Government decides on changes it wants to make to TUPE Regulations

At the beginning of September, the government published its response to the consultation on proposed changes to the Transfer of Employment (Protection of Employment) Regulations 2006 (TUPE).

In the government’s response they outline what they have decided to change:

  • Amend the TUPE Regulations to allow renegotiation of terms derived from collective agreements one year after the transfer, even though the reason for seeking to change them is the transfer, provided that overall the change is no less favourable to the employee.
  • Amend TUPE to provide expressly for a static approach to the transfer of terms derived from collective agreements.
  • Amend TUPE so that changes in the location of the workforce following a transfer can be within the scope of economic, technical, or organisational (ETO) reasons entailing changes in the workforce, thereby preventing genuine place of work redundancies from being automatically unfair.
  • Make an amendment to reflect the approach set out in the case law, namely that for there to be a TUPE service provision change, the activities carried on after the change in service provision must be “fundamentally or essentially the same” as those carried on before it.
  • Amend the Trade Union and Labour Relations (Consolidation) Act 1992 to make it clear in statute that consultation which begins pre-transfer can count for the purposes of complying with the collective redundancy rules, provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation.
  • Improve the TUPE process for micro businesses by allowing such businesses to inform and consult directly affected employees when there is no recognised independent union, nor any existing appropriate representatives.
  • Retain the rules about employee liability information and extend the time before the transfer when it must be given to the transferee to 28 days.
  • Work to improve TUPE guidance.

The government also state they will not:

  • Repeal the service provision change rules.
  • Allow a transferor to rely on a transferee’s economic, technical or organisational reasons to dismiss an employee prior to a transfer.

It is the government’s intention to lay amending Regulations before Parliament in December 2013; therefore no changes will come into effect before January 2014.

Young people in England must remain in some form of education or training until they are 18

Did you know that young people in England cannot just leave school at 16 and do whatever they like? There’s been a change in the law that requires their continued learning or training until they reach the age of 18.

A person ceases to be of compulsory school age on the school leaving date in the academic year in which they turns 16. The school leaving date is currently set as the last Friday in June. However, from June 2013, a person who ceased to be of compulsory school age but has not yet reached the age of 18 (or attained a level 3 qualification), is under a duty to participate in education or training.

A ‘Level 3 qualification’ can be an A Level, Access course, BTEC National Diploma/Certificate, NVQ Level 3, Higher National Certificate (HNC), Higher National Diploma (HND), or relevant work experience.

This means that pupils in England who left year 11 in summer 2013 need to continue in education or training until at least the end of the academic year in which they turn 17. Pupils in England starting year 11 or below in September 2013 will need to continue until at least their 18th birthday.

This does not necessarily mean staying in school; young people have a choice about how they continue in education or training post-16, which could be through:

  • full-time study in a school, college, or with a training provider
  • full-time work or volunteering combined with part-time education or training
  • an apprenticeship.

Therefore, pupils reaching school leaving age in England and entering straight into full-time* employment from September 2013 must continue in part-time training whilst they work.

This means such employees will be either employed under an apprenticeship contract, or the employee must ensure they continue in part-time education or training by undertaking a minimum of 280 guided learning hours per year, which is the equivalent to one day per week but doesn’t necessarily have to be taken that way – it could be distance or evening learning for example.

An employer is not required to give these 16-17 year-olds time off during required working hours for this training, although the Department for Education would like employers to consider how they could support such in the training and education requirement placed upon them. For example, this could be by employing them for four days a week so they can attend one-day a week at college.

The Government fully funds accredited training for 16-18 year olds and local authorities have a duty to secure a suitable education or training place for all young people. Your local council can provide further information about training opportunities in your area that can best support your business.

Pupils reaching school leaving age in Wales and Scotland are not required to continue in education or training until they are age 18.

**”Full-time” work is defined as a job lasting a period of eight or more weeks consecutively and for 20 or more hours per week.

Where jobs do not meet the definition of “full-time” work – such as part-time, holiday, or weekend work – young people will still need to participate in education or training in line with one of the other options above.

HMRC starts chasing employers who should be submitting Real Time Information but aren’t

On 2 September, payroll software developers and agents were informed that HMRC is about to commence a letter campaign to try and reach all those employers they consider should have started submitting RTI returns but so far have failed to do so.

HMRC state that the vast majority of employers have started reporting in real time but there are still a very small number who have yet to start or who need to close schemes that are no longer operating.

The letter being sent to these employers sets out the changes and explains to them that they have missed at least one PAYE reporting deadline and need to start reporting immediately.  It also explains that they need to contact HMRC straightaway if their PAYE scheme is closed or is no longer operating.

The letter directs them to a specific web page on the HMRC website for more help and information.

