Keeping up to date with changes in employment law and considering the impact they may have on both our clients and agencies is of utmost important to de Poel.
With this in mind we have a dedicated, on-site legal department to monitor any changes in the law and ensure that service agreements are regularly reviewed in line with new legislation.
The legal team play a pivotal role in keeping abreast of government plans which may have a direct impact on working legislation. They also work closely with clients, recruitment agencies and professional bodies, offering their knowledge and expertise to reduce the risk of litigation and legal exposure.
Use the quick links below to jump direct to each section
Blacklisting for union membership or activities is prohibited
Early 2010
The blacklisting of workers from employment as a result of their union membership or activities is prevented. The Government has the power to introduce regulations to do this under s.3 of the Employment Relations Act 1999. The revised draft Regulations (PDF format, 373K) can be viewed on the Department for Business, Innovation and Skills website.
Paternity leave and pay is extended
April 2010
Fathers will be able to benefit from up to 26 weeks' additional paternity leave if the mother of the child returns to work before the end of the maternity leave period to which she is entitled. This will be available during the second six months of the child's life and may be paid if taken during the mother's statutory maternity pay period. The Government intends that the legislation is to come into force in April 2010, with effect for parents of babies due from 3 April 2011. The Work and Families Act (PDF format, 135K).
Right to request time off for training is introduced
April 2010
A right to request time off to undertake training, modelled on the right to request flexible working, is introduced. Employers will be obliged to consider seriously requests that they receive, but will be able to refuse a request where there is a good business reason for doing so. Employers will not be obliged to meet the salary or training costs to enable a request for time off to train to be met. The Government intends to introduce the right to time off to train for employees in organisations with 250 or more employees in April 2010, with the legislation being extended to cover all employees from April 2011 at the earliest. Apprenticeships, Skills, Children and Learning Act 2009 (PDF format, 1MB).
Social Security (Medical Evidence) and Statutory Sick Pay (Medical Evidence) Amendment Regulations 2010 come into force
April 2010
The Regulations replace the current "sick note" approach with a "fit note" system. They change the format of the medical statement to allow doctors to record whether a patient is fit or not fit for work but also include a new option to allow a doctor to indicate where someone "may be fit for some work now"; update the rules relating to completing statements; remove forms med 4 and 5 to simplify the process for GPs and employers; and permit GPs to issue statements printed by their practice's computer systems as opposed to handwriting on a statement pad.
Registration with the Independent Safeguarding Authority
To be confirmed
Further implementation of the Safeguarding Vulnerable Groups Act 2006 includes voluntary registration with the Independent Safeguarding Authority for all new entrants from 26 July 2010. Employers must check that they are registered from 1 November 2010. Individuals already working in a regulated activity and who have not moved into a new role with a new employer will be able to apply for registration from 1 April 2011, with mandatory registration by 31 July 2015.
Number of years' contribution required to achieve a full basic state pension reduced
6 April 2010
The number of years' contribution required to achieve a full basic state pension reduces to 30 years for both men and women.
Single Equality Act introduced
October 2010
The Equality Bill consolidates existing equality law into a single piece of legislation. The Bill also introduces a number of reforms, including provision to make regulations requiring employers with at least 250 employees to publish information relating to the differences in pay between men and women (expected to come into effect in 2013).
Maternity pay is extended to 12 months
To be confirmed
The Government intends to extend paid maternity leave to 12 months. This follows an extension to nine months from April 2007.
Single equality duty introduced
April 2011
The Equality Bill replaces the current public sector duties to promote equality with a single equality duty extending to other protected characteristics. This will oblige public authorities to have regard to the need to eliminate discrimination and other prohibited conduct.
EU blue-card Directive must be implemented
19 June 2011
The Directive defines conditions of entry and residence for more than three months of people who are not EU citizens and apply to be admitted to the EU for the purpose of high-qualified employment. Such people will be issued with an "EU blue card".
Equal treatment for agency workers
1 October 2011
The Temporary Agency Workers Directive ensures that temporary agency workers receive the same basic employment and working conditions as if they had been employed directly by the end user. The
Personal Accounts scheme starts up under Pensions Act 2008
October 2012
The Pensions Act provides that from 2012 all eligible workers, who are not already in a workplace pension scheme, are to be automatically enrolled into either their employers' pension scheme or a new savings vehicle, known as a personal account scheme. To encourage participation, employees' pension contributions will be supplemented by contributions from employers and tax relief.
