News Items – at 8th November 2007

New Agricultural Minimum Wages for Northern Ireland

Increases in rates and holiday entitlements from 1 October 2007

The Agricultural Wages Board for Northern Ireland (AWB) has agreed an increase to the minimum rates of wages for Grade 1 agricultural workers and changes to holiday entitlement. The increases in the minimum rates of wages apply to Grade 1 workers only and are effective from 1 October 2007. The minimum rates of pay for Grade 2 – Grade 6 agricultural workers remain unchanged. These changes were agreed at a meeting of the AWB held in September.

The new minimum rates apply to four separate age bands. These rates and age bands are: £5.52 (aged 22+); £4.60 (aged 18 - 21); £3.40 (aged 16 - 17); and £2.76 (below compulsory school leaving age).

From 1 October 2007 all workers are entitled to a minimum holiday entitlement of not less than 4.8 weeks (proportionately). The holiday year for agricultural workers is 1st January to 31st December.  Accordingly, entitlement for workers with at least 52 weeks continuous employment with the same employer will be:

• for the period 1 October to 31 December 2007, additional entitlement of
  • 0.5 day for those working 1 or 2 days per week, and
  • 1 day for those working 3 to 5 days per week
• from 1 January 2008
  • 5 days holiday for those working 1 day per week
  • 10 days holiday for those working 2 days per week
  • 15 days holiday for those working 3 days per week
  • 20 days holiday for those working 4 days per week
  • 24 days holiday for those working 5 days per week.

An agricultural worker who has been in continuous employment with the same employer for more than one year is entitled to a total holiday entitlement of 29 days made up of 24 days holiday leave plus 5 of the additional days listed in Agricultural Wages legislation. This holiday entitlement is proportionate to the number of days worked.

Further information:
Increases in minimum wage and holidays for agricultural workers  http://www.northernireland.gov.uk/news/news-dard/news-dard-291007-increases-
in-minimum.htm
New Grading System for agricultural minimum wage  http://www.dardni.gov.uk/index/new-grading-system-for-agricultural-minimum-wage

Double Taxation Conventions

New treaty with Saudi Arabia signed by parties

The first comprehensive double taxation convention between the United Kingdom and the Kingdom of Saudi Arabia was signed in London on 31 October 2007.
The text of the new Convention is available on HM Revenue & Customs' website and will be presented to Parliament early next year for approval.

The Convention will enter into force once both countries have completed their legislative procedures. In the United Kingdom the provisions of the Convention will take effect, for income tax purposes, from 6 April in the calendar year following the date of entry into force. In Saudi Arabia, the provisions will take effect from 1 January in the calendar year following the date of entry into force.

Further information:
Double taxation convention: Saudi Arabia  http://www.gnn.gov.uk/Content/Detail.asp?ReleaseID=327057&NewsAreaID=2
UK/Saudi Arabia Double Taxation Convention And Protocol  http://www.hmrc.gov.uk/international/saudi-arabia.pdf

Tax Avoidance Schemes

Increased penalties for failure to comply with disclosure rules

HMRC has statutory powers to ask the Special Commissioners to make an order requiring the promoter of what HMRC believes to be a tax avoidance scheme to comply with the disclosure rules.  If such an order is made and the promoter fails to comply, the Special Commissioners may impose an initial penalty of up to £5,000 and, if the failure continues, HMRC may impose a further daily penalty of up to £600.
From 20 November 2007, the maximum daily penalty is increased to £5,000.  The daily penalty may be imposed after 10 days, counting from the date on which the Special Commissioners’ order is made.

Further information:
The Tax Avoidance Schemes (Penalty) Regulations 2007  http://www.opsi.gov.uk/si/si2007/uksi_20073104_en.pdf
Memorandum to the Tax Avoidance Schemes (Penalty) Regulations 2007  http://www.opsi.gov.uk/si/em2007/uksiem_20073104_en.pdf
The Tax Avoidance Schemes (Information) (Amendment) (No. 2) Regulations 2007  http://www.opsi.gov.uk/si/si2007/uksi_20073103_en.pdf

Payroll deadlines during the next month

November 19 – For employers required to pay tax and NICs etc to the Accounts Office monthly, this is the deadline for payment to be received by the Accounts Office, unless made electronically.

November 22 – For employers required to pay tax and NICs to the Accounts Office monthly, this is the deadline for electronic payments to be cleared into the HMRC bank account.  Payments through BACS must be initiated by November 20 at the latest.

December 5 – This is the final day of tax month 8.  Tax and NICs etc. for payments made in the tax month to December 5 are due for payment to the Accounts Office by December 19, or by December 22 if paid electronically.

Payroll FAQ's

“Keeping in Touch” Days

How should employers manage entitlement to “Keeping in Touch” days?

During the maternity, adoption and paternity pay period, no SMP, SAP or SPP may be paid for any week during which the employee performs any work for the employer.  Although any such work does not bring the pay period to an end, the return to work, even if it is just for a day or part of a day, effectively ends the maternity, adoption or paternity leave period.  The employee is left with an ongoing entitlement to SMP, SAP or SPP but no entitlement to maternity, adoption or paternity leave – an anomalous situation that creates all sorts of contractual problems.

