Location of GOV.UK guidance on statutory payments keeps changing!

Obviously, as feedback starts hitting the GOV.UK web site, they are modifying the links to the relevant guidance, hopefully to make it easier to find the information you need.

On 1st April 2014 I blogged information on how to find guidance on the GOV.UK web site to support Statutory Payments with the old Helpbooks no longer being available from 6th April 2014 onwards. The URL links in the second paragraph of my blog item now no longer work four days later! All the other URL links in my blog item do all still work, at the moment.

However, I’ve found another GOV.UK web page that does contain links to employer guides on SSP, SMP, OSPP, ASPP, and SAP.

In addition, most importantly, if you scroll down the above web page, under the heading ‘Additional detailed guidance for employers’, you’ll find links to the SSP Tables (for checking linking Periods of Incapacity for Work); and the SMP Tables (for checking an employee’s entitlement). There are also links to SPP and SAP Tables.

Mind you, the above links are what I found on 4th April 2014. Who’s to say they’ll still be active links tomorrow!

Acas Early Conciliation launches on 6 April

Before a case can be brought to an Employment Tribunal, the Advisory, Conciliation and Arbitration Service (Acas) will need to be approached to arrange for a conciliator to attempt to resolve the issue(s). This will become a requirement from 6 May 2014. The new Acas Early Conciliation service launches on 6 April.

Early Conciliation

Early Conciliation will be available from 6 April 2014.

For tribunal claims lodged on or after 6 May 2014, it is a legal requirement, unless an exemption applies, for a claimant to have made an Early Conciliation notification to Acas. Tribunal claims will not be accepted unless the complaint has been referred to Acas and a conciliation certificate issued. This certificate confirms that the Early Conciliation requirements have been met.

Early Conciliation can be used to help resolve the following issues:

  • unfair dismissal claims
  • workplace discrimination
  • redundancy payments or disputes around selection procedures
  • deductions from wages or unpaid notice/holiday pay
  • rights to time off or flexible working
  • equal pay.

Benefits of Early Conciliation

  • Using Early Conciliation will save people the time, cost and anxiety of facing an Employment Tribunal.
  • Conciliators will help claimants understand the strengths and weaknesses of their case, and ways of resolving it.
  • Independent research has found that the average cost to an employer of resolving a case through Pre Claim Conciliation (a similar service pre April 2014) is just £475, with employers spending on average one day on a claim, compared to an average of £3,700 and four days for an Employment Tribunal.
  • Early Conciliation gives both parties up to a calendar month initially in which to explore resolving their dispute using the services of an Acas conciliator. It can be shorter, or up to 14 days longer according to need.
  • When Early Conciliation has finished the claimant will have at least one calendar month in which to submit a tribunal claim.
  • It’s confidential and private – nothing a conciliator is told will be passed on to anyone else unless the parties agree. Most Employment Tribunal proceedings are public.
  • It’s voluntary – both parties must agree to take part before the process can start, and either can change their mind at any time.
  • It’s not an “either/or” option – if a claimant cannot reach an agreed outcome they are still free to go to a Tribunal, and Acas will be able to offer support to find a resolution until the Tribunal hearing itself. Under Early Conciliation, anybody who wishes to lodge a claim with an employment tribunal will have to provide an Acas Early Conciliation Reference Number.
  • It’s independent – Acas doesn’t represent either employers or employees nor are they part of the Tribunal. Acas expert conciliators don’t take sides or make judgements. Their role is simply to help people find a solution.
  • It’s professional – Acas are the experts in helping people deal with problems at work.
  • It’s free.

What are the steps to applying for Early Conciliation?

Before a person lodges an Employment Tribunal claim, they will have to notify Acas by completing a simple online form. Acas will contact the potential claimant within two working days. Acas will gather basic information on the dispute itself and provide information about Early Conciliation.

The case will then be passed on to a conciliator who will aim to make contact with both parties and talk through the issues to see if a solution can be found.

Statutory payment guidance moves to GOV.UK website

It used to be that HMRC published a set of Helpbooks on statutory payments – Statutory Sick, Maternity, Paternity, and Adoption Pay. From the beginning of the tax year 2014/15, these Helpbooks no longer exist. Instead, all the information has been transferred to the GOV.UK website.

Detailed guidance on Statutory Payments has now been added to the GOV.UK website to support the mainstream Statutory Payments Guidance found on the same website.

HMRC state that what is now on the GOV.UK website includes the guidance that was previously contained in the Statutory Payments Employer Helpbooks. But believe me, it’s not as simple as that. For example, the very useful SMP Tables are nowhere to be found online.