School leaving age is raised to 18
2013
The Education and Skills Act 2008 changes the statutory framework to put a duty on all young people in England to participate in education or training until the age of 18. It also amends legislation about the provision of adult education and training, and support for young people.
State pension age rises to 66 years
Between 2024 and 2026
The Pensions Act 2007 raises the state pension age from 65 to 66 years to reflect the ageing nature of the population.
State pension age rises to 67 years
Between 2034 and 2036
The Pensions Act 2007 raises the state pension age from 66 to 67 years to reflect the ageing nature of the population.
State pension age rises to 68 years
Between 2044 and 2046
The Pensions Act 2007 raises the state pension age from 67 to 68 years to reflect
February
March
April
August
October
Almost everyone who legally works in the UK is entitled to receive a minimum level of pay. This is called the national minimum wage. Employees/workers can be paid more than the minimum wage but must not be paid less.
Generally if you are legally allowed to work in the UK your employer must pay you at least the appropriate minimum wage. This includes home workers, agency workers, part-time workers, casual workers, pieceworkers and foreign workers.
The amount set by law and increases up on 1st October each year
Current National Minimum Wage rates from 1st October 2009
New National Minimum Wage rates from 1st October 2010
The consultation period for the Agency Workders Directive closed on the 11th December 2009, the draft regulations are expected to be released early next year. For a complete copy of the consultion document, click here Consultation Summary.
This consultation document sets out the Government's proposed approach to implementation of the Agency Workers Directive in the light of our policy consultation earlier this year. It provides a synopsis of responses to the previous consultation, sets out the way in which the Government now intend to proceed, and seeks comments on draft regulations. It sets out the key elements of the Government's proposed approach to who should be covered by the Directive, the definition of pay, holiday entitlement, duration of working time, the 12 weeks qualifying period, how the principle of "equal treatment" should be established, liability for compliance with obligations under the Directive, and dispute resolution. This consultation is seeking views on this approach.
This second stage of consultation is specifically seeking views on:
Responses to this consultation must be received by Friday 11 December 2009. They can be submitted via e-mail to awdconsultation@bis.gsi.gov.uk or alternatively you can send a consultation response form by letter or fax to:
Anita Thomas
Agency Workers Directive Policy Team
BIS
Bay 486
1 Victoria Street
London SW1H OET
Tel: 020 7215 5963
Fax: 020 7215 0168
Temporary workers entitlements
Temporary workers currently have entitlements such as 28 days' paid holiday, statutory maternity and sick pay, as well as protection under anti-discrimination and health and safety legislation.
The Directive will provide temporary workers with further additional rights. In the UK, employment conditions of temporary workers must, during their assignment at a host, be at least the same as those that would apply if they had been recruited directly by that host to occupy the same job. However this equal treatment will only apply after the temporary worker has been in a given job for 12 weeks. There will be anti avoidance measures in the legislation to prevent repeat re-assigning after a period of less then 12 weeks.
Equal treatment will cover basic pay, holidays, notice periods, vocational training and the right to be notified about vacancies. It will not cover access to occupational pension schemes, share option schemes and employer's sick pay arrangements.
Consultation Period Stage 1
The Department for Business, Enterprise and Regulatory Reform (BERR) is seeking views on the implementation of the TAWD and has subsequently launched a consultation period, 8th May - 31st July 2009.
The objective of the consultation period, through feedback, is to identify key concerns and issues which will need to be addressed. This consultation opens up the debate so that implementation can reflect the real and legitimate interests of agency workers, temporary work agencies and hirers.
BERR are seeking views on who should be covered by the Directive, eg the definition of: pay, holiday entitlement, duration of working time, the 12 weeks qualifying period, how the principle of "equal treatment" should be established, liability for compliance with obligations under the Directive, and dispute resolution.
This is the first stage of the Consultation process, running for 12 weeks until 31 July 2009. Following this, BERR will publish the Government's response and conduct a second stage consultation on draft Regulations, also inviting views on what practical advice users would welcome in the guidance which will accompany the Regulations.
