Thursday, 28 October 2010

It's all about discrimination: New Equality Act has come into force on October 1, 2010

From 1 October 2010, the Equality Act 2010 has come into force. The Act unifies all different forms of discrimination (age, disability, race, sex, gender reassignment, religion or belief, sexual orientation, marriage and civil partnership, pregnancy and maternity)  under the same umbrella. It also makes the law stronger (!) in some areas. Main changes are:
  • Third party harassment (different target): Employers can be sued if anyone (e.g. an employee) takes offence at something (e.g. a joke) said by another party (e.g. a customer), even though the  offensive material was not directed at the person who makes the complaint. For example, an employee can make a claim for harassment if another employee is harassed by a manager because of a disability. The unaffected employee has the right to claim on the grounds that the harassment of the disabled member of staff has lead to an offensive work environment.

    Comment: Aim is to force employers to establish zero tolerance towards potentially offensive behaviour. Valid question: How can possibly employers police the measure and hence steer clear possible employment tribunal claims?

  • Harassment by or against third parties: Employees can sue their employer if they were offended by people who are not employees (such as customers or contractors), if the employer does not take steps to address this when they become aware of it. Customers could also have a claim against the employer if they were offended by a member of staff.

    Comment: Aim is to reduce discrimination at workplace by everyone. Employers could rightly ask: What control do they have over third parties like customers or contractors?
  • Discrimination by association: An employee will be able to sue their employer if they believe they have been discriminated against because of their association with someone else (for example, an employee is refused flexible working arrangements, even though it has been offered to others, because that employee has caring responsibilities for a child or spouse with a disability and the employer believes they may not be dedicated enough to their work).

  • Comment: Aim is to reduce discrimination at workplace. Are employers supposed to ask their staff intrusive questions to ensure they steer clear of offence or discrimination?

  • Discrimination by perception: Employees will be able to sue if they are treated unfairly because the employer or other employees think - rightly or wrongly - that they have a protected characteristic (for example, an employee is discriminated against because the employer thinks he is gay).
  • Indirect discrimination: If the employer has a condition, rule, policy or even practice that applies to everyone, but disadvantages a certain employee. Can get away with, if the employer shows that has acted fairly and reasonably towards achieving a legitimate business aim, other than solely reducing costs.
  • Pre-employment health secrecy: Employers will not be able to ask job applicants questions about their state of health except to help them decide  whether the applicants could carry out functions essential to the job (for example, where a role involves heavy duty packing).

    Comment: Aim of the measure is, supposedly, to protect people from health and disability discrimination. However, employers will be unable to spot any employees who are not fit for the job, or would be unreliable, due to ill health.

  • Equal pay direct discrimination: A claim of unequal pay can be made not only by comparison with a real person of the opposite sex in the same employment, but even if no real person can be found, by proving what their remuneration would be if they were of a different sex. See example in next point.

  • Pay secrecy: Employees will be free to discuss their pay or bonuses and employers cannot enforce secrecy clauses in employment contracts where they are related to protected characteristics such as race or sex. For example, a male employee working in female environment and doing same job as his female colleagues has a right to make a claim to equal pay as the opposite sex and his employer cannot prevent him from talking to his colleagues about pay differences.

    Comment: Aim of the measure is, supposedly, to end pay discrimination. Employers fear this could lead to rash of claims for pay rises or even to claims if they believe they have been discriminated against.
  • Victimisation: When an employee is treated badly because they have made or supported a complaint or raised a grievance under the Equality Act (unless maliciously made or supported an untrue complaint), they have protection.

  • Employment Tribunals: Powers extend not only in fining employers, but also in (effectively) forcing employers to change work practices if found guilty of discrimination, not only in relation to the claimant but to the other employees too.

    Comment: Employers fear this would amount to Tribunals interfering with the way businesses are run.

  • Disability: the definition of disability changes, making it easier for a disabled person to prove disability. A disabled person only needs to show that their physical or mental impairment has a substantial and long-term effect on their ability to carry out normal day to day activities, such as using the phone, reading a book or using public transport.

Wednesday, 6 October 2010

Taxman introduces penalties on all employers for paying PAYE late

What's new:
From May 2010, employers are subject to penalties for not paying their PAYE bill on time, either monthly, quarterly or annually. The late payment penalties apply to all employers, regardless of size. 'Late' in this context means the payment reaches the Tax Office after the 19th of each month, (or 22nd when paying electronically).

Until now the Taxman did not impose penalties or interest on small employers if all the payroll deductions for the year reached him by 19th April (or 22nd) after the end of the tax year. Large employers (those with more than 250 employees) have been subject to surcharges for late payment for some years, as they have been obliged to pay over all deductions electronically.Those surcharges for large employers have been scrapped and all employers are now subject to the same penalties. However, small employers do not have to pay over their deductions electronically.

For penalties relating to late payments due in the current tax year 2010/11, HMRC will send late payment penalty charges after the end of the tax year (5/4/11). HMRC can issue a penalty letter up to two years after the late payment occurred. It is your responsibility to make sure that you pay PAYE on time. HMRC does not issue reminder letters.

How penalties operate: 
The penalty will be based on the total amount of deductions paid late for the tax year and will be calculated based on the number of times payments are late in a tax year as follows ...

- Late once – no penalty (as long as the payment is less than 6 months late)
- Late 2 to 4 times – 1% penalty
- Late 5 to 7 times – 2% penalty
- Late 8 to 10 times – 3% penalty
- Late 11 or more times – 4% penalty

If the employer has still not paid an amount in full after six months, a penalty of 5% may be due. A further penalty of 5% may be charged if payment is still outstanding after 12 months. Please note that these penalties are in addition to the penalties fro monthly and quarterly payments described above and they apply even where only one payment in the tax year is late!

(Comment: The taxman is closing down on all employers, going for their monies on time! However, it remains to be seen how the system will be implemented in practice, as the taxman doesn't know until after the end of the tax year - when P35 is filed - if there was any underpayment. Even if P35 shows an underpayment, surely, it is not possible to inspect PAYE records of all employers that underpaid to establish for how long the underpayment has been outstanding, so that the amount of the penalty is determined! In addition, even where P35 does not show an underpayment, it is possible that some amounts were paid late during the year and that cannot be discovered unless a PAYE inspection of the records. Bottom line is, this puts an additional responsibility on the employer's shoulders to reconcile the PAYE account every month, e.g. to ensure that late adjustments have been accounted for and so on).

Saturday, 2 October 2010

Minimum National Wage increase from October 1st, 2010

Minimum national wage (hourly rates) rises from 1 October 2010 as follows:

  • Workers aged 21 and over: From £5.80 to £5.93.
  • Workers aged 18-21: From £4.83 to £4.92.
  • Workers aged 16-17: From £3.57 to £3.64.
  • Apprentices under 19 and apprentices aged 19 and over (in first year of apprenticeship) £2.50 .

(Notes: Minimum wage limits for apprentices have been set for the first time! Also, from 1 October the minimum age for the top rate to apply has been reduced from 22 to 21 ).