Policy News Journal - 2014-15

If the complaint is upheld by an Employment Tribunal, they may receive compensation. Employers could also be subject to civil penalties in circumstances where the worker’s rights have been breached. The draft Regulations will also extend the prohibition on exclusivity clauses beyond zero hours contracts under which the individual is not guaranteed a certain level of weekly income. There will be an exception to this if the rate of pay for each hour worked under the contract is at least £20. There will be both an hours and income based threshold. If an employer cannot guarantee a certain weekly income, they would not be able to prevent that person from seeking additional work and income if they so wish. This level of weekly income, below which an employer could not demand exclusivity, would be set by multiplying the agreed number of hours by the adult national minimum wage rate - currently £6.50. An unintended consequence of the income-based approach is that individuals earning higher hourly rates could inadvertently be captured by the exclusivity ban. For example, an individual may earn a very high hourly rate, but only wishes to commit to one or two hours of work a week. Government believes Regulations should exempt those individuals guaranteed a higher hourly rate. Current thinking suggests this should be set at £20 an hour, so exclusivity clauses will be permitted if the rate of pay for each hour worked under the contract is more than £20. Existing guidance will be reviewed with a view to improving the information available to individuals and employers on using zero hours contracts. Government will continue to encourage business representatives and unions to develop industry-led, industry-owned, sector-specific codes of practice on the fair use of zero hours contracts as the reality of the situation is likely to be different in each sector.

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Employment Tribunals

Recruiter liable to account for temporary workers’ £158 million tax bill

17 April 2014

One of the UK’s largest employment agencies, Reed, has been found liable for up to £158 million of unpaid tax due on the salaries of thousands of temporary workers it employed, known as ‘employed temps’. The Upper Tribunal has backed an earlier judgment which found that Pay As You Earn (PAYE) and National Insurance Contributions (NICs) should have been paid on the entirety of Reed’s employed temps’ salaries between 1998 and 2006. The potential total includes interest on the tax and NICs due.

Over the eight year period, Reed described part of the salary earned by its employed temps as expenses for travel to work that were paid without making deductions for PAYE and NICs.

Reed had argued that, because HMRC originally allowed these arrangements, the employer could not now be expected to pay any PAYE and NICs due on the expense reimbursements.

However, the Upper Tribunal has now endorsed an earlier First-tier Tribunal judgment which found that the expense payments were part of the employed temps’ ordinary salary payments and, as such, PAYE and NICs were due on them. It also found that, when HMRC

CIPP Policy News Journal

08/04/2015, Page 103 of 521

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