A series of country-wide events hosted by the Government took place during June and July, to give interested parties an opportunity to discuss the Agency Workers Directive and its implementation in the UK. One of the main principles underpinning the Agency Workers Directive (AWD) is to give temporary agency workers equal treatment after 12 weeks. This will mean that temporary workers will need to be paid the same and have the same access to holidays, rest breaks, overtime and public holidays.
The next stage of the AWD comes in September when the Government complete their draft paper.
The points-based system is the biggest shake-up of the immigration system for 45 years. The system will replace over 80 existing routes to work and study in the United Kingdom with five tiers. The system allows British businesses to recruit the skills they need from abroad while providing assurances to the British public that only those migrants we need will be able to come to the United Kingdom.
Who does the system apply to?
The points-based system only covers migrants from outside the European Economic Area (EEA) and Switzerland. If you want to employ or teach an EEA or Swiss national, you should be able to do this without needing our permission. There are some restrictions on nationals of countries that have recently joined the EEA. The section for European citizens provides more information on the rights of all EEA and Swiss nationals.
How the system will work?
Under the new system, migrants will need to pass a points-based assessment before they are given permission to enter or remain in the United Kingdom. The system consists of five tiers. Each tier has different points requirements.
The number of points the migrant needs and the way the points are awarded will depend on the tier they are applying under. Points will be awarded to reflect the migrant's ability, experience, age and when appropriate the level of need within the sector the migrant will be working.
The role of the sponsor
Migrants applying under any tier except tier 1 will need to be sponsored in order for their application to be successful. If a United Kingdom organisation wishes to recruit a migrant under tiers 2, 4 or tier 5: Temporary Workers they will have to apply to us for a sponsor licence.
Under tiers 2 and 5: Temporary Workers, the sponsor will need to be a United Kingdom based employer. Under tier 4, the sponsor will need to be a United Kingdom based educational institution.
Migrants wishing to come to the United Kingdom under Tier 5: Youth Mobility do not require a United Kingdom based employer.
You can find full details of the sponsorship duties and how you can apply to become a licensed sponsor on the sponsoring workers and sponsoring students pages.
What are the tiers?
The points-based system consists of five tiers. These are:
tier 1 - highly skilled workers, for example scientists and entrepreneurs;
tier 2 - skilled workers with a job offer, for example teachers and nurses;
tier 3 - low skilled workers filling specific temporary labour shortages, for example construction workers for a particular project;
tier 4 - students;
tier 5 - youth mobility and temporary workers for example musicians coming to play in a concert.
When will the system be introduced?
Tiers 1, 2 and 5 are now open.
Tier 3 is currently suspended.
If you would like a copy of our Immigration Points System guide please email marketing@depoelconsulting.com
Issuing Department
HM Revenue and Customs (HMRC)
This brief clarifies HMRC's policy on the VAT treatment of supplies of health professionals, nursing auxiliaries, care assistants and support workers by employment businesses.
Background
This brief aims to clarify the policy on the VAT treatment of supplies of health professionals, nursing auxiliaries, care assistants and support workers by employment businesses.
Definitions
The Employment Agencies Act 1973 defines an 'employment business' as a 'business (whether or not carried on with a view to profit and whether or not carried on in conjunction with any other business) of supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other persons in any capacity'. 'Employment' is construed widely to include engagement on a contract of employment or a contract for services.
'Health professional' is an individual enrolled or registered on the appropriate statutory register including any and all of the following:
Dentist or Dental Care Professional - an individual registered with the General Dental Council
Doctor - an individual registered with the General Medical Council
Nurse, midwife or community public health nurse - an individual registered with the Nursing & Midwifery Council
Individuals registered by the Health Professions Council - including:
- Arts Therapist
- Biomedical Scientist
- Chiropodist/Podiatrist
- Clinical Scientist
- Dietician
- Occupational Therapist
- Operating Department Practitioner
- Orthoptist
- Paramedic
- Physiotherapist
- Psychologist
- Prosthetist/Orthotist
- Radiographer
- Speech & Language Therapist.
'Nursing auxiliary' - an individual who is not enrolled on any register of medical or health professionals but whose duties must include the provision of medical, as well as personal, care to patients.
'Care assistant' is an individual who is not enrolled on any register of medical or health professionals but who provides both medical and personal care to the recipient.
'Support worker' is an individual providing personal care and support services that may or may not be directly connected with the welfare of the recipient.
