Welcome to the September edition of Frontline. This month, Kate Hartley previews the UK Government's "Apprenticeship Levy" (due for introduction in April 2017) and considers how the obligation to contribute will affect certain employers and the steps that organisations should be taking to maximise benefits from the levy.
A quiet month in the Tribunals and Courts means we provide an extensive legal update on incoming changes to the taxation of termination payments; information on HMRC's plans to restrict the Salary Sacrifice regime, and; a bulletin on the entry into force of the "EU-US Privacy Shield", the successor to the Safe Harbor data transfer mechanism which was invalidated in October 2015.
The Apprenticeship Levy – how will this affect your business?
From 6 April 2017, all employers with an annual pay bill over £3 million will be required to pay a levy of 0.5% of their pay bill towards funding apprenticeships. This is part of the government's drive to create an additional 3 million apprenticeships by 2020, raise £3 billion per year and change the way that apprenticeships are funded. As the introduction date moves closer, there are several issues and approaches that affected businesses may wish to consider.
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Incoming changes to the taxation of termination payments
The UK government has now reported on its 2015 consultation on the tax/national insurance treatment of termination payments. Effective from April 2018, the regime will be amended with the stated aim of reducing the scope for employer abuse and increasing simplicity, fairness and certainty. Of particular note is that all PILONs will become fully chargeable to tax regardless of their nature and employer NICs will be payable on termination payments over £30,000.
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New HMRC Consultation on limiting salary sacrifice advantages for benefits in kind
HMRC has published a consultation on limiting the range of employee non-cash "benefits-in-kind" that can attract Income Tax and NIC advantages when provided as part of salary sacrifice arrangements. The proposals state that, as a general rule, such benefits in kind will become chargeable to income tax and employer NICs at the greater of the amount of salary sacrificed and the cash equivalent set out in statute (if any). Such changes are planned to come into effect in April 2017.
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EU-US Privacy Shield becomes operational with the GDPR on the horizon
10 months after the invalidation of the Safe Harbor regime for US data transfers, its successor – the "EU-US Privacy Shield" - has become operational. This offers organisations a potential new legal basis for their transatlantic data flows, with a focus on adherence to more demanding privacy principles, enhanced oversight/supervision and new methods of redress for data subjects.This development may be of particular interest to EEA-based employers who outsource their HR activities to service providers based in the US.
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In parallel to this development, employers with EU operations should be turning their attention to the EU's General Data Protection Regulation ("GDPR"), which will enter into force on 25 May 2018 and usher in a raft of onerous data governance obligations, new/enhanced individual rights and the potential for massively increased penalties. Our International Data Protection Group has produced a guide to the GDPR, which seeks to summarise the key changes that the new law will bring and to highlight the most important actions which organisations should take in preparing to comply with it. Please click on the link below to access this guide and do not hesitate to get in touch with the team if you require further advice.
A provision, criterion or practice operated by employers may not always be discriminatory
XC Trains v D (EAT)
This case confirmed that a provision, criterion or practice (PCP) operated by employers, may not be discriminatory if it is a "proportionate means of achieving a legitimate aim". Employers should be aware that whether a PCP is a "proportionate means of achieving a legitimate aim" may depend on the nature, needs and size of the business.
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Firm news and upcoming events
Our new home
This week marks the employment team's move into Bird & Bird's new London offices at 12 New Fetter Lane, which is just across the road from our previous premises. The brand new development is comprised of 147,000 square feet set over 12 floors, which will allow us to continue to grow and develop.
The building offers stunning views of London which we are excited to share with you through our dedicated client business lounge, which provides a space for you to grab a coffee, relax or catch up on some work should you find yourself in the area.
Global Mobility Seminar
On 21 September 2016 we will be hosting a Global Mobility seminar in our new London office. The seminar willpresent a case study, leading you through all stages of a successful relocation. We will also explore the importance and current state of Global Mobility as it transcends in to the world of Global Agility.
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See also our August edition of Frontline >