News Items – at 12th June 2007

Agricultural Wage Negotiations 2007 – England and Wales

New pay and holiday provisions from October 2007

The Agricultural Wages Board for England and Wales met on 15/16 May 2007 for the 2007 annual pay negotiations and is proposing a new Agricultural Wages Order (AWO) that would come into force on Monday, 1 October 2007, the same date from which this year’s increases in the National Minimum Wage apply. It is proposed that:

• the minimum basic Grade 1 pay rate for workers over compulsory school age should increase by approximately 3.2% from £5.35 to £5.52 per hour.
• the minimum pay rates for Grades 2, 3, 4, 5 and 6 should be increased by
  approximately 4.5%.  This would increase the minimum rates as follows:
  * Grade 2 from £5.74 to £6.00 per hour
  * Grade 3 from £6.31 to £6.60 per hour
  * Grade 4 from £6.77 to £7.08 per hour
  * Grade 5 from £7.18 to £7.50 per hour
  * Grade 6 from £7.75 to £8.10 per hour.
• the rates for Apprentices in Year 1 of an Apprenticeship/Advanced Apprenticeship
  should increase from £3.44 to £3.46 per hour and the rates for Apprentices in Year 2 should increase from £3.44 to £3.46 for 16-18 year olds, from £4.45 to £4.60 for 19-21 year olds and from £5.35 to £5.52 for those aged 22 and over.
• other rates and allowances should  increase by 4.5%.
• the value to be attributed to the provision of a House or Other Accommodation should be a specified sum rather than a sum not exceeding a specified amount.
• the “Other Accommodation” offset should increase to £4.30 per day.
  
• where an Agricultural Wages Committee re-values the benefit attributable to the
  provision of a House, that re-valued sum should be specified as a weekly amount.
  
• sub-section 8.5 of the AWO (treatment of worker payment of rent, water and sewerage charges) should be deleted.
  
• Annual and Public Holiday/Additional Public Holiday leave should be incorporated into a new annual holiday entitlement for all workers.
  
• the commencement date for the holiday year be moved to 1 October annually and that transitional provisions be incorporated into the 2007 Order.
  
• the calculation of holiday pay for the Total Annual Holiday entitlement should include guaranteed overtime.
  
• upon termination of employment employers should be entitled to recover all excess holiday pay, whether in relation to AWO holiday or contractual holiday pay.
  
• where the employer and worker agree that the worker is to forego one or more days of holiday (over and above Basic Holiday entitlement) and instead work on such days the employer should be required to keep a written record of the agreement in respect of each day of foregone holiday.  Such records would be required to be retained for a period of three years.
  
• where a worker does not in fact work on a planned day of foregone holiday,
  that entitlement to a day of holiday should be reinstated.
  
• workers should be entitled to carry forward to the following holiday year any untaken days of Total Annual Holiday Entitlement once the Basic Holiday entitlement under the AWO has been taken.
  
• the Board should continue to review the way forward on AWO pension provision in the light of proposed government legislation.
  
• the Board should review the possibility of further changes to the accommodation offset particularly in relation to multiple occupancy accommodation.

Other technical and consequential drafting amendments are also proposed.
Full details of the Board’s proposals can be obtained from the AWB Secretariat,
Tel 020 7238 6523.
Representations or other comments on the proposals must be lodged with the Secretary
to the Board by Friday 22 June.

Further information:
Agricultural wage negotiations 2007 http://www.defra.gov.uk/news/awb/awb0705.htm

Farming: Agricultural wages  http://www.defra.gov.uk/farm/working/agwages/index.htm

Agricultural Wage Negotiations 2007 – Scotland

New pay and pension provisions from October 2007

The Scottish Agricultural Wages Board proposes to increase the rate of pay for farm workers in Scotland, with more than 26 weeks continuous employment, by 26p per hour to £5.96.

Following the annual wage negotiation meeting held with industry representatives last week, the board proposes that the minimum hourly rates payable from October 1, 2007 should be:

• £5.52 per hour for those in the first 26 weeks of employment
• £5.96 for those employed for more than 26 weeks by the same employer.

Workers with appropriate qualifications should be paid an additional £0.90 per hour.
Those working with dogs should be provided with an allowance of £4.52 per week for each dog up to a maximum of four.

The Board also agreed to continue to support, in principle, the concept of a UK-wide pension scheme for agricultural workers. A provision, enabling employers to deduct up
to £4.30 per day from wages in the first 26 weeks of employment to cover living accommodation, other than a house, will be introduced.

The closing date by which representations must be received is Friday 29 June 2007.
The Board will meet again on Monday 23 July 2007 to consider written representations and, if it so decides, will make an Order giving effect to its proposals.