To show you what I mean, follow these links to find out what you need to know about SMP.

There is a web page on Gov.UK that explains the basics of SMP, including the MATB1 maternity certificate (showing the date the baby is due), the Qualifying Week, and how to calculate average weekly earnings.

Click on ‘Statutory pay’ at the bottom of the above web page, and follow the links to the link ‘Statutory Maternity Pay’.

At the bottom of this next web page click on ‘Next – Eligibility’.

Two thirds down this next web page, look for ‘Work out your qualifying week using the maternity pay calculator’.

Click on the ‘Start now’ button and answer the questions:

  • Baby’s due date of birth (obtainable from maternity certificate MATB1);
  • Check whether the individual is employed (can be entitled to SMP) or self-employed (can be entitled to MA);
  • Check whether the employee’s job was started before a specified date (if the answer is ‘yes’ the employee has worked for long enough for the same employer to be eligible for SMP as long as their average weekly earnings are high enough);
  • Check whether the employee is, or will still be in the same job on a specified date (although not mentioned in the text, this date is the Sunday of the beginning of the Qualifying Week – the 15th week before the expected week of childbirth);
  • What is the amount of the employee’s average weekly/monthly earnings (see above link on how to calculate average weekly earnings, which is based on a period starting in or before the Qualifying Week);
  • The final page shows the amount of SMP payable for this particular employee.

This will give you a flavour of the amount of ‘digging’ you might have to do to locate the guidance you need on the various statutory payments. Let’s hope your payroll software is up to automatically calculating statutory payments once you give the software the correct information!

Reminder of the “death” of the Percentage Threshold Scheme

Have you ever heard of the “Percentage Threshold Scheme”? No? Well don’t worry because it comes to an end on 5th April 2014.

The Percentage Threshold Scheme (PTS) enabled employers, usually very small employers, to recover some of the Statutory Sick Pay (SSP) they paid. Under the PTS, you could only recover any SSP you’d paid in a tax month that was in excess of 13 per cent of your gross Class 1 NICs liability for that same tax month. Unless you qualified under the PTS, you were not entitled to recover any SSP.

BUT, no employer will be able to recover any SSP paid for periods of sickness after 5th April 2014. At that point, employers will have until the end of the tax year 2015/16 to recover* SSP paid before the end of the tax year 2013/14. HMRC published guidance on this change on page 20 of their Employer Bulletin, February 2014, Issue 46.

The funding released from the abolition of PTS will be reinvested into the new Health and Work Service, which will be introduced in late 2014.

*Any Real Time Information employer wanting to recover SSP under the PTS for SSP they paid on or before 5th April 2014 cannot make a claim using a 2014/15 specification Employer Payment Summary. Instead, such an employer will need to make a separate claim using a form SP32.

HMRC online service availability 5/6 April 2014

On 21 March, HMRC told software developers that the April 2014 HMRC Enterprise Release is due to take place on Saturday 5 April 2014 from 22:00 until Sunday 6 April at 03:00.  During this time, say HMRC, customers will still be able to send their PAYE submissions to the Government Gateway and will receive an acknowledgement that their submission has been received.

However, during the above period the validation response returned through the Government Gateway advising whether or not the submission passed full validation will be delayed. Customers should not attempt to re-submit until the result of the submission is known.

The Service Availability page (scroll down page and click on ‘Pay As You Earn’) on the HMRC website is due to be updated shortly.

Software developers will be let known as a matter of urgency by HMRC if there are any changes to these proposed timings.

As the critical time, above, is across a Saturday/Sunday night it is unlikely this will affect most employers operating their own payroll function.

Maternity rights for a commissioning mother in a surrogacy arrangement

Is it unlawful to refuse maternity leave and pay to a woman who commissions a baby through a surrogacy arrangement, even if she starts breastfeeding the baby soon after it’s born? Is it discriminatory to deny maternity leave and pay to a commissioning mother? The Court of Justice of the European Union has ruled on these issues in the case of CD V ST Case C‑167/12.

In this case, Ms D wanted to fulfil her desire to have a child with the assistance of a surrogate mother. When the surrogate mother gave birth to the child, Ms D began mothering and breastfeeding the child within an hour of the birth and she continued to breastfeed the child for a total of three months.

Even before the child was born Ms D requested paid time off ‘for surrogacy’ under her employer’s adoption leave policy – in the absence of specific occupational or legal rules. Initially her request was refused although her employer later agreed to allow her paid leave under their adoption leave policy.

