In the news this month:

Kate Lawson of Element Law looks at the main issues including increases to all categories of statutory minimum wage, changes to the statutory rates of pay and caps, the current position on the Emploment Bill proposals including carer’s leave and changes to the flexible working rights, government stategy on disability reform, and points to note one year on from the introduction of the new off-payroll working rules for medium and large businesses in the private sector.

Updates to National Minimum Wage, statutory payments for time off work, and compensation limits

National Minimum Wage new levels

With effect from April 2022, the new rates are:
• Age 23 or over (NLW rate): £9.50 (up from £8.91).
• Age 21 to 22: £9.18 (up from £8.36).
• Age 18 to 20: £6.83 (up from £6.56).
• Age 16 to 17: £4.81 (up from £4.62).
• Apprentice rate: £4.81 (up from £4.30).

The 59 pence increase in the National Living Wage in particular may also add to a significant rise in the wage bill for many employers.

Family Friendly and Sick Leave Statutory Rates

New rates from April 2022 are as follows:
SMP/SPP/SAP/ShPP: £156.66 (up from £151.97)
SSP: £99.35 (up from £96.35)

Compensation Limits

Statutory Redundancy Pay (SRP):
Cap on week’s pay for calculation of SRP: £571 (up from £544)
Maximum SRP: £17,130 (up from £16,320)

Cap on compensation for “ordinary” unfair dismissal: lower of one year’s pay or £93,878 (latter up from £89,493)

From April 2022, national insurance contributions (NIC) were increased by 1.25% for a temporary period ending when the Health and Social Care Levy becomes chargeable. The NIC increase applies to classes 1 (employee and employer) and 4 (self-employed), both main and higher rates. However, the increase will not affect the flat rates for the self-employed (class 2) and voluntary contributions (class 3).

The delayed Employment Bill

At present there is little on the immediate horizon in terms of significant legislative changes in employment law, and indeed the long-awaited Employment Bill as covered in the Queen’s Speech in December 2019 has progressed little since this time. Here we discuss two aspects of the Employment Bill, namely carer’s leave and flexible working changes. Other key aspects of the proposed Employment Bill are a further 6 months of protection for employees returning from maternity leave, and a new right to neonatal leave and pay to support parents of sick and premature babies.

Last September the government confirmed it will introduce a new statutory right of up to one week’s unpaid carer’s leave. The government has said this will be implemented when parliamentary time allows, but has also said it will introduce this as the same time as any changes to the current position on flexible working, which discussions are at a relatively early stage.

The consultation on changes to the statutory rules on flexible working closed on 1 December 2021. The proposals do not extend to an automatic right for employees to work flexible, but do include a number of measures to broaden the scope of the right, while retaining the basic system involving a conversation between employer and employee about how to balance work requirements and individual needs. It is for example expected that the 26 week qualifying period for the right to request flexible working will be removed. We await information on the outcome of the consultation and on a timetable for introduction of the changes.

Disability Reform

On 21 July 2021, the Department for Work and Pensions published a Green Paper on shaping future support for health and disability, which sets out proposals aimed at helping disabled people and people with health conditions live more independently, including through work and the benefits system. One of the three priorities in the Green Paper is improving employment outcomes, including reducing the disability employment gap.

In terms of implications for employers, the Green Paper sets out plans for improving support for employers with the aim of preventing people with a health condition or disability becoming unemployed. These include:
 Promoting the Mental Health at Work website as a support tool for employers to manage the mental health of their employees.
 The development of an Access to Work passport, an updatable document setting out the needs of the passport holder, to support disabled people transitioning into work. This will be tested during the course of this year.
 Improving the Disability Confident scheme, which provides employers with knowledge and skills to recruit and retain disabled people, by making it easier for employers to sign up.

A White Paper setting out the legislative routes for achieving these outcomes is expected in mid-2022.

Employment-related tax changes

Off-payroll working rules
It has been one year since new off-payroll working rules were introduced in the private and voluntary sectors. Listen to our podcast with Kate Lawson and Sean Rustrick of Rustrick Accountants discussing this important legislation: Podcast: Off-Payroll Working April 2021.
If you are a small client organisation in the private or voluntary sectors which does not need to apply the rules, your contractors own limited company, usually a personal service company (PSC), will still need to consider and apply the rules. You may want to confirm with your contractors that you are not responsible for the rules due to not meeting the size conditions, and that they remain responsible for operating the rules.
The HMRC set out that businesses caught by the off-payroll working rules will not have to pay penalties as a result of mistakes made when applying the rules in the first 12 months from their introduction, regardless of when the inaccuracies are identified, and unless there is evidence of deliberate non-compliance. As the first 12 months has now ended, the HMRC has confirmed that penalties may now be charged on any inaccuracies relating to the operation of the rules that occur after April 2022.

End to Various Pandemic-Related tax “easements”
Cycle to Work
Due to the impact of the coronavirus pandemic, in December 2020, the UK government announced a time limited “easement” or relaxation of the rules. The easement was that employees who on or before 20 December 2020 joined an employer-provided cycling scheme or received a cycle or cyclist’s safety equipment would not have to meet the ’qualifying journeys’ condition until after 5 April 2022.
This relaxation ends from 5 April 2022 meaning all employees on an existing cycling scheme now need to meet the normal conditions, including the ’qualifying journeys’ condition.

Employee home-office expenses
Existing rules prior to the coronavirus (COVID-19) pandemic provided Income Tax and National Insurance contributions exemptions where employers provide employees with equipment to allow them to work from home. This rule remains in place.
Prior to the pandemic, where an employee purchased the equipment and was then reimbursed by their employer, the above exemption did not apply. Due to COVID-19, an easement was put in place under regulations to allow the same tax relief in situations where employers reimbursed employees buying their own office equipment to enable them to work from home during the pandemic.
This easement ended on 5 April 2022. This is because as UK government restrictions are lifted, working from home is no longer a legal requirement.

Tax on UK income for non-UK residents
In 2020 HMRC introduced guidance stating non-UK resident employees stuck in the UK because of coronavirus travel restrictions would not be taxed on earnings for duties performed in the UK after their planned departure date, provided they were taxed in their home state.
This easement ended on 5 April 2022. If you have non-UK resident employees, any days they spend working in the UK from 6 April 2022 onwards will be treated as days on which they performed duties in the UK.

Contact Kate

If you have any questions on the information contained in this newsletter, please contact Kate Lawson on 01892 516 216 or katelawson@elementlaw.co.uk