Further information:
Pay increase for agricultural workers http://www.scotland.gov.uk/News/Releases/2007/06/04164058

Child Maintenance Enforcement

Bill to replace Child Support Agency published.

The Child Maintenance and Other Payments Bill was published on 6 June 2007
and contains measures to reform the policy and delivery of child maintenance,
establish a non-departmental public body to replace the Child Support Agency,
simplify the way maintenance is calculated, and provide tougher enforcement powers
to collect maintenance arrears.
In summary the measures included in the Bill are intended to:

• establish a new child maintenance delivery organisation, to be known as the Child Maintenance and Enforcement Commission (C-MEC), to deliver child maintenance and replace the Child Support Agency
  
• encourage parents to make their own child maintenance arrangements and give them more choice as to how they do so
  
• streamline and simplify how child maintenance is calculated
  
• introduce tougher enforcement powers to collect arrears of child maintenance from parents who fail to pay
• introduce powers to reduce child maintenance debt more effectively.

The Bill does not make any substantial changes to the operation of a Deduction from Earnings Order (DEO), other than to make DEOs (subject to a pilot study) the first
method of collecting maintenance and to redefine “earnings” so that it includes all pension payments, but does introduce new non-payroll methods of enforcing maintenance payments, namely:

• direct regular deductions from non-resident parent’s current account
  
• direct lump sum deductions from savings accounts or other financial resources
  
• surrender of passport or other travel authorization document
  
• curfew orders
  
• disqualification from driving.
  

Further information:
Child Maintenance and Other Payments Bill
http://www.publications.parliament.uk/pa/pabills/200607/child_maintenance_
and_other_payments.htm

Regulatory Impact Assessment http://www.dwp.gov.uk/childmaintenance/pdfs/cm-bill-ria1.pdf

PAYE Online Notices

Secure mailbox service to be withdrawn in June 2007

On 27 June 2007, the Secure Mailbox service, which was used by HMRC to send out PAYE Online notices and reminders before 5 April 2006, is due to end.
Messages that are currently stored in an employer’s or agent’s Secure Mailbox will no longer be available from the 27 June. Any messages or notifications that need to be kept for audit purposes should be saved or printed out before the deadline date.

Access to the Secure Mailbox is available from the PAYE Online service page by selecting
the link. You can also view notices issued for tax years up to 5 April 2006.
Notices and reminders that have been issued since 6 April 2006 are not affected.

Further information:
PAYE Online - Secure Mailbox service comes to an end.
http://www.hmrc.gov.uk/dps/index.htm

Reform of VAT Fuel Scale Charges

VAT Motoring Expenses booklet updated

Following on from changes announced in the 2007 Budget, the basis for the VAT
private use charge changes from engine size to carbon dioxide (CO2) emission levels
from the first VAT accounting period starting on or after 1 May 2007. VAT booklet 700/64
Motoring Expenses has been updated accordingly.

Further information:
HMRC Notice 700/64 Motoring Expenses http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_
nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=
HMCE_CL_000090

Contracted-out Pension Schemes

HMRC scheme guidance booklets updated

HMRC’s guidance booklets for employers and scheme administrators on contracting
out of the State Second Pension scheme or making changes to their contracted-out certificates have been updated to bring them into line with the new pension legislation.

Further information:
CA14C Contracted-out Guidance for Salary Related Pension Schemes and Salary Related Overseas Schemes http://www.hmrc.gov.uk/forms/2007/ca14c.pdf

CA14D Contracted-out Guidance for Money Purchase Pension Schemes and Money Purchase Overseas Schemes http://www.hmrc.gov.uk/forms/2007/ca14d.pdf

CA14E Contracted-out Guidance for Mixed Benefit Pension Schemes and Mixed Benefit Overseas Schemes http://www.hmrc.gov.uk/forms/2007/ca14e.pdf

CA16A Appropriate Personal Pension Scheme Manual http://www.hmrc.gov.uk/forms/2007/ca16a.pdf

HMRC Litigation and Settlement Strategy

Internal HMRC guidance on how disputes are brought to a conclusion

Where taxpayers liabilities are in dispute, i.e. there is a significant difference of opinion about tax liabilities that will not be easily resolved, HMRC applies its Litigation and Settlement Strategy. The text of this internal guidance has been published for the benefit of practitioners.

Further information:
Litigation and Settlements Strategy http://www.hmrc.gov.uk/practitioners/lss-intro.htm

Payroll deadlines during the next month

June 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.

June 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 June 20 at the latest.