'Medical care' - in the context of what is provided by nursing auxiliaries and care assistants, includes monitoring the health of patients, for example, by taking blood pressure and temperatures, as well as administering drugs to patients under the direct supervision of a health professional.
'Personal care' - includes washing and dressing, feeding, helping people to mobilise, bed making, toileting etc., but does not include medical care.
Employment businesses in the health and welfare sector: basic VAT position
Staff supplied by an employment business may be either employees of that business, or self-employed and engaged by an employment business. In both cases the workers' services are provided to the employment business, which in turn makes a supply of that worker to the client. If the worker comes under the direction and control of the client, this is a supply of staff. The employment business must therefore account for VAT when appropriate on the full charge to the client as in these circumstances it is acting as the 'principal'.
However, if the employment business maintains the direction and control of its staff to make a supply of welfare or medical services directly to the final consumer, we would see it as providing health or welfare services rather than merely a supply of staff. In these circumstances, subject to relevant criteria, we would see the business as making an exempt supply of welfare or health services.
Supplies of registered health professionals (other than nurses, midwives and community public health nurses)
When an employment business supplies registered health professionals as a principal to a third party, where the health professional is working under the control and guidance of the third party, it is making a taxable supply of staff to that third party - not an exempt supply of healthcare or welfare services. It is the third party which is responsible for providing healthcare to the final patient, rather than the business supplying the staff which has no such responsibility.
A taxable supply of staff is made even where the employment business is responsible for ensuring that the workers it provides are properly trained and qualified when they work under the control of the third party.
Supplies of locum GPs
Where an employment business supplies a locum GP to a practice, the employment business' only responsibility is to make a taxable supply of staff to the practice, not exempt healthcare to the final patient.
Supplies of nurses, nursing auxiliaries and care assistants by state regulated agencies
The nursing agencies' concession
By concession (HMRC regularly reviews these), nursing agencies (or employment businesses that provide nurses and midwives, as well as other health professionals) may exempt the supply of nursing staff and nursing auxiliaries supplied as a principal to a third party, if the supply is of:
a person registered in the register of qualified nurses and midwives maintained under article 5 of the Nursing and Midwifery Order 2001
an unregistered nursing auxiliary who is 'directly supervised' by one of the above, or
an unregistered nursing auxiliary, whose services are supplied to a hospital (NHS or private), hospice, care home with nursing under item 4 of Group 7, Schedule 9 VAT Act 1994 and form part of the care made to the patient.
The institution to which staff are supplied may be operated by a local authority, NHS body, charity or other organisation operating in the public or private sector.
To qualify for the concession, the employment business must be registered with one of the following organisations:
Care Quality Commission (formerly known as the Commission for Social Care Inspection)
Scottish Commission for the Regulation of Care
Care Standards Inspectorate for Wales, or
Northern Ireland Health and Personal Social Services Regulation and Improvement Authority.
For the supply of nursing auxiliaries or care assistants to benefit from the concession, they must undertake some direct form of medical care, such as administering drugs or taking blood pressures, for the final patient. The concession does not apply to supplies of general care assistants who are only involved in providing personal care such as catering, washing or dressing the patients or who are working in care homes without nursing where they do not require supervision by health professionals to provide their services.
However, where a state-regulated domiciliary care agency supplies the services of its care assistants directly to the final patient, the Government would see the agency as making an exempt supply of welfare services.
Supplies of contracted-out welfare services
As is clear from above, employment businesses in the welfare sector make a taxable supply of staff to third parties, such as local authorities, if the third party is legally responsible for the onward supply of providing care to the final recipient. This is subject to the nursing agencies' concession. The mere fact that an employment business is state-regulated does not mean that its supplies of staff are exempt if they are not covered by the nursing agencies concession.
However, when state-regulated welfare providers provide welfare services to the final consumer, these services remain exempt even if they are contracted and paid for by a local authority or other third party. For example, a local authority may contract out the provision of domiciliary care services for the elderly or disabled to a state-regulated domiciliary care agency. Although the local authority rather than the final consumer may pay the domiciliary care agency charities for the care services, for VAT purposes the care agency has still made an exempt supply of welfare services rather than staff to the local authority. This is because the care agency's staff will still be working directly to the agency itself throughout the provision of the services rather than to the local authority.
