2008 EMPLOYMENT LAW RATES AND LIMITS
27th February 2008
With effect from 6th April 2008 SSP will increase from £72.55 to £75.40 and the prescribed rates of statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £112.75 to £117.18.
With effect from 1st February 2008, the limit on awards by an Employment Tribunal were increased to £63,000 for compensation for unfair dismissal and the limit on a week's pay for certain statutory purposes increased to £330. This means that the maximum basic award in an unfair dismissal claim and the maximum redundancy payment is now £9,500.
The jurisdiction of Tribunals for breach of contract cases remains at £25,000.
The new limits apply where the relevant date (in most cases the effective date of termination of employment) falls on or after 1st February 2008.
There is no limit on compensation in successful claims for discrimination on the grounds of sex, race, disability, sexual orientation, religion or belief or age, or where the employee is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or public interest disclosure.
If you have concerns about this announcement, please contact Jane Laidler : j.laidler@grm.co.uk
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INHERITANCE TAX : The unused Nil-rate band is now to be transferable to a surviving spouse/ civil partner.
31st October 2007
This change will affect all survivors of a marriage or of a civil partnership who die on or after 9 October 2007, regardless of the date on which the first spouse or partner died.
As from 9th October 2007, if a surviving spouse dies and his (or her) spouse had not used all of his (or her) Nil Rate Band then the proportion of the unused Nil Rate Band, multiplied by the amount Nil Rate Band in being at the date of the second death, will be be added to the Nil Rate Band of the spouse to die last.
For example,
a) Spouse A dies in 2007 not having used any of his Nil Rate Band (£300,000) and Spouse B dies in 2010 (Nil Rate Band £350,000), the total exemption on the second death will be £700,000
and
b) Spouse A dies in 2007 having used £60,000 of his Nil Rate Band (= one fifth of the 2007 Nil Rate Band) and Spouse B dies in 2010. The 2010 Nil Rate Band on her death will be £350,000 and the total exemption applicable will be:-
Spouse B’s Nil Rate Band £350,000
Plus
Four Fifths of the Nil Rate Band at the date of her death £300,000
Total £650,000
The same rules apply to Civil Partners.
This change to the Inheritance Tax rules was announced on October 8th and the Revenue has issued a statement confirming that these new rules will be applied as from October 9th. The legislation governing this change will not, however, be passed until circa June/July 2008. Whilst it is possible that this legislation may never be passed it would be unconscienable and politically unsafe for the government not to do so. This nevertheless remains an, albeit remote, possibility.
We consider that it will be best practice for those who already have Nil Rate Band Discretionary Settlements in their Wills, to leave their Wills unamended until legislation has been passed on the basis that, in most cases, it is easy to disarm them so that the new rules may apply. Nil Rate Band Discretionary Settlements may, in any event, still be desirable in certain circumstances.
If you have concerns about this announcement, please contact Michael Parnell-King : m.parnell-king@grm.co.uk
Increase to minimum annual leave entitlement from 1 October 2007
18th September 2007
A worker’s minimum paid annual leave entitlement is currently 4 weeks in each year (normally pro-rated for part-time workers) and an employer may include the public and bank holidays in this leave entitlement. However, following consultation, the Department for Business, Enterprise & Regulatory Reform (DBERR formerly DTI) has announced that from 1 October 2007, a worker will be entitled to 4.8 weeks (i.e. 24 days if they work a 5 day week) and to 5.6 weeks (28 days) from 1 April 2009.
Many businesses already offer their workers at least 20 days per annum plus the usual 8 UK bank holidays .However, according to the DBERR, there are up to 6 million workers who are currently only entitled to the 20 days holiday including the bank holidays who will therefore benefit from these changes. It will also bring the UK more into line with the other EU member states whose annual public holidays range from 8 to 16.
The DBERR considers that the groups that will benefit most from these changes will include women, part-time workers, low-paid workers and those from ethnic minority communities, but whatever the composition of the workforce, employers will need to review their existing policies and terms and conditions to ensure that existing provisions meet the requirements and that in future workers are engaged on terms which reflect the changes.
