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      LATEST NEWS |  June 2010 Budget: Employment Announcements



The Coalition Government’s ‘emergency’ budget on 10 June 2010 announced plans to introduce certain employment-related measures.


Some Key Changes:


·         Following intense lobbying from employer organisations and the pensions industry, the Government has confirmed that the previous Government’s plans for restricting pension tax relief for high earners will not go ahead.


In broad terms from 6 April 2011 an individual with an income in excess of £180,000 a year would be entitled to claim relief only at the basic rate (currently at 20%), with excess relief clawed back through a high income excess relief charge (HIERC).


A statutory "floor" would mean that individuals with incomes of less than £130,000 a year would not be affected by the HIERC at all. Although no new plans have been announced, the Government has confirmed that it is looking for an alternative method of restricting tax relief which will raise similar revenues.


·         Changes to the Enterprise Management Scheme will go ahead in order to comply with EU state aid rules. Historically, to grant EMI options a company would need to operate ‘wholly or mainly’ in the UK. The legislation will be amended so that

companies which are ‘permanently established’ in the UK can offer tax advantaged share options to qualifying employees. To qualify, the company must have a fixed place of business in the UK through which the business of the company is wholly or partly carried on, or an agent acting on behalf of the company must have and habitually exercise authority to do business on behalf of the company in the UK.


·         The Government also intends to introduce a scheme to promote the creation of new businesses in parts of the UK that are most reliant on public sector employment from September 2010. During a three-year period, new businesses in certain areas will be exempt from the first £5000 of Class I employer National Insurance Contributions for the first ten employees hired, for twelve months. HMRC has confirmed that new businesses established between 22 June 2010 and September 2010 will have to pay National Insurance Contributions for that period but will then receive a twelve month ‘holiday’ when the scheme takes effect.


·         From the 6 April 2011 the income tax personal allowance for those aged under 65 will increase by £1000 to £7,475. National Insurance contributions will also see an increase in the primary (employee) threshold to £570, as well as an increase of 1% of both employee and employer contributions.






      LATEST NEWS |  The Coalition Government’s New Employment Approach


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The Coalition Government’s recently published programme set out some clarity on the Government’s new approach to policies on a few key employment issues but there still remain some differences with the Conservatives and Liberal Democrats manifestos that are yet to be agreed on.


The Government’s plans in respect to employment law in the Coalition Government document include:


·         Plans to review employment and workplace laws to ensure they “maximise flexibility” for both employees and employers whilst protecting fairness and a competitive environment for businesses.


·         Promoting equal pay and taking measures to end discrimination in the workplace including promoting gender equality amongst the boards of listed companies.


·         Extending the rights to request flexible working to all employees. This right is currently only available to parents and carers of dependents. 


·         Encouraging shared parenting from the earliest stages of pregnancy which will include a system of flexible parental leave.


What this means in practice is unclear, but before the election the Liberal Democrats said they would allow mothers and fathers to share maternity leave which they would seek to increase to 18 months. The Conservatives simply said they would introduce a new flexible system but that only mothers could take the first 14 weeks as leave after birth.


The Liberal Democrats have also stated that they would give fathers the right to time off for ante-natal appointments.  Although the Coalition document does not say it will adopt this policy it may be what was meant by shared parenting from the earliest stages of pregnancy.


·         Phasing out the default retirement age - no timing for this was given.


·         Tackling unacceptable bonuses in the financial sector. 


There still remains many unanswered questions regarding the Government's proposals for other employment issues and what is still uncertain is their approach to the Equality Act 2010 which was originally intended to come into force in October this year.


The Conservatives have previously suggested they would amend the Equality Act and would not bring into force provisions designed to tackle equal pay and the new rules on positive actions. Meanwhile the Liberal Democrats welcomed the Equality Act.


The Coalition Government only commits to take measures to end discrimination in the workplace. However one of the biggest concerns for employers are the controversial provisions of the Equality Act 2010 concerning the duty to carry out equal pay audits. Both parties had disagreed considerably on this point. Conservatives did not support compulsory pay audits, while the Liberal Democrats said they would like to see them imposed on all employers with over 100 employees. Despite the Conservatives strong views against pay audits it seems unlikely that the Government will amend the Equality Act. Therefore the Equality Act as it currently stands will make it possible for the Government to require all employers with more than 250 staff to report their gender pay gap from 2013.


In the next few months weeks shall see how these areas of differences between the parties’ previous policies are ironed out and how the Coalition agreement manifests itself. Until then employers should familiarise themselves with the Equality Act 2010 which will begin to come into force October 2010.





      WHAT YOU SHOULD KNOW |   Conflicting Evidence in Unfair Dismissal Procedures



The recent case of Salford Royal NHS Foundation Trust v Roldan [2010] has provided a steer in the practical manner in which Employers deal with disciplinary and dismissal proceedings.


Facts of the case


Ms Rolden, a nurse with the Salford Royal NHS Trust, was suspended pending an investigation of a complaint received from a healthcare worker, Ms Denton, that Ms Rolden had mistreated a patient.


Following investigatory interviews, which were limited to Ms Denton and Ms Rolden and her supervisor, the NHS Trust concluded that Ms Rolden’s recollections of the events were quite vague in comparison to her complainant.


The disciplinary panel concluded that Ms Rolden’s evidence was therefore unreliable and accepted Ms Denton’s evidence as they felt there to be no reason why she would lie. Following this, Ms Rolden was summarily dismissed. The Employment Tribunal found this to be unfair dismissal on the grounds that the investigation failed to question the reliability of Ms Denton’s evidence.


Although at the Employment Appeal Tribunal this decision was overturned, the Court of Appeal restored the Employment Tribunal’s finding of unfair dismissal.


Existing law


The law is that in deciding whether a dismissal for reasons of alleged misconduct is fair or unfair, requires there to be an investigation of whether “the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and [that] shall be determined in accordance with equity and the substantial merits of the case”.


Case law has established factors that need  to be considered when determining this and one of the factors to be taken into account is whether the employer carried out as much investigation into the matter as was reasonable “in all the circumstances of the case”. This test is sometimes summarised to state that the employer must reasonably believe in the employee’s guilt.


Going Forward


The Court of Appeal pointed out that “all the circumstances” included the fact that the employee was an employee who had given service to the employer for over 4 years and, significantly, that there would be a real risk that her career would be blighted by the dismissal if it was found to have been fair - as it could lead to her deportation and therefore destroy the opportunity for building her career.


This decision also added that in cases of unfair dismissal the tribunal’s approach to conflicts of evidence when investigating claims should not be too relaxed, especially where the consequences of dismissal for an employee could be potentially severe.  There must, be a ‘genuine belief’ on reasonable grounds that the misconduct has occurred, as a result of carrying out the fullest possible investigation into the circumstances.


There will of course be instances where it is perfectly proper for an employer to say that it is not satisfied that it can resolve the conflict of evidence accordingly and in such instances it appears that it would be more appropriate for the employer to give the employee the benefit of the doubt and not feel obliged to rule in favour of either party.


However if faced with conflicting evidence, employers should refrain from deciding that a case is not sufficiently proved and therefore choose to impose a warning.  This could lead to appeals or even constructive dismissal issues which would cause further problems for the employer.





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© Corren Troen 2010 
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