Ms D claimed she was entitled to the similar special protection under Pregnant Worker Directives 89/391/EEC and 92/85/EEC afforded to pregnant women and those who have recently given birth and/or are breastfeeding a baby. She also claimed unlawful discrimination on the grounds of sex and/or pregnancy and motherhood with regard to the original refusal of her request contrary to Equal Opportunities Directive 2006/54/EC

Her employer contended there had been no infringement of the law since Ms D was not statutorily entitled to paid time off and in particular to either maternity or adoption leave. They maintained these rights are reserved for women who have given birth to, or adopted, a child.

The matter was referred to the Court of Justice.

In October 2013, the Advocate General of the Court of Justice gave his Opinion to the effect that the special protection afforded to pregnant women and those who have recently given birth, and/or who are breastfeeding should be shared by the two women in question – the woman giving birth and the commissioning mother.

The full Court of Justice does not agree.

In the judgement of the Court, a female worker who as a commissioning mother has had a baby through a surrogacy arrangement does not fall within the scope of Directive 92/85, even in circumstances where she may breastfeed the baby following the birth or where she does breastfeed the baby. Consequently, Member States are not required to grant such a worker a right to maternity leave pursuant to that Directive.

Further, the refusal to grant maternity leave to a commissioning mother, such as Ms D., does not constitute direct or indirect discrimination on grounds of sex within the meaning Directive 2006/54.

However, the Court of Justice recognised that EC Directives do not in any way preclude Member States from applying or introducing laws, regulations, or administrative provisions more favourable to the protection of the safety and health of commissioning mothers who have had babies through a surrogacy arrangement by allowing them to take maternity leave as a result of the birth of the child.

Which is interesting as the Children and Families Act 2014 does make provisions for surrogacy arrangements in the UK.

Under the Act, from April 2015, statutory adoption leave and pay will reflect entitlements available to birth parents. This means there will be no qualifying period for leave; enhanced pay to 90% of average weekly earnings will be paid for the first six weeks. Intended parents in surrogacy arrangements will also qualify for adoption leave and pay.

Intended parents in a surrogacy arrangement who are eligible, and intend to apply for a parental order*, will also be eligible like adopters to the new system of shared parental leave being introduced from April 2015.

* The Human Fertilisation and Embryology Act 2008 provides in section 54 that, on an application made by two people, a court may make an order giving them parental responsibility for a child (a parental order), so that the child is treated in law as the child of the applicants.

Chancellor’s Budget Statement, March 2014

On 19th March 2014, Chancellor George Osborne delivered his fifth Budget. Perhaps the biggest announcement for employees is the proposal to make Defined Contribution (money purchase) occupational pension schemes much more flexible.

Personal taxation

The Chancellor confirmed that from 6th April 2014, the income tax personal allowance will rise to £10,000. From April 2015, it was announced that the level of the personal allowance will rise to £10,500. So that higher rate taxpayers benefit from this increase in allowances, the basic rate limit will be reduced to £31,785 (£31,865 for 2014/15).

The government states that the changes they have made to personal allowances since they came into power mean over 3.2 million people will have been lifted out of income tax by April 2015. Further, the government’s increases to the personal allowance between 2010 and 2015 are worth £646 to a typical higher rate taxpayer in cash terms, and £805 to a typical basic rate taxpayer.

Budget 2014 also announced that the transferable tax allowance for married couples and civil partners announced at Autumn Statement 2013 will be set at 10% of the personal allowance from 2015/16. This means it will be £1,050 in 2015/16.

Defined Contribution Pensions

According to Budget 2014 documentation, the government intends to “introduce the most fundamental reform to the way people access their pensions in almost a century by abolishing the effective requirement to buy an annuity, giving people much greater freedom over how they access their pension savings.”

From April 2015, the government will change the tax rules to allow people to access their defined contribution pension savings as they wish from the point of retirement.

Drawdown of pension income under the new, more flexible arrangements will be taxed at marginal income tax rates rather than the current rate of 55% for full withdrawals.

The tax-free pension lump sum will continue to be available. Those who continue to want the security of an annuity will be able to purchase one. Equally, those who want greater control over their finances in the short term will be able to extract all their pension savings in a lump sum.

And those who do not want to purchase an annuity or withdraw their money in one go will be able to keep their pension invested and access it over time.

To help a retiree decide on their best options, the government will introduce a new guarantee that everyone who retires with a defined contribution pension will be offered free and impartial face-to-face guidance on their choices at the point of retirement. This will take effect from April 2015.

