Weekly round-up

This week has seen a plethora of newsworthy items. We have therefore summarised many of them below and will in the coming weeks expand on some of them with detailed articles for our Chartergate Affiliates.  If you wish to become an Chartergate Affiliate and benefit from important legal updates.

Yet more agency Transfer of Debt rules looming

As announced in the last Budget, the government is looking to bring in new rules to tackle NIC avoidance through the use of offshore companies from April 2014.  A consultation document was issued on 30 May and closes on 8 August, but there are no draft rules yet. We’ll send out full details when they are known, but the proposal is that offshore employers will need to operate RTI and collect full tax and NICs from employees, and if they don’t then after 3 months the obligations move to ‘intermediary 1’ (likely to be an employment agency) or the end client, i.e. the ultimate hirer of the worker, including a debt transfer of historic liabilities. How this will work in practice remains to be seen, as the consultation acknowledges that often the client and the worker don’t even realise that there is an offshore intermediary involved. The proposal is to place further record-keeping requirements on agencies, including new quarterly returns to HMRC and penalties for non-compliance. It seems that this will become a further part of the due diligence process when auditing umbrella companies. The measures are fully supported by the REC.

Overarching contracts guidance updated

HMRC has updated its guidance on its interpretation of overarching contracts of employment. The new guidance is a mixed bag, on the one hand ditching the minimum 336-hour requirement but on the other hand claiming that even a 336-hour contract might not be overarching, in HMRC’s view. We will be sending out a full analysis in a separate newsletter to our Chartergate Affiliates, but the one thing this updated guidance does demonstrate is that HMRC can change its view at a whim, and umbrella companies need to take bespoke advice in relation to their contracts.

Samadian appeal set to be heard by Upper-tier Tribunal

We recently reported on the travelling expenses case of Mr Samadian, and noted that an appeal would be likely. The Upper-Tier Tax Tribunal has now accepted an appeal request in the Samadian case (which indicates that there is perceived to be an arguable point of law). A hearing date is yet to be fixed but is likely to be in the first quarter of 2014. Watch this space.

Legitas reportedly in administration

You will undoubtedly have seen the many reports, including in the Daily Mirror, that Legitas Group has folded. This is a timely reminder for agencies to ensure the compliance of suppliers, and to this end we have recently launched Chartergates Verified to provide reassurance that agencies are dealing with bona fide and fully compliant companies.

Employment Tribunal reforms

Last week we updated our Chartergate Affiliates with some dates for Employment Tribunal reforms, notably the introduction of fees. We have some more dates for you this week. On 25 June 2013 the following reforms will commence:

• The two-year qualifying period for unfair dismissal will not apply where the dismissal is due to the individual’s political opinions or memberships. This will effectively be added to the list of existing protected reasons.
• The power to reduce/amend the cap on unfair dismissal awards will come into force. It appears that the cap will be (not yet fully confirmed) one year’s earnings or the current cap if a year’s earnings is greater.
• Hearings at the Employment Appeal Tribunal will be automatically heard by a Judge sitting alone unless directed otherwise.

Employment Tribunal procedural reforms

Underhill LJ has concluded his review of the procedures of the Employment Tribunals and new procedural rules have been published. The new rules are expected to come in to force on 29 July 2013 and include:

• The process for Employment Tribunal fees has been given some detail. An Employment Tribunal claim will be rejected if it is not accompanied by the relevant fee or a remission form. Where a hearing fee is not paid then the Claimant will be given a deadline within which to pay. The Tribunal will have discretion to reinstate a claim where the fee is paid after the deadline. It appears that Claimants will be given a significant amount of latitude. We can only hope that the Tribunal takes a robust approach to enforcing deadlines.
• It appears that the Employment Tribunal will implement a ‘sift’ much like the Employment Appeal Tribunal. The ‘sift’ will be used to assess whether the claim or the response have merit and therefore should proceed. Hopefully, this will ensure that Claimants do not continue to get away with sparse claim forms that contain very little information. We will have to wait and see. How the Tribunal implements this procedure when they are already under extreme pressure will likely determine how effective and robust the ‘sift’ is.
• A change to the default judgment procedure. Default judgments are commonly issued when a Respondent fails to file the ET3 within the 28 day deadline. Where this occurs the Respondent has to apply for a review of the default judgment and this will usually involve a hearing. The new rules will allow for the Respondent to apply for an extension of time to complete the ET3 after the 28 day deadline has passed. The scope for this does not currently exist and may result in less timely and costly review hearings.

National Minimum Wage

HMRC have published their report on the NMW investigations that they have conducted during 2012-2013. The highlights are below:

• 1,693 complaints investigated.
• 708 employers received automatic penalty charges.
• Over 26,000 workers shared £4 million in back pay and topping up wages.
• Fifty employers were fined the maximum £5000.
• A ‘major’ fashion chain and a ‘multi-outlet’ retailer were among the employers required to rectify payments.

For the full news item visit this link.