July 5 – This is the final day of tax month 3. Tax and NICs etc for payments made in the tax month to July 5, or in the tax quarter to July 5, are due for payment to the Accounts Office by July 19, or by July 22 if paid electronically.

July 6 – This is the deadline date for filing, in paper form or electronically,

• form P9D Expenses payments and income from which tax cannot be deducted
  
• form P11D Expenses and Benefits
  
• form P11D(b) Return of Class 1A National Insurance contributions due and Return of expenses and benefits – Employer’s declaration

Copies of forms P9D and P11D must also be given to the employees concerned
by this date.

Payroll FAQ's

Employer FAQ – Electronic Payslips

Can employers lawfully provide electronic payslips instead of printed payslips?

Employment legislation appears to permit the growing practice of providing payslips by email but there are a number of issues that must be addressed if the arrangement is to stay within the law.

The requirement for employers to provide an “itemised pay statement” is set out in Section 8 of the Employment Rights Act 1996. It says: “An employee has the right to be given by his employer, at or before the time at which any payment of wages or salary is made to him, a written itemised pay statement.”

Section 8 also defines the information that must be included on a payslip. This is not usually an issue for employers as computerised payroll systems generally provide more information on their standard payslips than is required by law.

However, a number of other issues are raised by the right to an “itemised pay statement”, as quoted above. Notice that:

1. the payslip must be “given” to the employee by the employer,
2. this must be done “at or before” the time when the payment is made, and
3. the payslip must be “written”.
   

There is no doubt that considerable financial savings can be achieved by issuing electronic payslips instead of paper ones and this is generally the motivation for introducing the arrangement. But is it lawful? HMRC appears to think so. In the context of issuing P60 End of Year Certificates to employees, HMRC states: “Even if you have been giving your employees electronic payslips, you must give your employees a paper form P60 at the end of the tax year. You must not, by law, give them P60 details electronically for them to print off.”

(See Guide to filing PAYE forms online and paying electronically, paragraph 6.15, at www.hmrc.gov.uk/helpsheets/mp2.pdf)

Although HMRC’s interpretation of the law as it applies to P60s is arguably wrong, there is clearly an acceptance that providing electronic payslips is permissible. No help is provided by the DTI and Acas; the guidance on their websites makes no reference to electronic payslips (see links below).

The critical issue, therefore, when planning the introduction of electronic payslips, is whether the electronic delivery arrangements meet the statutory requirements. Consider the following issues:

• Is each employee being “given” a payslip? The responsibility is on the employer to make the payslip available to the employee. If the employee does not know where to find the payslip or has no computer access to it, then it has not been “given” to the employee. Employees who normally view or print out their payslips at their desks or workstations may not have access to them when they are sick or on holiday. Many employers will find, therefore, that scrapping paper payslips altogether is not possible and some employees will still require a paper payslip. Also, personal circumstances change so there must always be the option for employees to revert to paper payslips.
• Is the electronic payslip always available on or before payday? This imposes the same strict deadline on the payroll department as does the production of paper payslips, although issuing payslips electronically will likely reduce time pressures. However, can all employees actually see their payslip on payday if they wish to do so? What about employees who only have access to their payslip on their work computer but who do not normally work on their payday?
• Can employees make a “written” copy of their payslip? When the legislation was originally devised, this referred to a hand-written or typed piece of paper. Many employees will be happy just to read their payslip details on-screen and file the document away somewhere, but others, for a variety of reasons, will want to print it out. Employees without printing facilities, or who have privacy concerns about printing their payslip on a network printer, may need to be given paper payslips instead. A further practical problem is that a payslip printed out by an employee may not be accepted as valid proof of earnings for mortgage, loan, work permit or other status purposes, requiring the employer to make special arrangements to supply copy payslips or to sign and stamp the employee’s payslip.

As a result of these issues, it may not be possible for employers wishing to introduce electronic payslips to get the full benefit of stopping the production of paper payslips altogether. The statutory requirements cannot be ignored because the penalties can be severe. The objective of the legislation is to ensure that employees are aware of all of the deductions that have been made from their pay at each payday. If they are unable to see those details on payday they can make a complaint to an employment tribunal. If the tribunal considers that the statutory requirements have not been met, the employer can be required to repay to the employee up to 100% of all of the unnotified deductions made from the employee’s pay in the 13 weeks prior to the date of the complaint, even if they were legitimate or statutory deductions.

Further information:
DTI – Employment Matters www.dti.gov.uk/employment/employment-legislation/employment-guidance/page16359.html

DTI – Business Link www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1073792635
Acas – Itemised Pay Statements www.acas.org.uk/index.aspx?articleid=1142

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