From 27 March 2014 the government will:

  • Reduce the amount of guaranteed pension income people need in retirement to access their savings flexibly, from £20,000 to £12,000;
  • Increase the capped drawdown limit from 120% to 150% to allow more flexibility to those who would otherwise buy an annuity;
  • Increase the size of a single pension pot that can be taken as a lump sum, from £2,000 to £10,000;
  • Increase the number of pension pots of below £10,000 that can be taken as a lump sum, from two to three;
  • Increase the overall size of pension savings that can be taken as a lump sum, from £18,000 to £30,000.

New type of Voluntary NICs

Budget 2014 announced further details of a new scheme of Voluntary National Insurance contributions (VNICs) to allow pensioners to top up their Additional State Pension.

The scheme will be open for 18 months from October 2015 and available to everyone reaching State Pension age before 6 April 2016. This will help pensioners with savings who want to boost their State Pension income in a way that protects them from price inflation and provides them with an income for life. It could particularly benefit those with gaps in their Additional State Pension record, such as the self-employed and women who have taken time out from work to raise children.

Simplifying expenses and benefits

For a while now, the Office for Tax Simplification has been examining the UK tax system and looking for ways to simplify it. One of the areas they examined was expenses and benefits.

As highlighted by the OTS review of employee benefits and expenses, working practices have changed. The current rules for benefits and expenses are complex and can lead to unfair outcomes.

Budget 2014 goes no further other than to state the government does intend to “implement OTS recommendations to simplify the taxation of employee benefits and expenses.” To this end they also announced they “will undertake a call for evidence on remuneration practices in the 21st century to inform future changes.”

Some of the changes it is known that government are examining include abolishing the £8,500 threshold, voluntary payrolling of benefits, a trivial benefits exemption, and a general exemption for non-taxable expenses. The government also intends to review the rules underlying the tax treatment of travel and subsistence expenses.

Tax exemption for employer-funded occupational health treatments

As announced at Budget 2013, the government will introduce a tax exemption for amounts up to £500 paid by employers for medical treatments for employees. The tax exemption is expected to become available with the rollout of the Health and Work Service in October 2014.

Employer provided benefits in kind: beneficial loans

As announced at Budget 2013, the threshold for the small loans exemption limit will be increased from £5,000 to £10,000 from April 2014.

Company Car Tax (CCT) rates for 2016/17

Budget 2012 and Budget 2013 set out CCT rates and bands for 2016/17, including the removal of the diesel supplement. The appropriate percentage of the list price subject to tax will be 7% for the 0-50 grams of carbon dioxide per kilometre (gCO2/km) band and 11% for the 51-75 gCO2 /km band in 2016/17.

CCT rates for 2017/18 and 2018/19

The appropriate percentage of a car’s list price subject to tax will increase by two percentage points for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017/18 and 2018/19.

In 2017/18 there will be a four percentage point differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018/19 this differential will reduce to three percentage points. The differential will reduce further to two percentage points in 2019/20 in line with the Budget 2013 announcement.

Fuel Benefit Charge (FBC)

From 6 April 2015, the FBC multiplier for both cars and vans will increase by RPI.

Van Benefit Charge (VBC)

From 6 April 2015, the main VBC rate will increase by the increase in the Retail Prices Index (RPI).

The government will extend VBC support for zero emission vans to 5 April 2020 on a tapered basis. In 2015/16 the VBC rate paid by zero emission vans will be 20% of the rate paid by conventionally fuelled vans, followed by 40% in 2016/17, 60% in 2017/18, 80% in 2018/19 and 90% in 2019/20, with the rates equalised in 2020/21.

The government will review VBC support for zero emission vans in light of market developments at Budget 2016.

Company Car Tax

As announced at Autumn Statement 2013, to protect tax revenues, and taking effect from 6 April 2014, the government will introduce legislation to:

  • Ensure individuals make payments for private use of a company car or van in the relevant tax year;
  • Ensure that where an employer leases a car to an employee, the benefit is taxed as a car benefit rather than as employment earnings.

Working parents to be given more choice over what childcare support to choose

On 18 March, the Government outlined the new childcare support scheme – Tax-Free Childcare – it’s offering working parents.

Tax-Free Childcare will be introduced far more quickly than previously announced so that all working parents with children under 12 will be covered within the first year from autumn 2015. This is significantly faster than initially proposed, where children under 12 would have gradually qualified for the scheme over a seven-year period.

Under the new Tax-Free Childcare scheme, the government will provide 20% support on childcare costs up to £10,000 per year for each child via a new simple online system. The limit had previously been set at £6,000. This now means support of up to £2,000 per child per year.

