236: And finally a look forward to what’s happening in employment news for May 2020
The government has published its response to the 2018 National Minimum Wage (NMW) consultation on salaried workers and salary sacrifice schemes. The response confirms three substantive changes to the National Minimum Wage Regulations. Employers will be allowed to pay salaried hours workers in additional equal instalments, such as fortnightly or four-weekly. Employers will also have the discretion to choose a calculation year for their workers, rather than workers falling into different years depending on when they commenced employment. In addition, employers will be allowed to make premium payments to their salaried hours workers in respect of basic hours, and to specify these payments in contracts of employment. These payments will not form part of the workers’ remuneration for calculating NMW. The consultation also found some evidence that salary sacrifice and pay deduction arrangements (including childcare, pension benefits and travel schemes) are being withdrawn by employers due to concerns that they will lead to non-compliance with NMW legislation. There are no proposals to deal with this through changes in the rules, but the government will implement a range of non-legislative measures including improved guidance; a helpline for employers who operate deduction or salary sacrifice schemes; waiving financial penalties for certain breaches of rules relating to salary sacrifice and pay deductions; and resuming the NMW Naming Scheme.
Acas has published new non-statutory guidance on non-disclosure agreements (NDAs) for employers, managers and workers. This clarifies that for employment law purposes, NDAs are more commonly referred to as ‘confidentiality clauses’, to keep particular details of an agreement confidential or to keep the fact that an agreement has been made confidential. The guidance sets out when NDAs might be used appropriately in settlement agreements and contracts of employment; when they might be inappropriate, for example, because they are misleading, cover up wrongdoing or have been entered into under pressure; and how to improve workplace practices so that NDAs are never entered into as a matter of routine. Acas advises employers to challenge themselves by considering on a case by case basis whether a confidentiality clause is needed, and if it could cause moral or ethical issues. The guidance notes that alternatives to NDAs could include relying on whistleblowing or grievance procedures and creating an open workplace culture where employees can speak openly about any issues in the knowledge that these concerns will be addressed appropriately. Acas also sets out how to tackle the misuse of confidentiality clauses, for example, by raising awareness, monitoring and reporting on their use, and ensuring that they are drafted appropriately. The government has already announced that it intends to legislate on the use of NDAs. In the meantime, employers are advised to ensure that their use of NDAs complies with this best practice guidance.
HMRC has confirmed that the changes to the off-payroll working rules (IR35) which were due to come into effect on 6 April 2020, have been delayed until April 2021 because of the coronavirus pandemic, in order to help businesses deal with the current economic difficulties. HMRC has emphasised that this is not a cancellation of the changes, and that from April 2021, all medium and large-sized private sector clients will be responsible for deciding a worker’s tax status. The government had already announced that businesses will not have to pay penalties for inaccuracies in the first year, except in cases of deliberate non-compliance.
The Supreme Court has refused permission to appeal in the case of Hextall v Chief Constable of Leicestershire Police. This means that the law remains as set out in the judgment of the Court of Appeal, which ruled that failure to pay enhanced pay for shared parental leave (SPL) is not sex discrimination or a breach of equal pay rights. Mr Hextall had argued that it was discriminatory for Leicestershire Police to pay 18 weeks’ enhanced maternity pay to women on maternity leave, but only statutory pay to parents on SPL. It is worth noting that the case of Ali v Capita, which was joined with Mr Hextall’s case, was not being appealed. In Mr Ali’s case, the Court of Appeal held that it was not direct sex discrimination to fail to pay enhanced pay for SPL since the correct comparator for a man on SPL is a woman on SPL, and everyone on SPL is treated the same. This also therefore remains the law, meaning that in most cases employers can now pay enhanced maternity pay only, without the risk of a successful discrimination claim.
HMRC has updated its rules on managed service company (MSC) avoidance schemes to reflect the Supreme Court’s refusal to grant permission to appeal in Christianuyi Ltd and others v HMRC. In this case, HMRC challenged arrangements under which an MSC provider was providing services to workers using personal services companies. Although the written documentation stated that the workers were running their own companies, HMRC was successful in arguing that the personal service companies were, in reality, MSCs. This meant that amounts paid to the MSC for services that were not already subject to PAYE income tax and class 1 NICs, such as share dividends, would be treated as employment income. HMRC is now likely to use this decision to investigate and challenge similar arrangements.