Exemption would also apply to cases where a local authority or other body subcontracts the provision of adult placement schemes. Under these schemes a â EUR ~worker' provides personal care and/or support services to adults living with them or living in their own homes. Currently scheme providers need to be registered with the Care Quality Commission.
Sometimes local authorities make payments directly to people who have been assessed as needing help from social services, and who would like to arrange and pay for their own care and support services instead of receiving them directly from the local council. These arrangements are called direct payment schemes, and any welfare services provided to the recipient by a charity or state-regulated private institution or agency are again exempt from VAT.
The wording of terms and conditions of agreements
The HMRC are aware that some employment businesses state in their contract terms that their staff are still working under their control and direction rather than the third party to which their staff are being supplied. If that is the case you are no longer acting as an 'employment business' within the definition of the Employment Act 1976. You are reminded that the VAT liability of a supply is not determined conclusively by the terms of any contract or other documentation alone. If the wording of a contract does not reflect any changes in the way that the business actually operates in practice, the VAT liability of a taxable supply of staff will not change.
Correcting errors
If businesses can demonstrate that they have taken reasonable steps to follow our previous guidance and that has resulted in their applying the wrong VAT treatment then we will take that into account when considering whether any corrective action is necessary.
The Points Based System (PBS) for economic migration to the UK is now fully operational and replaces more than 80 routes to work and study in the UK, condensing them to just 5 tiers.
With an estimated 20,000 companies in the UK employing non-EU migrant workers, it has been a race against time for employers to get up-to-speed with the new system and make all the necessary changes to comply. Failure to do so can impede employers' ability to hire non- EU migrants and put non-EU employees already on the books at risk. The UK Borders Agency, have prosecuted 1,176 companies with fines exceeding £1million. The Government has recently listed all offending companies on their website.
Top 10 things you need to know about the Points Based System.
Step 1
Original documents that demonstrate entitlement to work must be seen BEFORE the person starts employment. This is either a single document or a combination of two documents depending on the immigration status of the employee.
Step 2
Reasonable checks must be made to ensure documents are not fraudulent. For example: Is the person you interview the person in the passport/visa photograph; is the name and date of birth correct; is the document obviously fraudulent; can you see it has been tampered with?
Step 3
Copies of these documents must be kept in format that cannot be altered such as, paper or electronic. All employees with an expiry date on their visa need to be re-checked on an annual basis to ensure visas remain compliant.
If the document is a passport or an alternative travel document, copies of the following must be retained.
* Front cover
* Any pages containing holder's personal details including nationality
* Any pages containing holder's photograph
* Any pages containing holder's signature
* Any pages containing the date of expiry
* Any pages containing information indicating the holder's entitlement to enter and remain in the UK and undertake the work in question
The government also requires employers to report when a migrant is not keeping to the rules of their stay in the UK. This includes reporting small details such as a change of address. When recruiting under Tier 2, employers are required to prove there is no UK or EU national available to fill the position. This is known as the Labour Residency Test (LRT). Due to rising unemployment in the UK, this now includes a mandatory advert on Job Centre Plus. Professional listed on the Shortage Occupations List are not subject to the LRT, if you would like a copy of the list please email marketing@depoelconsulting.com
What is a Driver CPC? - In 2003 the European Union agreed that all commercial goods vehicle drivers must undertake vocational training, this training is referred to as a Certificate of Professional Competence or CPC. The aim of the Driver CPC is to improve road safety & fuel efficiency and to help a driver meet the demands arising from the developing transport market
This qualification should not be confused with the Transport Managers CPC, which is a different and higher level, regarded as a level 3 (driver CPC is regarded as level 2)
Two Types of Training - initial & periodic - Initial training is to be undertaken by new drivers passing their test, after September 2008 for PCV & September 2009 for LGV, Initial training will result in the driver having to pass a test to show they have completed the learning to a set standard.