Businesses should also be aware that there are sanctions for failing to comply with these Regulations; Improvement Notices can be issued and any further failure to comply can result in fines and even imprisonment. Employment Tribunals also have the power to order compensation payments.
For further information please contact Jane Laidler: j.laidler@grm.co.uk
LASTING BUT NOT ENDURING - New Powers of Attorney under the Mental Capacity Act 2005
18th September 2007
It will no longer be possible to create Enduring Powers of Attorney (“EPA’s”) as from 1 October 2007. They will be replaced by Lasting Powers of Attorney (“LPA’s’”)
Although LPA’s are similar to EPA’s in some respects, they do differ in many ways.
The purpose of an EPA is to enable an attorney to look after the donor’s financial affairs. An LPA additionally grants an attorney the power to make decisions concerning the donor’s welfare and health. These powers are, however, tempered by the Mental Capacity Act 2005 which places a duty on an attorney to act in the donor's best interests. The Act contains a checklist of the factors that an attorney must take into account when deciding what is in the donor's best interests. A donor may enter restrictions, conditions and guidance notes for his attorney(s) in the LPA document.
An unregistered EPA may be used prior to the onset of mental incapacity. Registration is only necessary if the donor becomes mentally incapable. Indeed, EPA's are used to care for the financial affairs persons of all ages and for diverse reasons i.e. long absence abroad. An LPA will not, however, be valid until it has been registered. The registration procedure will be sufficiently expensive to deserve careful consideration and it will, in most cases, be advisable to delay registration until it proves necessary for an attorney to use the powers that he has been granted. For this reason, it is possible that we may see a increase in the use of general powers of attorney, especially by younger donors.
An LPA requires the inclusion of the names of persons to be notified on application for registration of the LPA.
An LPA requires a suitably qualified person to certify that the donor has not been induced to create the LPA by fraud or undue influence and that there is no other cause for preventing the creation of the LPA. The list of those persons who may certify an LPA is similar to the list of those persons who may certify photographs for passport applications. The person certifying will be obliged to interview the donor. Many of those who may certify may, in practice, refuse to do so because of the professional indemnity issues involved.
Even it will be possible to grant attorneys wider authority, it nevertheless appears that LPA’s will be less flexible and more costly than EPAs.
Any EPA made prior to October 2007 will remain valid. It will not be possible to create new EPA’s after that date. Anyone who may need attorneys to act on their behalf in the near future, should seriously consider completing an EPA before 1 October 2007.
Please contact Michael Parnell-King, head of the Private Client team, if you require any additional information or if you are in need of assistance : m.parnell-king@grm.co.uk
Employment Simplification Bill
6th September 2007
Gordon Brown's draft legislative programme for the coming year includes an Employment Simplification Bill, the stated purpose of which is to "simplify, clarify and build a stronger enforcement regime for key aspects of employment law".
The main elements of the Bill are likely to be:
the repeal of the statutory dispute resolution procedures and implementation of a package of replacement measures to encourage informal resolution of disputes and further changes to the Employment Tribunal system;
- clarification and strengthening of the enforcement framework for the National Minimum Wage;
- strengthening the employment agency standards enforcement regime by making offences under the Employment (Agencies) Act each way offences and clarifying investigative powers;
- amendment of trade union membership law to reflect recent Court decision;
- clarification of provisions in the National Minimum Wage legislation relating to voluntary workers.
The Government envisages that the main benefits of the Bill will be cost, time and administrative savings for business and greater clarity for employers, trade unions, employees and public sector bodies.
The proposals have received support from the Chartered Institute of Personnel and Development whose own research has revealed that some 29% of employers believe disputes are less likely to be resolved informally after the introduction of statutory dispute resolution procedures in October 2004. The CBI and the TUC were also united in agreeing that the statutory procedures were not effective.
Consultation on the proposals is now at an end and the Bill is expected in the Autumn.
For further information please contact Jane Laidler: j.laidler@grm.co.uk
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