The idea behind the new scheme is that, for example, a working parent will open a simple online savings type account. For every 80p an individual pays in to their childcare account, the government will top up an extra 20p. This is the equivalent of the basic rate of tax most people pay – 20% – which gives the scheme its name, ‘tax-free’. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year.

Where a working parent no longer needs childcare support, etc., they will be able to close their account and withdraw the unspent funds they contributed. In this case, the government will withdraw its corresponding contribution.

Tax-Free Childcare will be open to more than twice as many families as currently use Employer Supported Childcare (ESC) vouchers* and, unlike ESC, will not depend on employers offering it.

In addition to giving support to the self-employed, the scheme has been adjusted to ensure those working part-time, earning £50 per week and above, those on maternity, paternity or adoption leave, and those starting their own business, who may not meet the minimum earning requirement will be included, giving them government help with childcare costs for the first time.

All working families where the parents earn at least £50 per week will have access to government support with childcare costs, unless one of the parents earns over £150,000 or receives support from tax credits, Universal Credit, or ESC.

Parents currently receiving childcare vouchers through ESC can continue to benefit from the scheme with their current employer should they wish to do so, but it will be closed to new entrants from autumn 2015. Parents will not be able to receive ESC vouchers and take part in the new support scheme. They will have to choose which scheme best suits their needs.

*The ESC voucher scheme enables a basic rate taxpayer to receive up to £243 in qualifying childcare vouchers per qualifying tax week from their employer without incurring any income tax or NICs liabilities.

The tax exemption covering workplace nurseries will be unaffected by the above changes.

New Act lays basis for changes in work/life balance for many more employees

On 13 March, the new Children and Families Act 2014 was given royal assent. The Act lays the basis for changes in the law to help people better balance their work and home life.

The Children and Families Act 2014 introduces the following measures.

Shared parental leave

From April 2015, mothers, fathers, and adopters can opt to share parental leave around their child’s birth or placement (the time a child starts living with its adoptive parents). This gives families more choice over taking leave in the first year.

Under the new legislation, all employed women continue to be eligible for maternity leave and statutory maternity pay or allowance in the same way as previously. If they choose to bring their leave and pay or allowance to an early end, eligible working parents can share the balance of the remaining leave and pay as shared parental leave and pay up to a total of 50 weeks of leave and 37 weeks of pay.

Eligible adopters can use the new system for shared parental leave and pay. The new shared adoption leave measures will also apply to prospective parents in the ‘fostering for adoption’ system, and intended parents in a surrogacy arrangement who are eligible, and intend to apply for, a parental order.

Antenatal appointments

From 1 October 2014, the father or parent of the pregnant woman’s child (and intended parents in a surrogacy situation who meet specified conditions), or a mother’s partner (i.e. a pregnant woman’s husband, civil partner, or partner (including same sex partners)), can take time off to attend up to two antenatal appointments (there is no statutory right to be paid during working hours).

The Act also contains provision for paid and unpaid time off work for adopters to attend meetings in advance of a child being placed with them for adoption.

Adoption pay and leave

From April 2015, statutory adoption leave and pay will reflect entitlements available to birth parents. This means there will be no qualifying period for leave; enhanced pay to 90% of average weekly earnings will be paid for the first six weeks. Intended parents in surrogacy and ‘foster to adopt’ arrangements will also qualify for adoption leave and pay

Flexible working requests

From 30 June 2014, the right to request flexible working is extended from employees who are parents or carers to include all employees.

The Act also lays the basis for replacing the current statutory procedure through which employers consider flexible working requests (i.e. a statutory formula for making requests, meeting with the employee, rendering decisions, and dealing with appeals), with a duty on employers to consider requests in a ‘reasonable’ manner.

Increase in National Minimum Wage from 1 October 2014

On 12 March, the Government announced its approval of a rise in the National Minimum Wage to £6.50 per hour from 1 October 2014.

The Government press release states that more than 1 million people are set to see their pay rise by as much as £355 a year.

The National Minimum Wage rates from 1 October 2014, as recommended by the Low Pay Commission, will be:

  • a 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour)
  • a 10p (2%) increase in the rate for 18 to 20 year olds (from £5.03 to £5.13 per hour)
  • a 7p (2%) increase in the rate for 16 to 17 year olds (from £3.72 to £3.79 per hour)
  • a 5p (2%) increase in the rate for apprentices (from £2.68 to £2.73 per hour)

The increase in the adult rate from 1 October this year will increase the real value of the minimum wage for the first time in six years through the biggest percentage increase since 2008.