On 23 September 2022, the government announced that the IR35 rules on “off payroll” working will be scrapped.
What is IR35 and Off Payroll Working?
The terms “off-payroll working” and “IR35” are commonly used interchangeably because they both relate to legislation that governs the tax treatment of the provision of a worker’s services through an intermediary, such as contractors engaged by businesses via a personal service company, but both form part of the much wider Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) legislation.
When ITEPA 2003 was first introduced responsibility for determining the correct tax status of the engagement sat with the contractor but following amendments to the IR35 rules in 2017 and 2021, responsibility for determining the correct tax status of the engagement shifted to the business engaging the contractor. These changes were introduced to crack down on a particular form of perceived tax avoidance whereby individuals would seek to avoid paying employee income tax and national insurance contributions by supplying their services through an intermediary and paying themselves in dividends.
What Are the Changes to IR35 Rules from April 2023?
In its mini-budget announcement on 23 September 2022, the UK Government confirmed that the rules in Chapter 10 of Part 2 of ITEPA 2003 will be repealed with effect from 6 April 2023 meaning contractors will become responsible for determining the correct tax status of the engagement.
Put simply, this means that businesses will no longer have to assess whether their contractors working through a personal services company (PSC) are within the IR35 rules, and the liability for tax and NI will remain with the PSC. However, the Chancellor said that compliance will be kept under review so it could be that PSCs fall under greater scrutiny.
Although many businesses will welcome these changes, those involved in engaging contractors will need to continue to carefully consider both the existing and future IR35 rules to reduce risk and avoid liability. Key considerations for businesses include:
The IR35 rules don’t change until April 2023. Businesses engaging contractors in the meantime should continue to adhere with the current IR35 rules and maintain the necessary records of their checks and tax status determinations.
From April 2023, the rules on employment status don’t change and business remain liable for incorrectly determining employment status.
The risk of penalties for businesses that continue to pay individuals off payroll when they know they should be treated as employees or workers remain in place.
Do You Need Assistance?
The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in advising UK Employers on employment status. If you have any queries about your options you can call us on 0800 612 4772, Contact Us via our website or Book a Free Consultation online.
If passed, the Retained EU Law (Revocation and Reform) Bill is set to significantly transform worker regulations in the UK.
The New Brexit Freedoms Bill Unveiled
On 22 September 2022 the UK Government’s much anticipated Retained EU Law (Revocation and Reform) Bill received its first reading in the House of Commons,
The intended purpose of the Bill is to repeal, amend or replace thousands of EU laws and regulations that were initially retained when the UK left the EU in January last year and will provide the UK Government with the means to update previously retained EU legislation via Parliament.
Included in the Bill is a “sunset” provision that could potentially see all EU-derived subordinate legislation and retained direct EU legislation implementing EU law (regulations) scrapped entirely on 31 December 2023 unless otherwise preserved.
Special features of EU law will be removed from retained EU law that remains in force after that date (assimilated law), ending the principle of the supremacy of EU law, general principles of EU law and directly effective EU rights on 31 December 2023. EU interpretive features will no longer apply to assimilated law. (The sunset date can be extended until 2026 for specified pieces of legislation.)
What Employment Laws Could be Affected?
Employment laws currently contained within Acts are not captured by the sunset provisions, but a wide range of employment related regulations derived from EU law could be affected, including:
The Working Time Regulations
The Agency Workers Regulations
The Part-time Workers Regulations
The Fixed term Employees Regulations
TUPE (but only insofar as it implements EU law)
The Information & Consultation of Employees Regulations
Various Health & Safety regulations
The Maternity & Parental Leave Regulations
More Uncertainty for UK Businesses
The first reading of the Retained EU Law (Revocation and Reform) Bill in the House of Commons on 22 September 2022 was only the first stage of a multi-stage process and there will undoubtedly be intense scrutiny and debate in Parliament before the Bill is passed into law but in the meantime, we face a lengthy period of uncertainty as the Government picks its way through an extensive and complex range of EU laws to determine which laws it will retain, replace and revoke.
