EMPLOYMENT
Employment Channel News Script – Is it 'all
change' in pay?
Hello, you're watching Addleshaw Goddard's Employment Channel.
Today's programme focuses on pay, where there's lot of change in the pipeline! The government's recently
announced a new 'living wage' for workers 25 and over from April 2016,
IR35 arrangements are under
scrutiny and the way in which termination payments are taxed is set to change.
First up, tax treatment of termination payments. The government's currently consulting in this area with the
apparent aim to "give employees certainty about the amount of money they'll receive when they lose their
jobs whilst, at the same time, simplifying the current position making it easier for employers and the tax
office to administer". The consultation closes imminently on 16th October.
To tell us a bit more, I'm joined today by Michael Carter, who heads up our Employee Incentives practice.
Consultation on the taxation of termination payments
[Comment from Michael Carter, Partner and Head of Employee Incentives]
Thanks Michael!
Secondly, moving on to our next proposed change – the government's review of IR35 arrangements.
Review of IR35
Most of you probably engage at least some self-employed consultants through their personal service
companies. Recently, there's been a consultation reviewing the taxation of these companies. Here's Michael
again to tell us a little bit more.
[Comment from Michael Carter, Partner and Head of Employee Incentives]
Thanks Michael!
National Living Wage
Finally, the government's summer budget saw the announcement of a new living wage for workers 25 and
over from April 2016. You may be wondering how this is going to be implemented, how it interacts with the
existing National Minimum Wage (and Living Wage) and how it will be enforced? Well, in a nutshell, the
National Minimum Wage will remain in place and the new National Living Wage is set to operate as premium –
or top-up - for workers aged 25 and over.
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So, the National Minimum Wage increased on 1 October to £6.70 / hour and the government will set the first
national living wage premium in April 2016 at 50p – which will increase the total National Living Wage to £7.20.
The new National Living Wage will be implemented through the National Minimum Wage Regulations,
meaning that rules for ALL wage rates will be found within the National Minimum Wage Regulations.
The government's asked the Low Pay Commission to review the levels of each of the different Minimum
Wage rates, and make recommendations for the next increase in October 2016 and indicate Minimum Wage
rates for 2017, to give more certainty to business. This report is requested by early February 2016.
Separately, they've also been asked to consider the new National Living Wage – and to recommend the level of
the National Living Wage to apply from April 2017, as well as provide an indicative premium rate for April 2018.
This report is requested by October 2016.
In terms of enforcement, the Department for Business, Innovation and Skills announced a package of measures
on 1 September intended to improve compliance with both the Minimum and Living Wage come April 2016.
These include doubling the penalties for not paying either the minimum or living wage and introducing a new
penalty of disqualification from being a company director for up to 15 years for non-payment of the minimum
or living wage.
Finally, the new National Living Wage shouldn't be confused with the Living Wage set by the Living Wage
Foundation (which is a campaigning organisation promoting a voluntary minimum hourly rate of pay
calculated according to the basic cost of living). This remains entirely separate and is simply a recommended
voluntary rate of pay – currently £7.85 outside of London and £9.15 in London.
Should you need any further guidance on any of the topics covered today, please do not hesitate to get in
touch.
Otherwise, that's all for today from Addleshaw Goddard's Employment Channel!
Thank you for
watching, and see you next time.
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