Software developers and agents were sent a preview of the letter which employers will start to receive from 5 September, so that they can prepare for calls from any of their customers, clients, or members who receive a letter. There will be slightly different letters for employers depending on the numbers of employees they have.

HMRC are also supporting these letters with agent communication as they believe that many of the PAYE schemes that have not started RTI reporting may no longer be operating and just need to close.

It is important that employers who should be submitting RTI returns but are not currently doing so, get their affairs in order to start sending the necessary returns during this tax year. Employers who have PAYE schemes that are no longer operating need to inform HMRC as quickly as possible.

From April 2014, automatic penalties will start to be charged against employers who are “late” submitting RTI returns.

Known RTI issue affecting student loan borrowers

On 29 August, HMRC admitted that their RTI system is causing problems for some employees repaying student loans through the payroll.

The HMRC statement is reproduced in full below.

“Employers should be aware that: A very small number of borrowers’ employments have been incorrectly ‘ceased’ on HM Revenue & Customs (HMRC’s) PAYE systems.

This has prompted HMRC’s systems to automatically inform the Student Loans Company (SLC) that those individuals had left their employment.

As a result, SLC have issued letters to these borrowers, querying their employment status. Employees affected by this issue are being asked to respond to the SLC saying they have not ceased or changed employer.

HMRC are now in the process of correcting their systems, and are due to complete this within the next few weeks. There is an issue getting this corrected information on to the student loans system and HMRC are taking active steps to rectify this.

If you suspect that this issue has affected any of your employees, please ask them to follow the instructions above.”

What is notable about the above statement is that nowhere is any apology made by HMRC, or explanation of why their supposedly RTI pilot proved system has developed this glitch!

HMRC updates its advisory fuel rates from 1 September 2013

On 29 August, HMRC published updated advisory fuel rates that can be paid tax-free to employees driving employer provided vehicles to cover just their business mileage. The same rates can also be used to charge employees for private mileage costs paid by their employer.

The new rates apply to all business journeys on or after 1 September 2013, although until the end of September employers can continue to use the previous advisory fuel rates, applicable from 1 June 2013.

The new rates per mile are as follows (the changed rates are shown in red; the figure in parenthesis is the amount between 1 June 2013 and 31 August 2013):

+ Petrol engine cars: 1400cc or less – 15p; 1401-2000cc – 18p (17p); over 2000cc – 26p (25p); based on 137.0p/litre (133.2p/litre from 1 June).

+ Diesel fuelled cars: 1600cc or less – 12p (13p); 1601-2000cc – 15p (14p); over 2000cc – 18p; based on 141.7p/litre (138.4p/litre from 1 June).

+ LPG fuelled cars: 1400cc or less – 10p; 1401-2000cc – 11p (12p); over 2000cc – 16p (18p); based on 69.8p/litre (74.4p/litre from 1 March).

The above changes are part of HMRC’s quarterly review of their advisory fuel rates.

Have your say: Real Time Information survey

On 28 August, HMRC announced the launch an online survey to learn more about how employers and agents are finding the Real Time Information obligation to report PAYE information ‘on or before’ employees are paid.

In the announcement, HMRC stated they’ll use the information gained from the survey to help assess the impact of these reporting changes and to tell them more about whether any changes are needed to the new RTI reporting rules.

This is your chance to have your say; and HMRC strongly encouraging everyone to complete the survey (there’s a link to the online survey) which should only take ten minutes. The survey closes on 13 September 2013.

The survey is hosted by an external company called Survey Monkey and all answers are entirely confidential. This means all persons completing the survey can be totally honest in their responses.

New guide on the Statutory Residence Test published by HMRC

On 28 August, HMRC published an updated version of their Guidance Note: Statutory Residence Test (SRT). It’s been updated to take account of changes to the legislation introduced in Finance Act 2013.

The above Guidance Note is a must have for any employer who has employees going abroad outside the UK to work, or if they have persons coming to work for them in the UK from overseas.

The Guidance Note (running to 106 pages) gives information about how HMRC interprets the Finance Act in the context of applying the SRT to an individual’s circumstances and covers headings on:

  • Going outside the UK to work
  • Coming to work in the UK
  • Returning to the UK when working abroad
  • What happens when someone leaves the UK / arrives in the UK part-way through a tax year
  • Periods of temporary non-residence

The text of the Guidance Note contains hyperlinks that take the reader to more detailed information within the document, and to other HMRC guidance on the HMRC website, particularly links to HMRC internal manuals (the manuals HMRC’s own officers use).

More employers to be ‘named and shamed’ for failing to pay the UK’s National Minimum Wage

Employers who fail to pay the UK’s National Minimum Wage will be named and shamed under revised plans to highlight businesses not playing by the rules.