We will continue to closely monitor the situation and track this comprehensive and transformative legislation to ensure we keep ahead of the regulatory changes that are undoubtedly coming.
The new Real Living Wage increase announced today will give a full-time worker £2,730 a year more than a worker earning the current government National Living Wage.
New Real Living Wage Rates
In response to the cost-of-living crisis, the Living Wage Foundation has brought forward the rise to the Real Living Wage, which was planned for November, and has today announced a 10.1% increase bringing the Real Living Wage up to £10.90 per hour across the UK and £11.95 in London. This is the largest year-on-year increase announced by the Living Wage Foundation since the scheme was launched in 2011.
Katherine Chapman, director of the Living Wage Foundation, said “Today’s new rates will provide hundreds of thousands of workers and their families with greater security and stability during these incredibly difficult times.”
The number of Living Wage employers in the UK, which doubled over the past two years, now sits at 11,000 and approximately 390,000 workers of accredited Living Wage employers are set to benefit from a significant pay increase just as inflation rates and the cost of living in the UK reaches a record high.
The Real Living Wage vs The National Living Wage – What’s the Difference?
The Real Living Wage is a voluntary rate paid by employers who choose to go above and beyond the government minimum to ensure their staff are always paid a wage that covers the cost of living, and it is based on calculations of the cost of living carried out by the Living Wage Foundation and applies to all workers over 18.
In contrast, the National Living Wage and the National Minimum Wage is the legal minimum set by the government for workers aged 16-22 and those over 23. These rates change on 1 April every year.
23 and over
21 to 22
18 to 20
Under 18
Apprentice
NLW / NMW Current Rates
1 Apr 2022 – 31 Mar 2023
£9.50
£9.18
£6.83
£4.81
£4.81
Apprentices are entitled to the apprentice rate if they’re either aged under 19 or aged 19 or over and in the first year of their apprenticeship.
What Can Employers Do?
In the three months to the end of April 2022 the median basic pay increase in the UK was 4%, the highest recorded level since September 1992, so its clear that many employers have already tried to close the growing gap between pay and inflation but many employers are still struggling to overcome the many challenges created by the Covid-19 pandemic and rising operating costs that are being driven by soaring inflation rates.
The challenge for many employers, therefore, will be how they can continue to keep employees engaged and performing in the absence of being able to offer workers substantial pay rises. Some alternatives to pay increases that employers may wish to consider include:
Extra (paid) time off
Extended lunch breaks
Early finishing times on Fridays
Flexible working hours
Wellness / Mental Health programmes
Skills training
One-off bonus payment
Do You Need Assistance?
The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in advising UK Employers on pay and benefits. If you have any queries about your options you can call us on 0800 612 4772, Contact Us via our website or Book a Free Consultation online.
Acas has published new guidance to advise employers on how to consider and handle staff suspensions at work, specifically during investigations.
Should Employers Suspend Staff?
Paid suspension is not generally a breach of contract and is often an appropriate course of action where there have been allegations of serious misconduct, but how employers consider and handle staff suspensions at work, specifically during investigations, can give rise to further complications and problems.
New ACAS Guidance on Staff Suspensions
The recently published ACAS guidance advises employers on how to consider and handle staff suspensions at work, specifically during investigations. The guidance covers deciding whether to suspend someone, the process for suspending someone, supporting an employee’s mental health during suspension and pay and holiday during suspension.
Employers and employees must follow the Acas Code of Practice on Disciplinary and Grievance Procedures (Acas Code). Failure to do so may affect both the fairness of a dismissal and the amount of any compensation that the employee is awarded by the tribunal.
When suspending an employee, employers should also consider the non-statutory Acas guide and the Acas guidance on suspension. The Acas suspension guidance considers a number of key issues, including deciding whether to suspend someone, the process for suspending someone, supporting an employee’s mental health during suspension and pay and holiday during suspension.