To prevent this situation arising in the context of maternity and adoption leave (but not paternity leave), the employment and social security legislation provides for employees to attend work for up to ten “Keeping in Touch” days, commonly known as “KIT days”, during the year period of maternity and adoption leave.  The full ten-day entitlement applies even if the employee returns to work early.  The ten days are a part of the statutory leave period, not in addition to it.  No KIT days, however, may be taken during compulsory maternity leave.  A women is not permitted to work for her employer under any circumstances in the two weeks (four weeks in the case of women working in factories) immediately following the birth.

Employees may, therefore, attend work for up to ten days during the period of statutory maternity or adoption leave without, as a result, bringing entitlement to leave to an end or foregoing payment of SMP or SAP for any week during which they work for their employer.  However, if work is performed on more than ten days, entitlement to statutory maternity or adoption leave ends.  See When statutory leave ends early, below.

Any work carried out on a particular day, including a single work shift that spans two days, constitutes a “day’s work” – it can be a few minutes or a full day.  The nature of the work performed must be the type of work the employee normally performs under the employment contract, but it may include training or any other activity that is undertaken to enable the employee to keep in touch with the workplace.

Although a few minutes of work would have to be treated as a whole KIT day, the legislation specifically allows “reasonable contact” between the employer and employee to discuss matters pertaining to the leave.  So, for example, the employer could meet with the employee to discuss return to work arrangements without that being treated as work and thereby taking up a whole KIT day.

The legislation sets no rules regarding

• when during the leave period the KIT days should be taken,
• whether they should be taken singly or in blocks of days, or
• what payment should be made for the work.

These are matters for the employer and the employee to agree between them.  The KIT days could, for example, be taken as a single period at the start of the leave period (before the birth) or at the end of the leave period.  If a woman taking maternity leave is only going to be absent for the first six weeks, they could be taken over the latter four weeks of the six-week period.

The options for payment for KIT days are discussed in a separate FAQ. 
To prevent any abuse of KIT days, the legislation makes it clear that
the employer does not have any right to require an employee to spend any days at work during the statutory maternity/adoption leave period, and
the employee does not have any right to spend any days at work during the statutory maternity/adoption leave period.

Employees are protected from detrimental treatment or from dismissal on the grounds that they undertook, considered undertaking, or refused to undertake work during the statutory maternity/adoption leave period.

When statutory leave ends early
Statutory leave and statutory pay are separate rights and have different conditions for entitlement . For example, a pregnant woman is automatically entitled to maternity leave (an employment right) but may not meet the conditions for payment of SMP (a social security benefit).  Another significant difference is that maternity and adoption leave end when the employee returns to work but, if the employee returns early, the maternity or adoption pay period continues for the full 39 weeks.  Of course, as the employee is back at work, no SMP or SAP may be paid but, nevertheless, entitlement does not end.  So, if, after returning to work, the employee were absent again for one or more whole weeks, the employer would have to resume payment of SMP or SAP.

Employers should take care not to allow or arrange for an employee to work for more than the permitted ten KIT days.  As soon as the limit is exceeded, the employee’s maternity or adoption leave automatically ends, the employee is assumed to have returned to work and, as a result, the employee is entitled to full pay under the employment contract. This creates a significant problem for the parties as it is only during statutory maternity or adoption leave that the employer may stop paying full pay and pay SMP or SAP instead.  If the employer’s intention in exceeding the ten KIT days was not to bring statutory leave to an end, the parties could agree for the absence to continue – although it would no longer be statutory leave – and for SMP or SAP to continue to be paid.  However, that is a dangerous course because the employer is technically in breach of contract by not paying full pay.

ISLE OF MAN

Double Taxation Agreements

Agreements signed with seven Nordic countries

The Isle of Man has concluded taxation and economic cooperation agreements with the seven members of the Nordic Council – Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden.  The agreements were part of a package of 28 agreements that was signed at a ceremony in Oslo on 30 October 30 2007.
The agreements will enter into force in the Isle of Man from the 6 April following the completion of legal procedures and in the Nordic countries from the 1 January following completion of the legal procedures.

The Agreements will enter into force once all of the countries involved have completed their legislative procedures. In the Isle of Man the provisions of the Agreements will take effect, for income tax purposes, from 6 April in the calendar year following the date of entry into force. In the Nordic countries, the provisions will take effect from 1 January in the calendar year following the date of entry into force.

Further information:
Isle Of Man First to Sign Co-Operation Agreements with Nordic Countries  http://www.gov.im/treasury/incometax/technical/internationalagreements.xml
International Agreements  http://www.gov.im/treasury/incometax/technical/internationalagreements.xml

REPUBLIC OF IRELAND

Social Security Agreements

New agreement with Republic of Korea signed

A Bilateral Agreement on Social Security with the Republic of Korea was signed on 31 October 2007 and is expected to come into force in 2008.  The main purpose of the Agreement is to protect the pension rights of migrant workers who move between Ireland and the Republic of Korea. It will allow social insurance contributions paid in one country to be counted towards certain benefits in the other country, including State pensions.

The Agreement also provides that Irish employees, who are posted to work for their company in the Republic of Korea for up to five years, may continue to pay insurance contributions under Ireland’s social security system instead of becoming liable for contributions in the Republic of Korea. This will also apply in reverse, allowing workers from the Republic of Korea who are posted by their company to Ireland, can continue paying into their country’s own national social security system.
It is estimated that there are about 200 Irish citizens employed in the Republic of Korea and 250 Koreans in employment in Ireland at present.

Further information:

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