Payroll insight
one week in employment with the same employer can break what counts towards continuous service; hence the suggestion, accepted by government, to extend the gap in service from one week to four. ● Bring forward legislation to repeal the Swedish derogation and ban the use of this type of contract to withhold agency workers’ equal pay rights – Agency workers can currently exchange their right to be paid equally to permanent counterparts in return for a contract guaranteeing them pay between assignments – the ‘Swedish derogation’. However, the government has evidence to suggest that this type of contract is simply used by some employers to reduce the size of their paybill. ● Legislate to ban employers from making deductions from staff tips – The government acknowledges that whilst most businesses act in good faith and pass on tips workers earn for good service, there are a small number who retain tips earnt by their staff. Legislation will mean a better deal for workers and a level playing field for employers, and also ensure consumers can be confident in the knowledge that their tips are going to the staff as they intended. Policymakers at the Department for Business, Energy and Industrial Strategy (BEIS) have already been in touch with the CIPP policy team to establish what this will mean for payroll. Worker status In the UK, the individual’s employment status determines which statutory employment rights apply and how much tax is to be paid. However, evident from the many tribunal cases making national headlines, plus the introduction of off-payroll working (first in the public sector with the private sector following on in 2020), it is clear that employment status is not always easy to determine and greatly concerns the CIPP and its members. The government will bring forward detailed proposals on how the employment status and tax frameworks can be aligned and will legislate to improve the clarity of the employment status tests, reflecting the reality of modern working relationships. It will also improve the guidance and online tools available to help people
understand their status. Having a separate framework for determining employment status for the purposes of employment rights and tax adds to the confusion for individuals and employers. The Review recommended that renewed effort should be made to align the employment status frameworks for the purposes of employment rights and tax to ensure that the differences between the two systems are reduced to an absolute minimum. ...detailed proposals on how the employment status and tax frameworks can be aligned... Of perhaps an even greater consideration for those engaging off-payroll workers is the Review’s observations that an individual can have nearly every aspect of their work controlled by a business (from rates of pay to disciplinary action) and still be considered to be self-employed if a right for the individual to send a substitute to work in their place exists. The Review recommended that the tests that determine whether someone is self-employed or has worker rights should place more emphasis on control and less on the notional right – rarely in practice exercised – to send a substitute, reflecting new business employment models. The government has confirmed that it will use legislation to tackle this issue. Relationships, rights and obligations Workers also need to be clear on the terms and conditions both parties are required to enter into at the start of the relationship and understand what protections apply to stop problems emerging later. The Review recommended that more needed to be done to make these relationships, rights and obligations more transparent. Measures in the Plan include the following: ● Written statement – Legislation will make access to a written statement a day-one right for both employees and
workers, and to ensure the content is as useful as possible to both the individual and the employer the information required will be expanded. In addition to the current mandatory information, the following will be required: m how long the job is expected to last m how much notice an employer and worker are required to give to terminate the agreement m details of eligibility for sick leave and pay m details of other types of paid leave e.g. maternity/paternity leave m the duration and conditions of any probationary period m all remuneration, not just pay m which specific days and times are required to be worked. ● Agency workers – With so many different organisations potentially involved when placing an agency worker, the government believes there must be greater transparency for the worker. Legislation will require all employment businesses to provide every agency worker with a key facts page. It will be the responsibility of the employment business to issue and ensure the worker’s receipt of the key facts page which must include: m the type of contract a worker is employed under m the minimum rate of pay m how they are paid m the deduction of fees to be taken if they are paid through an intermediary, and an estimate or example of what effect this has on their pay. ● Holiday pay – Another area where the Review identified that individuals would benefit from greater transparency is holiday pay entitlement. The government will launch an awareness campaign, targeted at both individuals and employers, to boost awareness and understanding to help ensure all workers are benefiting from their paid entitlement to leave. Although the CIPP are very pleased to see this announcement, it is perhaps the next item which will be of greater interest to CIPP members, as something that we have long campaigned for has finally come to pass.
The government will legislate to extend the holiday pay reference period from 12 to 52 weeks. It will introduce new guidance, including
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Issue 47 | February 2019
| Professional in Payroll, Pensions and Reward |
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