Acas recommends that because of the risk of breaching the employment contract and the stress that can be caused, a suspension should only be used when it is a reasonable way of dealing with the situation (such as while an investigation is carried out and there is a need to protect evidence, witnesses, the business, other staff or the person being investigated) and there are no appropriate alternatives. Employers should consider each situation carefully before deciding whether to suspend someone.
Suggested alternatives to suspension include:
Changing shifts, site or working from home.
Working with different customers or away from customers.
Stopping working with certain systems, tools or on specific tasks.
A suspension may also be appropriate in order to protect an employee’s health and safety (such as in medical or pregnancy circumstances).
Employers should support a suspended worker by explaining the reason for the suspension, making it clear that it does not mean that it has been decided they have done anything wrong, maintaining pay and benefits, keeping the suspension as short as possible, keeping it confidential wherever possible, and staying in regular contact throughout.
The worker should be informed of their suspension in person if possible. It is good practice to allow them to be accompanied at any suspension meeting and for the suspension to be confirmed in writing.
Do You Need Assistance?
The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in advising UK Employers on staff suspensions. If you have any queries about your options you can call us on 0800 612 4772, Contact Us via our website or Book a Free Consultation online.
On the day of Her Majesty Queen Elizabeth II’s funeral, Monday 19 September, the offices of Employment Law Services (ELS) will be closed as a mark of respect, and to allow colleagues to pay tribute to Her late Majesty and commemorate Her reign.
Changes to UK Right to Work checks affect how employers verify ID documents, both digitally and manually. We look at what is changing and what employers need to do to comply.
UK Right to Work Checks – What Employers Need to Know
From 1 October 2022, there will only be three main methods of checking an individual’s right to work in the UK – online, manual and using an Identity Service Provider (IDSP).
The temporary changes to right work check requirements introduced on 30 March 2022 due to the COVID-19 pandemic, which allow checks to be carried out over video call and for scans or photographs of documents to be checked rather than original documents, will also end on 30 September 2022.
To prepare for these changes, employers should:
Consider the percentage of employees who hold various immigration documents and the rate of staff turnover. This will help to decide whether it is worth the employer using an IDSP.
Determine how it will conduct manual checks on relevant employees following the end of the temporary COVID-19 related concessions.
Create step-by-step guides for those conducting right to work checks and ensure whoever is conducting the checks understands when to use each method and what that involves.
The checks that employers must undertake to comply with the law and secure the statutory excuse are to:
Obtain the employee’s original documents as prescribed in the Home Office guidance or check the applicant’s right to work online using the share code provided by the employee. Where a manual document check is being undertaken employers should be satisfied that the documents relate to the individual and are original and unaltered. Where an online check is being undertaken the employer should use the share code and the employee’s date of birth to access the employer section of the online right to work check.
Check (in the presence of the prospective employee) that the employee has the right to work by performing a manual document check or an online right to work check.
Copy the documents which have been manually checked and record the date of the check and date for follow-up checks and retain copies of the documents securely (this can be a hardcopy or a scanned copy in a format which cannot be manually altered, such as a JPEG or a PDF file). For online checks, the “profile” page, which includes the individual’s photograph and date on which the check was conducted, must be retained (this can be printed and saved as a hardcopy or saved as a PDF or HTML file).
Right to Work Check Method Employers Must Use From 1 October 2022
From 1 October 2022 the method an employer uses will depend on the immigration status of the individual and the documents they hold.
Right to Work Online Checks
The online checking method should be used for all those whose immigration status are either of the following:
Those with e-visas (for example, EU Settled Status, EU Pre-settled Status or those who applied for UK immigration permission using the UK Immigration: ID Check app)
Right to Work Manual / IDSP Checks
Manual checks or using an Identity Service Provider (IDSP) is the checking method that should be used for those not eligible for online checks (for example, valid British and Irish passport holders)
Initial right to work checks must be carried out in respect of all prospective employees before the employment begins.
