixed - term contracts , the EAT upheld the employment tribunal's finding of unfair dismissal because, when notice was given of the non-renewal of the fixed - term contract , there was no discussion about alternative roles and no mention of a right of appeal.

The EAT,in dismissing the Appeal, did not err in law either by substituting  its own view for that of the employer on the issue of fairness , nor by placing too high a burden on the employer when decidiing that it should have offered to discuss possible alternative employment with the employee.

Royal Surrey County NHS Foundation Trust v Drzymala

Rest Break Crucial

The EAT has held that the length of the 20 minute rest break required for workers under the Working Time Regulations is crucial  and cannot be met by aggregrating breaks  of a shorter duration.

In this case,the signalman who worked on his own on a stretch of railway  that was nor busy , was able to take shorter , naturally occurring  breaks  between trains and these breaks amounted to significantly more than 20 minutes over the course of his shift.

However , the EAT made it clear that the length of the break was crucial and as each break  was less than 20 minutes the employer was held to be in breach  of the Working Time Regulations.

They rejected the argument that the Network Rail's system in this case was actually better from a health and safety point of view than a system involving a continuous 20 minute break.

Crawford v Network Rail Infrastructures Ltd

Injury to Feelings Payable in Working Time Detriment Claims

A worker has the right not to be subjected to a detriment for refusing to comply with a requirement that breaches the Working Time Regulations 1998. In South Yorkshire Fire & Rescue Service v Mansell and others, the EAT held that tribunals may make injury to feelings awards in such cases.

Mr Mansell, a firefighter employed by South Yorkshire Fire & Rescue Service,refused to volunteer for a new shift pattern which contravened the Working Time Regulations.As a result ,he was compulsorily transferred  to another station and brought a claim  for detrimental  treatment.

The EAT,upholding the original decision,held that compensation to feelings may be awarded in working time detriment claims.With injury to feelings available  for other detriment claims under ERA, including whistleblowing and trade union membership,the EAT saw no reason why awards could not also be made for working time detriment claims.