HOLIDAY PAY UPDATE

We assume you remember our Holiday Pay Ruling post from November?  What do you mean it’s not seared into your brains along with the name of your first born?  O.K., O.K., since it is Friday, here’s a gentle reminder: https://lntvinsight.wordpress.com/2014/11/07/holiday-pay-ruling-handed-down/

In that post we mentioned that the decision was still awaited in the case of Lock v British Gas Trading Limited and others, which was sent back to the UK Tribunal by the European Court of Justice after they held that holiday pay needed to include commission payments.  Well, Monday 23rd March saw judgment handed down from the Leicester Employment Tribunal in the Lock case, in which the Tribunal unsurprisingly ruled:

‘1. In relation to the claimant’s complaint that of an unlawful deduction of wages, the Working Time Regulations 1998 should be read so as to be consistent with Article 7 of Council Directive 2003/88/EC (formerly Council Directive 93/104/EC) such that appropriate words should be added to domestic legislation to bring the calculation of a week’s pay in conformity with Council Directive 2003/88/EC

2. Regulation 16(3) of the Working Time Regulations 1998 is to be interpreted and applied as if it had the following paragraph added to it:

(e) as if, in the case of the entitlement under Regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.’

The effect of adding these words into the Working Time Regulations to give effect to the Working Time Directive is that commission and similar payments are to be included in holiday pay.

This judgment therefore agrees with the previous decision in Bear Scotland.  What will be of future interest will be cases which will inevitably look to deal with what payments are to be regarded as ‘similar’ to commission, and how that element should be calculated.

Now, must go and pick the oldest up from school.  What’s his name again?…

AN ECLIPSE…AND A COMPREHENSIVE ROUNDUP OF THE BUDGET

Did you see the eclipse on Friday?  We have to be honest, here at LNTV HQ, the grey murky morning sky looked, well, just as grey and murky as any other morning really!  We heard from some subscribers around the UK throughout the day that this was not the case for everyone, and have had some reports of wonderfully eerie experiences on the way to the office.  Let us know how it was for you!

Back to the week that was, and Wednesday’s budget was eagerly awaited.  Mr Osborne first told us that Britain “is walking tall again“, and that in the last year it has “grown faster than any other major advanced economy in the world“.  If you hadn’t been told it was a budget just before a major election, you would still have known it was a budget just before a major election.  Phrases like, “…the critical choice facing the country now is this: do we return to the chaos of the past?  Or do we say to the British people, let’s go on working through the plan that is delivering for you?“, showed what the Chancellor was focused on.

So what of the budget itself?  Here’s the full LNTV breakdown:

• Increasing UK Trade & Investment’s resources to double the support for British exporters to China
• First major western nation to be a prospective founding member of the new Asian Infrastructure Investment Bank
• National Minimum Wage to rise to £6.70 (for adults) in Autumn 2015, and to £8.00 by 2020
• Increasing the number of long-dated gilts to be sold
• Farmers able to average their income over five years for tax purposes
• Redeeming the last remaining undated British Government bonds in circulation
• New design for the one pound coin
• Launching a sale of £13 billion of the mortgage assets still held from the bailouts of Northern Rock and Bradford and Bingley
• Selling at least a further £9 billion of Lloyds shares over the coming year
• Using the resources from the bank sales, lower interest payments, and lower welfare bills to pay down the national debt
• £30 billion further savings necessary by 2017-18 to be achieved by £13 billion from government departments, £12 billion from welfare savings, and £5 billion from tax avoidance, evasion and aggressive tax planning
• Reduction in the pension tax relief Lifetime Allowance from £1.25 million to £1 million
• Lifetime Allowance indexed from 2018
• A new Diverted Profits Tax aimed at large multinationals who artificially shift profits offshore
• Amended corporation tax rules to prevent contrived loss arrangements
• No longer allowing businesses to take account of foreign branches when reclaiming VAT on overheads
• Closing loopholes to make sure Entrepreneurs Relief is only available to those selling genuine stakes in businesses
• Issuing more accelerated payments notices to those who hold out from paying tax owed
• Clamp down in agencies and umbrella companies who abuse tax reliefs of travel and subsistence
• Review on the avoidance of inheritance tax through the use of deeds of variation
• Raising the bank levy to 0.21%
• Stopping banks deducting compensation they make to customers, for products they have been mis-sold, from corporation tax
• Providing funds to regimental charities of every regiment that fought in Afghanistan
• Contributing funds for a permanent memorial to those who died in Afghanistan and Iraq
• Helping renovate the RAF museum at Hendon, Stow Maries Airfield, and Biggin Hill Chapel Memorial
• Funds to help the eldest veterans
• Funds for new air ambulance helicopters
• Refunding the VAT of blood bike charities
• £1 million to buy defibrillators for public places and to support training
• Additional money to support the fight against terrorism
• Trebling the Church Roof Fund to support church roof appeals
• Allowing charities to claim automatic gift-aid on donations for the first £8,000 they raise, up from £5,000
• £1 million to support celebrating the battle of Agincourt
• For London, new investment in transport, regeneration from Brent Cross to Croyden, new powers for the mayor over skills and planning, and new funding for the London Land Commission to help address the housing shortage
• A comprehensive Transport Strategy for the North, funding the Health North Initiative, and promoting Northern industries
• An elected mayor for Greater Manchester, with devolution of power over skills, transport and health budgets
• Greater Manchester to keep 100% of additional growth in local business rates
• Same business rates deal for Cambridge and surrounding councils
• £60 million investment in the new Energy Research Accelerator
• National energy catapult to be in Birmingham
• £100 million investment into the automotive industry for driverless technology
• Company car tax to be increased more slowly than originally planned for low emission vehicles
• £7 billion transport investment for the South West for better roads, air links and a new rail franchise
• Introduction of the first 20 Housing Zones, to keep Britain building
• Extension of eight enterprise zones across Britain, with new zones in Blackpool and Plymouth
• Opening of negotiations in relation to the Swansea Bay Tidal Lagoon
• Reduction in the toll rates for the Severn Crossings from 2018, and abolition of the higher band for small vans and buses
• Devolution of corporation tax to Northern Ireland
• Continuing to work on the devolution agreement with Scotland, implement the Glasgow City Deal, and open negotiations on new city deals for Aberdeen and Inverness
• Introduction of a tax allowance to stimulate investment in all stages of the North Sea industry
• Investment in new seismic surveys in underexplored areas of the UK Continental Shelf
• Petroleum Revenue Tax cut from 50% to 35% in 2016
• Cutting the Supplementary Charge from 30% to 20%, and backdating that cut to January 2015
• More generous tax credits for TV and films
• Expanded support for the video games industry
• New tax credit for orchestras
• Introduction of a new horse race betting right
• Consultation as to how local newspapers can be provided with tax support
• New financial support for PhDs and research-based masters degrees
• Almost £140 million for research in the UK into infrastructure and cities of the future
• New budget freedoms to national research institutes
• Investment in the Internet of Things
• £600 million to clear new spectrum bands for further auction, to improve mobile networks
• Testing the latest satellite technology, to reach the remotest communities
• Funding for Wi-Fi in public libraries, and expanding broadband vouchers to more cities
• Ambition to bring ultrafast broadband of at least 100 megabits per second to nearly all homes in the country
• Corporation tax reduced to 20%
• Abolition of National Insurance for employing under 21s from April 2015
• Abolition of National Insurance for employing a young apprentice from April 2016
• Extending the small business rate relief from April 2015
• Major review of Business Rates
• Annual Investment Allowance to be abolished at the end of 2015
• Changes to the Enterprise Investment Schemes and the Venture Capital Trusts, to ensure they comply with the latest state aid rules
• Abolition of the Class 2 National Insurance contributions for the self-employed
• Abolition of the annual tax return
• No change to tax on tobacco and gaming
• Cutting beer duty by 1p a pint
• Cutting cider duty by 2%
• Cutting whiskey and spirits duty by 2%
• Wine duty frozen
• Cancellation of the fuel duty increase scheduled for September 2015
• Personal allowance raised to £10,600 from April 2015
• Personal allowance raised to £10,800 from April 2016
• Personal allowance raised to £11,000 from April 2017
• Higher tax rate threshold increased to £42,385 from April 2015, to increase to £43,300 by 2017/18
• Transferable tax allowance for married couples to increase to £1,100 in April 2015
• Changing the law to give pensioners access to their annuities
• Abolition of the punitive tax charge of at least 55% – tax will only be applied at the marginal rate – from 2016
• Introduction of a Flexible ISA which will allow people to take money out and then put it back in later in the year, without losing any of their tax-free entitlement, from Autumn 2015
• Creation of a new Help to Buy ISA – for every £200 saved, the Government will top it up with £50, i.e. a 25% top up
• New Personal Savings Allowance from April 2016, meaning that the first £1,000 of interest earned on all savings will be tax-free – although the higher rate tax earners allowance will be set at £500

https://www.gov.uk/government/speeches/chancellor-george-osbornes-budget-2015-speech

So, there you have it.  Now we wait for the elections.  Then it gets really interesting!

Until next time…

SUPREME COURT ALLOWS FINANCIAL CLAIM 22 YEARS AFTER DIVORCE

In somewhat of a surprise judgment, the Supreme Court last week decided that an ex-wife (Ms Wyatt) could bring a financial claim against her now wealthy ex-husband (Mr Vince), despite the fact that all his wealth had been made after their relationship, and they had been divorced for 22 years and separated for even longer (https://www.supremecourt.uk/decided-cases/docs/UKSC_2013_0186_Judgment.pdf).  Ms Wyatt has requested financial assistance from her ex-husband to purchase a property, and capital to provide her with an income; in total a sum of £1.9 million.  The amount she will actually get is yet to be determined, as that decision was referred back to a Financial Dispute Resolution appointment to be held before a judge of the Family Division, and many think it will be nothing like the figure she has requested.  The main reason for this is that Lord Wilson stated that if it had been relevant to ask whether Ms Wyatt’s application had a real prospect of success, his opinion would have been that it had a real prospect of ‘comparatively modest success, perhaps of an order that would enable her…to purchase a somewhat more comfortable, and mortgage-free, home for herself and her remaining dependants’.

Lord Wilson pointed out that Ms Wyatt’s claim faced ‘formidable difficulties’, due to the fact that marital cohabitation had subsisted for scarcely more than two years, it broke down 31 years ago, the standard of living enjoyed by both Ms Wyatt and Mr Vince prior to the breakdown of the relationship could not have been lower, Mr Vince did not start to create his current wealth until 13 years after the breakdown, Ms Wyatt had made no contribution, direct or indirect, to that wealth creation, and Ms Wyatt’s delay in bringing the application appeared to be inordinate.

However these difficulties did not stop her succeeding in her claim, and the facts of the case are as interesting as the judgment itself.  And it is those facts that make us here at LNTV HQ question the news reports issued over the last week that this case could open the floodgates for financial claims by long-divorced ex-spouses seeking a share of the later wealth of their former partners.  The facts in this case are so unusual that it is unlikely they would ever be replicated in another such case, meaning this might be the rare sort of judgment we see once and then never again.  Still, we now wait to find out what award Ms Wyatt will be granted…and so what sort of ‘more comfortable’ home she may be able to afford.

Until next time…