Prevention of Illegal Working and Establishing the Right to Work in the UK
It is unlawful to employ someone who does not have the right to reside and the appropriate right to work in the UK or who is working in breach of their conditions of stay.
To comply with their obligation to prevent illegal working, an employer must:
Carry out “right to work” checks on all prospective employees before the employment starts.
Conduct follow-up checks on employees who have a time-limited permission to live and work in the UK.
Keep records of all the checks carried out.
Not employ anyone it knows or has reasonable cause to believe is an illegal worker.
Where the employer is also a sponsor under the points-based system, it must also comply with the sponsor management system requirements
Civil and Criminal Sanctions for Employers
Employers found to be in breach of their legal obligations can face a civil penalty of up to £20,000 for each individual they employ who does not have the right to work in the UK. If a civil penalty is issued to an employer that holds a sponsorship licence, this can be taken into account in determining whether to downgrade the sponsor from A-rated to B-rated or revoke its licence.
If an employer can establish a statutory excuse by establishing that it undertook the specified right to work checks and retained records to prove the checks were conducted correctly, it can avoid liability for the civil penalty.
If employers knew or had “reasonable cause to believe” that an employee did not have the appropriate immigration status to work in the UK, a criminal offence will have been committed and employers may face criminal prosecution.
Other Considerations for Employers
Employers should be aware that different illegal working regimes apply where the employment started before 16 May 2014:
For those employed between 27 January 1997 and 28 February 2008 the employer’s position is governed by the Asylum and Immigration Act 1996
For those employed from 29 February 2008 to 15 May 2014, the position is governed by the Immigration, Asylum and Nationality Act 2006 (IANA 2006) and the Preventing illegal working: code of practice, 2008.
For those employed from 16 May 2014 onwards, employer obligations are governed by the IANA 2006, the Immigration Act 2014, the Immigration Act 2016 and the current codes of practice and guidance published by UKVI.
Do You Need Assistance?
The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in advising UK Employers on their legal obligations to prevent illegal working in the UK. If you have any queries about your legal duties to prevent illegal working in the UK and/or avoiding Home Office fines, you can call us on 0800 612 4772, Contact Us via our website or Book a Free Consultation online.
Employers have just under a week to decide how they intend to manage the additional bank holiday across their organisations, but what are their options?
Extra Bank Holiday for the Queen’s State Funeral
On Saturday 10 September 2022, King Charles III approved a Royal Proclamation declaring the day of the State Funeral of Queen Elizabeth II will be a bank holiday, the date of which has since been confirmed as Monday 19 September 2022.
The intended purpose of the bank holiday is to allow individuals, businesses and other organisations to pay their respects to Her late Majesty and commemorate Her reign, while marking the final day of the period of national mourning but with this being the second additional bank holiday this year, the first being the additional Jubilee bank holiday, employers have just under a week to decide how they intend to manage the additional bank holiday across their organisations.
What is a Bank / Public Holiday?
Bank holidays in England and Wales, Northern Ireland and Scotland are governed by the Banking and Financial Dealings Act 1971, which sets out certain fixed bank holidays, and allows the King (or in Northern Ireland, the Secretary of State) to vary those dates or proclaim additional bank holidays. For example, New Year’s Day (or the next working day) is not listed as a bank holiday in England and Wales under the 1971 Act (although it is in Scotland), but it has been a bank holiday every year by Royal Proclamation since 1974. Ad hoc bank holidays are also sometimes proclaimed for events such as royal weddings and jubilees. Where Christmas Day falls on a Saturday, an additional bank holiday is usually proclaimed on the following Tuesday. Royal Proclamations are published in the Gazette.
Good Friday and Christmas Day are not listed under the 1971 Act as bank holidays in England and Wales or Northern Ireland because they were already common law public holidays. However, they are listed as bank holidays in Scotland under the 1971 Act.