The announcement was made in a joint press release published by the Department for Business, Innovation and Skills, HMRC, and the Low Pay Commission on 23 August.

The original ‘name and shame’ scheme was introduced from 1 January 2011. Under the original scheme, employers had to meet one of seven criteria before they could be named. The minimum amount of national minimum wage owed to workers had to be at least £2000 and the average per worker at least £500 before an employer could be referred for naming.

The revised NMW naming scheme, which will come into effect in October 2013, will strip back restrictions, making it simpler for government to name more employers who break the law.

As the Low Pay Commission pointed out, under the original scheme only one employer has been named for failing to pay the NMW. Contrast this with the fact that during 2012/13 alone, HMRC identified 736 employers who had failed to pay the minimum wage.

When announcing the revised name and shame scheme, Jo Swinson, Employment Relations Minister stated: “This gives a clear warning to rogue employers who ignore the rules, that they will face reputational consequences as well as a fine if they don’t pay the minimum wage.”

Employers who pay workers less than the NMW have to pay back arrears of wages at current minimum wage rates and face financial penalties of up to £5,000. In the most serious cases employers can be prosecuted.

Minimum wage problems when overtime hours are unpaid

When an employee works extra hours unpaid, can this cause a lack of compliance with the National Minimum Wage even if the employee’s basic wage is more than the minimum wage? Yes, as shown in the EAT case of Thomas & Anor v Taylors of St James Ltd [2013] UKEAT 0117/13.

In this case, drivers and packers employed by the company were to be paid £18,000 per annum. This annual wage was said to equate to £6.92 per hour for a standard 42.5 hours week. However, the drivers and packers maintained that they actually worked 60 hours a week but didn’t receive any extra pay over their basic.

The employees claimed they should have been paid at least £6.92 per hour for their overtime hours. As the company had failed to pay for all hours worked the employees had suffered an unlawful deduction from wages.

The employment tribunal judge found that the contractual provisions regarding hourly pay were that the employees would work the hours as required for a fixed salary of £18,000 a year. The judge found there was no entitlement to additional pay for the hours worked over and above 42.5 per week. These terms were made clear to the employees when they joined, were reflected in the contractual documentation, and were repeated when queried by the employees. Also, the terms were ‘agreed’ by the employees in question as they continued to work in the knowledge that they were not contractually entitled to any overtime pay.

However, despite there was no entitlement to contractual overtime pay there was still an entitlement to be paid the National Minimum Wage for all hours worked. In this case, when £18,000 per annum was divided by the actual hours worked over the year, the average rate was less than the NMW, and the employees were entitled to be paid at least at the relevant hourly rate of the NMW for all hours worked. Therefore, an additional amount per overtime hour was due.

This case illustrates that statutory entitlements take precedence over any contractual ones. It also illustrates that an employer should not just assume that the basic hourly rate they pay will cover all the hours an employee works and still be within the relevant NMW rates. In some cases it will be obvious that the basic hourly rate an employee is paid will more than cover any amount of overtime hours they work.

Nevertheless, an employer should still keep sufficient records to show they have complied with the NMW legislation, and this will include dividing the employee’s wage not just by the number of contractual hours but by the number of actual hours worked. This may be necessary to identify the pay reference period over a rolling 12-month period when an employer will have to make additional payments where the basic rate they pay fails to meet the NMW pay due to cover overtime hours.

HMRC cracking down on football clubs failing to pay the minimum wage to all workers

Despite football players being paid huge sums every week, HMRC reveal that others working for football clubs are being paid below the National Minimum Wage.

On 20 August, HMRC reported that research shown that posts are being advertised for work at football clubs in areas such as sport science and marketing, as well as match day roles – such as ball boy supervision, or work as mascots – which appear not to comply with NMW rules.

HMRC is now taking pre-emptive action to safeguard workers by initially contacting 44 football clubs, to ensure that employers are not breaching minimum wage rules.

HMRC enforce the NMW rules (on behalf of the Department for Business, Innovation & Skills which sets the minimum wage policy), protecting workers from rogue employers and ensuring they get at least the wage to which they are legally entitled. Where an employer ignores these rules, HMRC will take steps to ensure arrears are paid out in full and the employer fined. In the most serious cases, criminal prosecution can follow.

Anyone who believes they are not being paid the National Minimum Wage can call the Pay and Work Rights Helpline on 0800 917 2368.

Last year, HMRC enforcement action resulted in 708 employers receiving automatic penalty charges of up to £5,000 and 26,519 employees receiving back pay totalling over £4 million, topping up wages that had previously been below the legal minimum rate.

The National Minimum Wage is currently £6.19 an hour for workers aged 21 and over. This increases to £6.31 an hour from 1 October 2013. There are different rates for younger workers and apprentices.