Tax Finance & Legal Cttee

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Tax Finance & Legal Committee

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Chairman - Marc Cumberlege

COMPANIES ACT - ONE YEAR DELAY

Department for Business Enterprise and Better Regulation (former DTI) has advised that the full implementation of the Companies Act 2006 is to be put back to 1 October 2009, though some provisions which have not already been scheduled to come into force by 1 October 2008 may still be brought into force on that date. Click here for further news.

National Minimum Wage (NMW)

Hourly Rates applicable from 1 October 2008:

Adult Rate – age 22 and over £5.73
Development Rate – age 18-21 £4.77
Age 16-17 £3.53

Hourly Rates applicable from 1 October 2009:

Adult Rate – age 21 and over £5.80
Development Rate – age 18-21 years £4.83
Age 16-17 years £3.57

Tips, Service Charges and Gratuities from 1 October 2009

Under the current law, tips, service charges and gratuities paid by an employer through its payroll can generally be taken into account when calculating whether an employer has paid the national minimum wage (NMW) to an employee. There are two situations where such payments cannot be taken into account: (1) if the tips, service charges or gratuities are paid by customers directly to the worker; and (2) where they are paid to a troncmaster (for example the head waiter in a restaurant) who then distributes them to the workers.

In July 2008, the Government announced its intention to make changes to the law so that tips, service charges and gratuities could no longer be taken into account when deciding if a worker has received the NMW. Following a consultation, the announcement was made that the proposals will be given legal effect and that a new industry code of best practice will also be produced. So, from 01 October 2009, the law will be amended so that tips, gratuities and service changes can no longer be taken into account when deciding if a worker has received the NMW.

Clive Dobbin, LLP Partner, Employment Department, Paris Smith LLP

Further information is available at:

http://www.hmrc.gov.uk/nmw/help.htm and

http://www.berr.gov.uk/whatwedo/employment/pay/index.html

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AGE DISCRIMINATION AT WORK

Since 1st October 2006 important new legal obligations mean employers, small or large, must ensure that they don’t unlawfully discriminate on grounds of age.

Discrimination must be avoided at recruitment, during employment and at retirement. This is a very brief overview of the key points.

The recruitment process must avoid age bias. Rejecting a job applicant because of their age amounts to direct discrimination and is unlawful unless objectively justified. A job requirement, provision or practice that disadvantages people of a particular age group is also potentially unlawful. It is advisable to avoid asking for age and date of birth in application forms. Selection decisions must be based on skills and ability alone. Employers should adopt an equality policy covering all forms of discrimination.

With respect to current employees, dismissal, refusal to provide training or the denial of promotion may also be unlawful, as will harassment or victimisation due to age. Employers may be held responsible for the acts of employees hence it is important to train them on the regulations.

Since 1 October 2006 retirement must be carefully dealt with. The new regulations set a default retirement age of 65 and give employees the right to request to continue working beyond that date or their contractual retirement date. A failure to deal with retirement fairly may result in an unfair dismissal even for those over 65, as the upper age limit on claims for unfair dismissal or redundancy is removed. Redundancy procedures should be checked to make sure they don’t discriminate against particular age groups.

There are limited circumstances when it is lawful to treat people differently because of their age if objectively justified and the discrimination is not disproportionate to the business objective. A significant culture change is likely to take place in the next few years.

Howard Robson 023 8071 7717 Tax & Legal Committee and Employment Partner, Warnergoodman Commercial
howardrobson@warnergoodman.co.uk

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