The term “public holidays” in England and Wales covers both bank holidays and the traditional common law holidays of Good Friday and Christmas Day. In Northern Ireland and Scotland, public holidays also include some additional locally declared holidays.
What Does the Law Say?
There is no specific statutory right to time off (paid or otherwise) on a bank and public holiday, provided employees receive at least 5.6 weeks paid holiday during a leave year.
Whether a worker is entitled to time off (paid or otherwise) on a bank and public holiday is a matter for the contract, or in some cases, simply the employer’s managerial prerogative. In many industries or occupations (such as retail, travel or emergency services), working on public holidays is a commercial or operational necessity.
The first thing employers should do is check the holiday clause in an employee’s contract of employment and any existing holiday policy to determine whether bank and public holidays are expressly stated.
If the holiday clause in the contract says that employees are entitled to 20 days or 4 weeks holiday per year plusbank and public holidays, or contains similar wording, employees will have the right to an additional day’s paid leave unless an existing holiday policy expressly states which bank and public holidays are recognised by the employer. If the contract allows employers to require employees to work on bank and public holidays, they can require the employee to work but the extra day will need to be added to the employee’s annual holiday entitlement.
If the holiday clause says that employees are entitled to 20 days or 4 weeks holiday per year plus the usual bank and public holidays, employees will not automatically have the right to an additional day’s paid leave and would need to use their existing holiday entitlement if they want to take the day off, subject to the usual rules for requesting holidays. Employers should check any existing holiday policy to determine whether ‘the usual bank and public holidays’ are expressly stated, or in the absence of a holiday policy, look at what they did for the additional Jubilee bank holiday earlier this year.
If the holiday clause says that employees are entitled to 28 days or 5.6 weeks’ holiday per year inclusive of bank and public holidays, employees will not have the right to an additional day’s paid leave and granting the additional bank holiday will be at the employer’s discretion. If the employer opts not to grant the additional bank holiday, those employees wanting to take the day off will need to use their existing holiday entitlement, subject to the usual rules for requesting holidays.
Considerations for Employers
After checking existing policies and contracts, determine what your legal obligations are and communicate your position to all employees clearly and promptly, so they know whether they will be required to work or will have the day off and, if they will be off, whether this will be paid in addition to, or as part of, their existing holiday entitlement.
If you have determined that you can require employees to work on the bank holiday, remember that all schools will be closed and that this may create childcare challenges for employees who are required to work but who are unable to make childcare arrangements.
The right to time off for dependants applies to all employees, regardless of gender, age or length of service, whether they work full time or part time or whether on a permanent, temporary or fixed-term basis. An employee who is refused permission to take time off in accordance with the right or who is subjected to a detriment for taking it (or seeking to take it) may complain to an employment tribunal. If an employee is dismissed because they took or sought to take time off in accordance with the right, they will be able to claim automatic unfair dismissal whether they have the necessary qualifying service for an ordinary unfair dismissal claim.
Remember, a failure to provide paid holiday pursuant to the Terms of a contract of employment would likely amount to a breach of contract and could give rise to a claim at the employment tribunal.
Do You Need Assistance?
The specialist employment law team at Employment Law Services (ELS) LTD have extensive experience in advising UK Employers on their legal obligations in respect holiday entitlement and pay to ensure compliance. If you have any queries about your legal obligations you can call us on 0800 612 4772, Contact Us via our website or Book a Free Consultation online.
Her Majesty The Queen was a national treasure who represented the very best of our United Kingdom throughout her entire life and we join the Country in mourning her loss.
For 70 years the Queen epitomised selfless devotion to the United Kingdom, the Commonwealth and the World, the likes of which we will never see again, and her loss will be felt dearly across Scotland, the United Kingdom and around the World. May God give to you and all whom you love his comfort and his peace, his light and his joy, in this world and the next; and the blessing of God almighty, the father, the Son, and the Holy Spirit, be upon you, and remain with you this day and for ever. Our thoughts and prayers are with The Royal Family at this sad time.
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