Periodic training applies to all drivers, but must equal 35 hours over 5 years, there is no formal test. However the training must conform to an approved syllabus and cover topics such as
The directive does not stipulate the precise content of each course, only the duration they must take, and give guidance on the content. This content can be tailored for each company so that it matches their own business requirements. A training organisation or department can submit their own training materials to be assessed and included as part of the training requirement
Most drivers who undergo their LGV driving test will now be have to take the Initial CPC module, however those who already hold a licence will have until 10 September 2014 to complete 35 approved hours training
Training record - A driver will now have to carry with them when driving a driver record card to show that they have completed the required amount of training. These cards will be issued by the DVLA on completion of either the Initial training or on completion of the first 35 hours of periodic training, as with digital tachograph cards there are strict requirements regarding the loss or theft and replace of the training record card. As a driver must report it missing within 7days, and can only drive without it, once reported for 15 calendar days.
Currently drivers who hold ADR licences and have to re-sit these exams cannot use these hours to count as part of the training for the Drivers CPC. Only drivers who are studying for a Transport Managers CPC or an NVQ can count this training - which in nearly all cases will be provided by the same approved supplier.
Offences & Penalties - Legislation is already in place to make it an offence to drive without holding a Drivers CPC, or to force someone else to drive knowing that they did not hold a CPC, in all cases the fine is £1,000 currently these are deemed to be non endorseable.
Who Pays? - The legislation requires a driver to hold the correct qualification on the correct date, but does not stipulate who will have to pay for it. With most employed drivers this will in all likelihood be the employer who organises and pays for the training. However with agency labour, it will most likely be the driver who is going to have to organise it. Some of the larger agencies will undoubtedly have the resource to put processes in place, but it will be down to the end user to ensure that a driver meets the criteria, and can prove it by producing the Training record card when they arrive for duty.
If you would like more information regarding Driver CPC please email marketing@depoelconsulting.com
The Independent Safeguarding Authority (ISA) is a Non-Departmental Public Body set up by the Home Office to provide a new vetting and barring service for those working with children and vulnerable adults. From the 12th October 2009 individuals will need to register with the ISA if they are to work or volunteer with children and/or vulnerable adults in a regulated activity.
This will determine whether or not you can employ an individual on a permanent or temporary basis and may affect what activities they can undertake. Only an ISA-registered person can undertake regulated activity - it will be illegal to employ an unregistered person and can result in imprisonment or a fine of up to £5,000. An unregistered person means that a person has either not applied to register or that they are on an ISA Barred List. The cost for an individual to apply to register with the ISA will be a one-off, lifetime fee of £64.00. Organisations will be able to check an individual's ISA-registration status online or as part of an enhanced CRB check.
What will ISA do? - The ISA will assess relevant information on individual applicants and, where they believe this indicates that the individual poses a risk, bar them from working in regulated activity with children and/or vulnerable adults. However, it is important to understand that in carrying out this function the ISA will not be barring every single individual with any kind of criminal conviction or based on other information known about them. Only those who pose an obvious risk will be barred.
Will I need to have all my staff and volunteers who are working with children and vulnerable adults registered with ISA by 12 October 2009? - No. The requirements to be registered with the ISA will be phased in over 5 years. No further details are available from ISA at this stage.
Will it be illegal to employ someone who is not registered with ISA? - Yes eventually, but organisations will be given up to 5 years to ensure all current employees and volunteers are ISA-registered.
How can employer check if someone is ISA registered? - There are two ways to carry out an ISA check- both require the consent of the individual.
1) Online: This will confirm whether or not the person is registered with the ISA.
2) Enhanced CRB check [no additional charge to the CRB fee of £36.00]: This will provide more information than the online check as it will reveal a person's full criminal record, any other relevant information and the ISA registration status. If the person is barred it will also provide the reason(s) for that bar.
Does an ISA check replace a CRB check? - No, an ISA check will reveal if the person has registered and is able to work with children and/or vulnerable adults. A CRB check will reveal if the person has a criminal record or, if any, relevant non-conviction information.
How will individuals apply to register with ISA? - Individuals in England and Wales will apply to the CRB, through one of its Registered Bodies, for registration with the ISA. Individuals in Northern Ireland will apply through AccessNI.
If you would like a copy of our ISA Guide please email marketing@depoelconsulting.com
The withdrawal of the SHC will undoubtedly have a significant impact on many organisations in the voluntary sector, increasing the cost of employing temporary workers. The recruitment sector supplies social care workers to a variety of clients, from care homes to supplying local authorities with domiciliary care assistants who visit vulnerable people in their own homes.
VAT is a notoriously complex area for voluntary organisations whose activities will often fall into several VAT categories. Many charities provide services which are considered either non-business (outside the scope of VAT) or exempt from VAT. This means that the VAT they pay to their suppliers in order to provide those services (input tax) is irrecoverable. The Charity Tax Group (CTG) estimates that this irrecoverable VAT costs charities between £400 and £500 million every year. The withdrawal of the SHC will no doubt increase this bill.
Charities providing welfare services, social housing, care homes and hospices will be particularly affected as the nature of their activities means they are some of the biggest employers of temporary staff.
The UK Voluntary Sector Workforce Almanac estimated the number of temporary staff in the voluntary sector at about 52,000, approximately 9% of the total workforce. This is a higher proportion than in both the public and private sectors. Although not all of these workers will be agency staff, their use is fairly common due to the flexible and unpredictable nature and funding of the sector. This, along with the fact that many voluntary organisations will find it impossible to reclaim the extra VAT costs incurred, mean it is likely to be a substantial burden.
HMRC has estimated that there are approximately 17,500 care and nursing homes which currently have their input tax recovery restricted. The subsequent impact on service delivery will be significant in several cases. In its summary of responses document (March, 2008) HMRC reported that three charities operating care homes claimed that the withdrawal would have a negative impact on their levels of activity and one said that it would "impact severely on their ability to offer excellence to their disabled clients".
The Treasury expects that the withdrawal will cost the voluntary sector approximately £20m a year. A survey conducted by the Charity Finance Directors Group (CFDG) in 2006 found that the average cost of the withdrawal to its members would be £120,000, with one member facing an increase of £300,000 to its unrecoverable VAT bill. At best it will mean significant restructuring for affected organisations, and at worst significant cuts to service provision.
In general, the supply of temporary workers is a taxable supply and VAT should be charged on the full cost of the provision of the worker at standard rate.
The current exceptions to the general rule include:
(a) the Staff Hire Concession (the "SHC") granted to assist organisations that cannot fully recover their input VAT. Hence the SHC applies to most organisations operating in the care sector. Under the SHC agencies may be able to charge VAT on the commission element of the supply only, rather than on the full value of the supply. Importantly, the SHC is available on the supply of all categories of temporary workers; and
(b) an exemption available to agency supplies of nurses and nursing auxiliaries supplying care, where the agency acts as principal, such that a qualifying supply is completely free of VAT. However historically it has been unclear whether certain supplies of nursing staff qualified for this exemption based on the guidance available from HMRC.
From 1st April 2009 the SHC will be withdrawn by HMRC as it considers the regulatory framework to now provide equal treatment for employment businesses and agencies operating on the same commercial basis and because the concession has no basis in UK and EU VAT law. There is no direct replacement for the SHC. Hence the supplies of temporary workers who do not fall within the nursing staff exemption will, from 1st April, have VAT charged on the full cost of the supply.
The good news is that HMRC have taken the withdrawal of the SHC as an opportunity to review and clarify the confusion surrounding the exemption available for the supply of nursing staff.
HMRC have confirmed that the following conditions must be met:
1) The supply is of nursing staff
2) The agency acts in the capacity of principal
3) The agency is registered with the CSCI
If you would like a copy of our guide on the removal of VAT concessions please email marketing@depoelconsulting.com
The Government's Equality Bill has now been published and represents the culmination of over four years' work by various bodies. The Government is proposing to harmonise all strands of discrimination law as well as making it simpler and more effective. The first elements of this Act are expected to come into force in late 2010.
The Equality Bill will consolidate all of the existing discrimination legislation into a single Act and repeal all of the existing statutes. It will also bring definitions into line across all types of discrimination which will now be known as "protected characteristics". One upshot of this is that perceptive and associative discrimination will also now become formally unlawful. This means that, for example, it will be unlawful to discriminate against an individual because of his or her perceived disability or because of his or her association with a disabled person.
The emphasis on positive action within the Bill seems to have polarised opinion more than any other aspect. This concept is distinct from positive discrimination as it will simply allow employers to take account of the make-up of its existing workforce when choosing between two equally qualified candidates for a job in order to favour a candidate from an under-represented group. It will not, however, allow positive discrimination in that selecting solely on the basis of a protected characteristic, such as gender or race, will remain unlawful. Public bodies will have a number of new duties imposed upon them. These include a new equality duty, similar to that which already exists in relation to certain characteristics, but which will now apply across all protected characteristics.
The gender pay gap has also been addressed in the Equality Bill and the current proposals may require public bodies with over 150 staff to publish, amongst other things, details of their gender pay gap. This obligation will be subject to consultation this summer and may be extended to the private sector. The Government has undertaken not to implement such a requirement for private sector employers with over 250 employees before 2013. Whether or not this obligation will be extended to private companies will depend on the level of voluntary reporting and, one would hope, progress in reducing the existing pay gap.
Contractual terms containing "secrecy clauses" preventing employees from discussing their pay with their colleagues will become unenforceable under the Act. It is thought that in 2003, approximately 22% of employers had such restrictions in place.
The Act also renders employers liable for harassment of its employees by third parties by reason of any of the protected characteristics and not simply gender as currently. Liability may be avoided when the employer becomes aware of this and takes steps which are reasonably practicable to avoid it recurring.
Finally, Employment Tribunals will have an extended power to make recommendations in its judgments which could benefit the whole workforce and not simply the claimant.
Ever since the European Working Time Directive was implemented in the UK, it has taken advantage of the employee's right to opt-out of the 48-hour maximum working week.
Employers have long incorporated the opt-out into an employee's contract of employment or as a side agreement, almost without needing to think twice. Indeed it has been such an accepted practice in the UK that press reports highlighting the prospect of employers being required to limit employees weekly hours to 48 had caused real alarm.
The instigator for change has been the European Parliament. For the last five years the Parliament has been committed to phasing out the right, principally on the basis that long working hours have a detrimental impact upon employees' health and safety. The UK has, for the most part, steadfastly resisted, conscious that this would effectively amount to handing back the right negotiated by John Major in 1993.
The judgement at EU level in the SIMAP case that time spent by doctors "on-call" counted as "working time", added impetus for retaining the status quo. The current Europe-wide economic recession has also assisted the UK in garnering increasing support for its position. One of only four member states to operate the opt-out five years ago, the UK has now been joined by a further 15 member states in support (although most limit the opt-out to specific sectors e.g. healthcare).
Various compromise solutions suggested over the years - including removing the right to incorporate the opt-out on commencement of employment, implementation of a "cooling-off" period for employees to change their minds, and a longer working hours reference period - have all proved unsuccessful.
It was not entirely surprising then that on 29 April 2009 the EU institutions finally accepted that, despite a concerted effort at conciliation, they had again failed to reach agreement on the future of the opt-out.
For the European Commission - which has acted as both proposer of draft legislation and as arbiter between the EU Parliament and Council of Ministers - the outcome is a real blow. While it may not be fatal to further development in years to come, it is very unlikely now that there will be further movement on this issue in the short or medium term.
The opt-out creates rights on both sides. For the employee it means more pay in his/her pocket and the potential for career advancement by working longer hours. For the employer it means continued freedoms to manage peaks and troughs of work and with it continued competitiveness.
From 6 April 2010 new fit notes replace sick notes
What happens currently?
Medical statements are issued by doctors to employees when they are ill or injured. They are commonly used by employers as evidence for sick pay purposes. With the current statement, doctors describe an individual's condition and indicate whether or not they are fit to work.
What is the fit note?
The Statement of Fitness for Work, or 'fit note', is a new Medical Statement that doctors will issue from 6 April 2010, which is relevant to all employers in England, Northern Ireland, Scotland and Wales. It replaces the old 'sick note' and aims to provide more useful information on how your employee's condition affects what they do and how they might be able to return to work. A doctor will give a 'may be fit for work' statement if they think that your employee's health condition may allow them to work - as long as you give them the appropriate support.
What's different about the new fit note?
In the past, doctors have either said that 'you should refrain from work' or 'you need not refrain from work'. With the fit note the doctor will be able to advise their patient if they are 'not fit for work' or a new option - 'may be fit for work taking account of the following advice'.
A doctor will be able to suggest ways of helping an employee get back to work. This might mean discussing:
The doctor will also provide general details of the functional effect of the individual's condition. While you won't have to act on the doctor's advice in a 'may be fit for work' statement, it may help you make simple and practical adjustments to help your employee return to work and reduce unnecessary sickness absence.
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